Type “China overtakes Japan” into Google and look at the first two results. They’re both from the Guardian, and they both have exactly the same headline: “China overtakes Japan as world’s second-largest economy”. Except that while one is dated from today, the other one is from August 16 last year.
This is not necessarily a mistake by the Guardian – nor is it the only publication to have made it. GDP statistics are notoriously inaccurate, and early estimates are prone to huge revisions later (as George Osborne will be hoping). China’s economy could easily “overtake” Japan’s several times as the data change. China’s rise is not an event that can be reported on the day it happens; it is something that takes years. The Guardian can be forgiven for using today’s figures as an excuse to report it.
But even if the Chinese economy is now larger than Japan’s, this still isn’t really news, for two reasons. First, when comparing countries, it is normal to adjust for purchasing power parity – a measure of how much things actually costs that is best explained by the Economist’s Big Mac Index. When you adjust the figures, you see that China actually overtook Japan years ago.
Second, using any measure of total GDP as a measure of the success of an economy is absurd. Even Sarah Palin would understand that the only really informative measure is GDP per capita. China has a population of approximately 1.3 billion people, so its average income per person is about $7,400 – or a sixth of that of Japan. So when the Japanese economy minister, Kaoru Yosano, said “As an economy, we are not competing for rankings but working to improve citizens’ lives” he was subtly reminding us that, even after two decades of stagnation, Japan’s economy is still way ahead of most of its Asian rivals.
For more: China's economy hasn't overtaken Japan's – at least, not in a way that matters – Telegraph Blogs
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