China Beats Japan to Become 2nd-Largest Economy
Second-quarter output surpasses Asian rival
By Jane Yager,  Newser Staff
Posted Aug 16, 2010 2:57 AM CDT
Updated Aug 16, 2010 5:41 AM CDT

(Newser) – In an unprecedented feat for a still-developing country, China has become the world's second-largest economy after edging ahead of Japan. Second-quarter GDP figures show China's output at $1.339 trillion, well ahead of Japan's $1.288 trillion. Because China is already in the habit of outperforming Japan in the later months of the year, an edge in the second quarter is a strong sign Beijing will finish 2010 ahead of Tokyo.

The shift represents "a milestone for the global economy," an economist told the Wall Street Journal. China is already far ahead of Japan in purchasing power, but its output per person remains about a tenth of Japan's. But China's economic rise is adding to tensions with its regional trading partners. "There are very real limits to China's ability to translate its economic strength into soft power," a regional observer said, citing recent diplomatic rows with Vietnam, South Korea, and Australia. "China always seems to overreach or under-deliver."