According to New Figures, China Was Third-Largest Economy in 2007
Thursday, January 15, 2009
BEIJING, Jan. 14 -- China leapfrogged over Germany to become the world's third-largest economy in 2007, sooner than predicted, underscoring how quickly the concentration of global economic power has shifted.
While earlier estimates had put growth of China's gross domestic product that year at 11.9 percent, revised figures released by the government statistics bureau Wednesday show that its economy actually expanded by 13 percent to $3.38 trillion. That compares with Germany's 2007 GDP of $3.32 trillion.
"It was inevitable," said Ting Lu, a Merrill Lynch economist based in Hong Kong.
Whether the growth trajectory will continue, however, has been complicated by the global recession, which has already prompted massive layoffs and waves of company closures, especially across southeastern China, the heartland of its export-driven economy. If China were to continue to grow at its current rate, economists say it could surpass Japan in as soon as three years and the United States in 18 years to become the world's No. 1 economy.
In 2007, the United States remained the world's largest economy with a GDP of $13.8 trillion and Japan the second-largest with a $4.38 trillion GDP, according to calculations based on an annual average of daily exchange rates by Merrill Lynch.
China is one of the few major economies that is on track to have positive GDP growth this year. Merrill Lynch calculates that China will have a GDP growth of 8 percent as compared with a 2.8 percent decline for the United States, a 1.3 percent decline for Japan and a 0.6 percent decline for the European Union.
"In 2007, the gap between the growth rates of China and other big countries was huge. Actually in 2009 the gap between will be even bigger," Lu said.
But even if China achieves a projected 8 percent growth rate this year, that may be insufficient to stop the wave of company bankruptcies and layoffs that have alarmed China's leaders. Economic data released this week added to the pessimism: Exports dropped 2.8 percent in December from the same month a year ago, the sharpest decline in a decade.
In the early days of the global economic crisis, some economists had debated whether China would serve as an engine that would keep Asia from being pulled into the turmoil. Pakistan, which was suffering from a balance-of-payments crisis, even came to China looking for a loan. But this fall, China found its own economy cooling so fast that its leaders issued statements saying the best thing it could do to help the world economy was to help itself.
Coming into this global slowdown, 30 years of capitalist-style reforms pioneered by China's then-supreme leader Deng Xiaoping had transformed China from an isolated and impoverished nation into one of the world's great economic powers.
Years of white-hot, double-digit growth driven by exports and investment went hand in hand with achievements in politics, science, engineering and the arts.
Huang Yiping, chief Asia economist for Citigroup, said China grew so quickly because it had the "advantage of backwardness."