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Japan welcomes China becoming world's No. 2 economy

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Second or third doesn't surprise me. What's surprising is that Japan is only about the same size of California but ranked second in the worlds economy for the longest time. If Japan can grap the number two spot again in the near future, that would be awesome....again.

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If Japan can grap the number two spot again in the near future, that would be awesome....again.

Will never happen. Japan has had its day in the sun and will slowly slip further and further behind China and eventually Europe. Until there is drastic reform the Japanese economy will continue to suck the life out of it's up and coming workers. Higher birthrate or immigration is the answer but Japan is not very good at doing either.

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Population wise, Japan is 42% the size of the United States.

So it's quite an achievement for Japan to hold on to the No.2 spot for over 40 years. Too bad that the No.2 title for Japan is now a permanent thing of the past.

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Population wise, Japan is 42% the size of the United States.

mushroomcloud, I did not know that. Pretty amazing though isn't it. I hope the second place slot is not a permanent thing of the past.

Thanks for the info!

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But think about how many millions in China are dirt poor. Look at the inflation going on too. China will break up soon enough.

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Together, Japan can take the 2nd place back all over again.

I have a great respect to Japanese scientists and best quality products made in Japan.

Remember INNOVATION and EDUCATION are the most important ingredients for sucess in knowledge based global economy. Japan can do this!!

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Remember INNOVATION and EDUCATION are the most important ingredients for sucess in knowledge based global economy.

Right?! Saying that, I wonder how China took over second place. I can see the innovation, although they copy alot of products and mass produce those items cheaper, but education? China doesn't strike me as a highly educated country.

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globalwatcher has the right attitude. And his comments can make it possible for Japan to face reality and work and at least try to regain the title as No.2 economy.

Unfortunately, comments like the ones from goddog are definitely sour grapes.

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Not unless Government Changes there is little hope for Japan

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Gruken China doesn't strike me as a highly educated country.

Exactly, that's my point!! That's the reason Japan can take it back. China is not ready yet for KNOWLEDGE based global economy like USA and Japan.

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Together, Japan can take the 2nd place back all over again.

Why is there a necessity for Japan to "retake the No.2 spot"? Lost pride? GDP per person is almost 10 times higher in Japan than China, and there is no comparison in living standards. Japan will keep slipping down - this is irreversible - but the living standard is the more important thing.

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I don't see China holding onto the top 2 spot for very long either.

They are due for a burst of their current bubble, if that happens japan could regain the no 2 spot if India don't take it.

But as was said the ratings are immaterial. USA might still be No.1 but they are also having difficulties, high unemployment, etc.

In short the ranking us just so much bragging rights and not much more.

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BurakuminDesu

Why is there a necessity for Japan to "retake the No.2 spot"?

Someone named Renho got into trouble by saying something like this. Oh no, we are always striving to be the #1 in the market.

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Japan and the United States have the largest debt loads on earth. The good thing for Japan is that she owes most of it to her citizens. Suggestion: Japan should clean up it's huge debt mess before thinking of aspiring to regain any lost glory.

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Zenny

I don't see China holding onto the top 2 spot for very long either. They are due for a burst of their current bubble, if that happens japan could regain the no 2 spot if India don't take it.

How can you see China in a bubble when it's fueled by cash, not debt? Do you know what a bubble is? China is paying it's way.

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Spudman.

The bubble burst will come from internal pressures, etc the discrepancy between a few rich cities/people/goverment and a rural country that barely has any infrastructure or wealth to speak off.

In order to even that out before it becomes a more serious problem than it is now it will crash them.

You already got strikes for higher wages, etc the goverment is clamping down hard now. Might not be able to do so soon as people get more and more upset.

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as a country, China might be No.2, but all the money is in Beijing and Shanghai, the rest of the country is so very poor. China needs to work real hard within its own country so that people outside of the big cities get money and education. Even though China is No.2 (GDP), it will probably take many more years before they actually catch up with the U.S. in terms of morals and education, etc etc. It will be pretty interesting to see how China will develop.

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I am with zenny11, I would bet Japan will be back in second place by default before the end of the decade, probably much before that. China is going to blow.

spidman-cash IS debt, they are the same thing. In a sane world that wouldn't be true, but we don't live in a sane world, we live in the debt/credit money one, China included.

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Why aiming for the second position? Rather, Japan should aim at being the number one. Anyway, those are just GDP figures and don't really reflect the people's standard of living. Next topic please.

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Expect to see Japan slip to fourth or even fifth in the next decade as economies like India continue to accelerate and Japan's continues to deteriorate. Japan IS good at competing when it's the underdog, and at coming back under such situations, but they were No. 2 for TOO long, and you have an entire generation of young adults and teenagers who are far too complacent to make the sacrifices needed for Japan to rise again. What's more, the idiot politicians in office are hell-bent on making things a lot worse. As was said above, drastic reform is needed, as well as mass immigration to counter the declining birth rate, but that won't happen until it's too late.

And anyway, isn't this the THIRD time in less than a year Japan has been announced as being the No. 3 economy? Maybe it's just the first time they're willing to admit it.

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This is old news!? Happened several months ago.

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On previous comment was talking about the real estate bubble, if spudman was talking about how the Chinese government finances itself then he was right. They just print up the money, real mysterious how there are never any articles about Chinese government debt problems, ain't it. Looks like they just issue enough bonds to control interest rates. But even if they are using cash and not debt, the money still has to be used productively and sustainably, not just endlessly building empty condominiums or on other make-work projects.

As for Japan, the things that are supposedly wrong with Japan today are the same things that were supposedly right about Japan 20 years ago. Management style, government structure, group orientation. But it always is about the money; how much of it there is, and how it is used. Japan screwed that up, China probably is heading for the same result, and maybe with a much messier outcome.

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Expect to see Japan slip to fourth or even fifth in the next decade as economies like India continue to accelerate and Japan's continues to deteriorate.

A 3.9% increase in nominal GDP = deteriorating?

Something else seems to have escaped your logic, Smith old chum: China is number two right now. That means that not only have they passed Japan, but they've passed everyone else in the world.

Did they pass Germany because the Germans failed to reform? Was it the fault of Britain's immigration policy? Did they pass Canada because the Canadians Failed To Stop The Rot?

Of course not. They passed those countries because they've got over a billion people. And their nominal GDP will eventually pass the USA as well. Bot even when they manage to achieve that, they'll still have more than 300 million people living in abject poverty.

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GJDailleult: It's hard to say. China, for now anyway, still has an relatively cheap labour force, and if enough of them are motivated to see the nation move forward, there'll be no stopping them. Japan, on the other hand, has an incredibly expensive labour force without the will or inclination their grandparents and parents had to PUT Japan into the second position and keep it there. And lest we forget, that work force is also shrinking and will be 1 working per 1 'retired' person within ten to fifteen years.

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The way China is growing, it will not just be No.2 for too long, and will most likely surpass the USA altogether in the very near future.

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smithinjapan: Japan IS good at competing when it's the underdog, and at coming back under such situations, but they were No. 2 for TOO long, and you have an entire generation of young adults and teenagers who are far too complacent to make the sacrifices needed for Japan to rise again.

How can one be #2 for TOO long? They have little to no chance of being #1 because of the size of their population. Overall I'd say they've kicked some serious ass. China overtaking them is just a numbers game, not the result of Japan falling into some kind of abyss. It was inevitable, just like it will be inevitable that China will overtake the US at some point.

And anyway, isn't this the THIRD time in less than a year Japan has been announced as being the No. 3 economy? Maybe it's just the first time they're willing to admit it.

Why not just move to China? You seem to enjoy standing behind the Chinese and shouting insults at Japan. Perhaps you'd feel more at home in a Chinese school. Think about it....you'd have the complete attention of only Chinese people and you can bash on Japan all day. Naturally you'd make about 60% less and probably live in a $hithole...oh, now I get it.

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As someone said, old news. And as another said, standards of living are more important. Consider that the average salary of a worker in Shanghai is one-eighth of what someone in Tokyo makes. But hopefully this will spur those lazy government officials into making some changes. Fingers crossed.

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Big deal, the per capita income is $3500 per year with 1.3 billion people, and Japan is ten times greater with equal GDP. Once the Chinese per capita grows around $6K to $7K a year in 5-12years, you will see a sudden stagnation of growth. Currently, you have seen the their currency at lowest point of 6.58 per dollar. Next year, you will see in the high 5's. Also, the inflation in china will continue to grow will become a major problem. The true test is whether China can sustain same growth in 10 years. I doubt it.

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I just want to congratulate to all Japanese people doing an excellent job to keep Japan as a world #2 economy for a long time.

Since the Plaza Accord, the Yen has been strenghening, but we successfully kept it in the 2nd place. It was not easy, but we did it because we were so strived to be the #1 in the market place.

I truly believe that the innovation and education are the key for sucess for the next generation to succeed in KNOWLEDGE based global economy. It will be a very tough competition ahead of you.

I know many of you are making a personal sacrifice and a committment to complete many work related projects on time. And there are many sleepless nights.

I know this as I have been there. I am now 66 years old retired senior citizen living in US. I am sending my best wishes to all Japanese scientists, engineers and politicians to succeed. You can go up to the 1st place. You are the best and the greatest!!!

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China has 1.3 billion people making businesses. No wonder if China surpasses Japan (0.13 billion) and the US (0.3 billion) someday. However China's GNP is almost same as Japan but Japan is just behind China.

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SuperLib: "How can one be #2 for TOO long?"

Because they've forgotten what it's like to be less than that and have lost their competitive edge. And like I said, I believe it's help spawn an entire generation of young people who have always gotten what they want and haven't had to work very hard (if at all) for it. You have kids who never leave home because they want the expendable cash from their jobs, if they work, etc. After WWII the Japanese worked EXTREMELY hard to come out from under the ashes and had the drive to become next only to the US in economies. They've lost their edge, and while I think this will spark SOME to work harder and strive to be number two again, the aforementioned apathy of today's youth will not allow them to accomplish it. And once again I point out the declining birth rate and boom in people retiring -- they will become a HUGE drain on the system, while taxes will increase to compensate, and costs of raising children increase to the point where it's impossible to have more than one (unless rich), further exacerbating the problem.

"Why not just move to China? You seem to enjoy standing behind the Chinese and shouting insults at Japan. Perhaps you'd feel more at home in a Chinese school. Think about it....you'd have the complete attention of only Chinese people and you can bash on Japan all day. Naturally you'd make about 60% less and probably live in a $hithole...oh, now I get it."

Somebody wake up on the wrong side of the bed this morning? No Valentine's chocolate? Don't what your sudden problem is, either way, but my comments on this thread are not at all out of line, and ALL are factual (declining birthrate, aging society, apathy amongst the young, etc.). It's not my fault if you read too much into the '#2 for TOO long' part. Even look at bicultural's comment -- he too says it's old news.

But hey, don't take MY word for it. After you have your coffee and settle down a bit, read for yourself:

ht tp://w ww.japantoday.co m/category/business/view/china-overtakes-japan-in-2nd-quarter-as-worlds-no-2-economy

This was the August 10th article when China first surpassed Japan, and:

ht tp://w ww.japantoday.co m/category/business/view/japan-says-it-is-still-worlds-no-2-economy-ahead-of-china

this is the article that came soon after when Japan denied it (again, hence my comment, and others agreeing it's "old news"). Of course, you have to delete the spaces at the beginning of the URL.

Anyway, take your medicine, bro, and have a nice day.

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bicultural: "And as another said, standards of living are more important. Consider that the average salary of a worker in Shanghai is one-eighth of what someone in Tokyo makes."

Bang on. Who is #1 or #2 in Asia really isn't anything more than a pi$$ing contest, so long as the standards you and others have mentioned are still high. The problem is, and I fear will become the case in Japan, those standards may prove to slip, while standards will become higher (in the cities, anyway) for many in China. They're already pretty much promising a consumption tax hike, and there's no way they'll be able to sustain an pension system or any form of national health care if the number of workers becomes too low while the number of retired increases.

"But hopefully this will spur those lazy government officials into making some changes. Fingers crossed."

I hope so. They should start by sacking themselves. Again, though, I'm afraid they'll take all the wrong steps to bolster the economy and get the numbers up, and hurt Japan far more in the future.

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I heard on the news about six months ago....A famous money man in the U.S. stated that China is buying property all over the world with money that they don't have. China also fudges their numbers to make them look like they have more money than they actually have. Its only a matter of time before this explodes in their face.

Don't know if what he stated was true since I don't follow the economy of any country, but it if it is true, I hope it doesn't bring down the economy again if it should blow up in their face.

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True, once you step of the meglev train to Shanghai and through the bright lights to the outside of town, it is like you've gone from the 21st century back to the 1950s. And of course, China could blow it. But, OK, I don't actually speak Chinse, when I'm there for work, I feel they really have a fire in their stomach, and that is what drives and will drive China's success, not the government. China is a big and complex country with a lot of players. You can't summarize it in one paragraph. For those of you who write off Japan: I don't think so. Come and visit sometime. Not all women are Akihabara maid caffe waitreses and not all guys are hosts in Kabukicho.

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Agree, it's not earth-shattering news, since this was merely a formality as they had to wait for the year-end numbers. But, what I find discouraging about this article is the Japanese government's typical reaction -- "Well things will improve here as China is growing and the U.S. recovery is heating up." When is something going to be done about increasing domestic demand and attacking Japan's many structural problems? Like: the enormous debt, poor efficiency in domestic industries, too high corporate taxes, and un-friendly foreign-investment climate. Clearly there is no overall economic strategy in-place. Which is very sad, regardless of whether Japan is #2 or #3.

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Having lived in California, Chile, Japan and Britain - none of which are doing brilliantly economically - I totally agree with those who have said that quality of life is more important than economic supremacy. Freedom to step down from the economic pissing contest will be a very good thing for the Japanese.

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obaachan -- OK, please enlighten me on how great the "quality of life" here is for the average salaryman. He works a minimum of 50 hours a week; commutes over an hour each way so he can find a tiny place he can afford; has about JPY 500 a day to spend on lunch; drinks flavored dish-water because he cannot afford real beer; and, if he's really lucky, may be able to replace that same suit he wears everyday sometime in the next year. And he does this so he can pay too much for private education for his one child, so they can grow up in a bankrupt Japan, all the while knowing his pension will be worth "pennies on the dollar". And let's not forget the millions of freeters and part-timers who have it even worse. Where is this quality of life you are all going-on about?

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smithinjapan has it. Not long ago China was a place Japanese employees dreaded having to visit. Today more and more they are being transferred there.

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OK! Let me be clear first. I am not an economist or anything like that. I can’t really say what is in my mind in English since is not my mother language , I am sorry for that.

Many people here are now trying to justify or put a negative side to this. Who care who is number one?

I am coming from a so cold develop country!

Let’s talk about standard of living.

What is a high standard of living?

Have money save in the bank?

Having a nice apartment that is your and don't need to pay mortgage to bank? Having a good family environment, where you can have free time to enjoy with your wife in kids everyday after work?

Go to a supermarket and with 50 dollars and you can buy food for 3 weeks?

Japan can be a rich country like you people are saying here, but I don't think middle class Japanese are having a good standard of living like the middle class American or European, let me go a little more far or the middle class from the so cold 3rd world country. The garage of the American Home of an American middle class I think is bigger than a Japanese middle class home.

Japan is the only country that I see people way in they 60 still commutes 2 and 3 hours to work.

Just check the train any day and you see how many old people still have to work.

About the working hard to get to number.

The Japanese didn't do it by only working hard.

The use many trick to get there: The brain washing that all foreigner is Dangerous. The Unique Japanese way. (This one really is a laugh) They did what china is doing now to the US, dumping cheap mass product to the US, But this time the American and the world wake up to what japan was doing, so there is no second chance for Japan.

I this they need a once a year Holiday to The General MacArthur, he was the one who protect Japan from the Russian, give japan it constitution, woman right to vote, Stop the big mafia about land, read about the Land part, if was not for him Japan never get to what is Japan today. Those who always trying to find a justification in another country even they own country, please have more self-respect. Love your country no matter what! If a crime happen here, why say this happened in X country or in my country.

I think japan don't need that, this country people that tell then the way it’s not that everything is ok because that happened in other country.

There many good people in japan that know the true and really laugh when they hear people talking about how good is japan just because they are married or having a life they never did in the own country, it’s not your country maybe it’s you.

So China is number India is next, Germany is not too far behind.

Unless Japan stops thinking everything is ok because Japanese have money saved, you will see what will happen in the Future.

NOW START KILLING ME BECAUSE MY ENGLISH.

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Talk about mixed messages, demands for paying for the ship accident then releasing this? Funny thing is China has been in number 2 spot for more than 12 months.

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China is not ready yet for KNOWLEDGE based global economy like USA and Japan. ......................................................

Historically speaking, China always values " knowledge" as just about all asian countries do ( including Japan ).

Consider the population of China ( including Hong Kong, may be throw in Taiwan ), let's just say 10 % are university educated ( and that's a conservative figure ) and that leaves us a huge number of " smart " people with sizable leftovers to be " cheap " labors in manufacturing.

Regarding the issue of " copying ", Japan gone through the same route and advance to innovation. Same route is likely for China and other Asian countries like S. korea. Talking about S. Korea, do not be shock she will pass Japan in 5 years( assuming japan cannot get her acts together ).

Bad mouthing China , as so many are doing lately , is not the solution. Consider it as a challenge and be prepared to meet it is.

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Basically it is a highly competitive economy out there..Doggie Dog as they say Either winner or loser simple as that!

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They just print up the money, real mysterious how there are never any articles about Chinese government debt problems, ain't it. Looks like they just issue enough bonds to control interest rates. ....................................

Sounds like you are referring to the US. One exception, China is the creditor buying up all the US bonds, just like japan did in the 80's. Be careful of what you wish for. If China implodes ( won't that be sweet news to most of the reader here at JT ), gues what will happen to the nascent economic recovery of US ? With Japan and Korea's export based economy, what would happen to them ?

Not a pretty sight.............

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smithinjapan: Don't what your sudden problem is, either way, but my comments on this thread are not at all out of line, and ALL are factual (declining birthrate, aging society, apathy amongst the young, etc.).

I believe you're saying China has overtaken Japan because of "an entire generation of young people who have always gotten what they want and haven't had to work very hard" and "they've lost their edge." Yep, can't debate with those factual statements.

A the end you threw in some token statements about the declining birthrate and taxes and yadda yadda yadda as if Japan could somehow overcome the population gap by manipulating these variables. Sure, just bump up the birthrate to about 12.7 and Japan could stay at #2....but they're just so lazy!

It's a numbers game, pure and simple. China would literally have to intentionally eliminate their growth in order for them not to be #2 and eventually #1. Your personal opinions about Japanese people are as irrelevant as your comments about demographics and government.

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Yosano said, but noted that ‘‘the situation surrounding Japan’s economy is not necessarily bad’’ amid bright signs seen in the U.S. economy.

In other words, we plan to leach of the US economy!

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There are some difference between Japan and China economic development. Both Japan and China prospered because of manufacturing prowess and efficiency. However Japan major export market was USA. When USA got flu, Japan got a cold too.

Back in 1970s and 80s, Japanese goods are ultra cheap like China goods. Because of US demand, Japan revalue the yen many times and open the market more for foreign imports. The another mistake was over investment on over heated property bubble. Since 1990, Japan has lost the momentum of good old days. It was a failure of free and open market economy.

On the contrary, China has huge population and reliable supply chains for manufacturing goods. Their domestic market is expanding and explosive. They do not depend so much on external market for economy. The government controlled individual saving for investment such as US treasury and natural resources. Gold, Copper and Iron ore prices are sky rocketed by Chinese demand. They transfered the raw materials into consumer goods. China is not a free and open economy. Government strictly controls the financial sector, media and strategic resources. Since 1978, they have sustained their average economic growth between 8% to 10%.

In the reality, controlled semi socialist economy was more adaptable and workable for the real world. Chinese banks and citizens have high saving. Due to one child policy, most people have extra budget for investment and business.

However China has huge gap between rich and poor, Coastal regions and inland areas. Local and provincial government corruptions are making the mess of economy. Being No 2 is not sustainable without solving these major problems.

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Sounds like you are referring to the US. One exception, China is the creditor buying up all the US bonds, just like Japan did in the 80's.

Actually, I am referring to every country that uses a private central bank system where the government pays interest on the money it issues. China appears to operate outside the international capital market racket, and simply issues the money debt-free. I'm not exactly an expert on China, so correct me if I am wrong, but China is doing things the way they should be done in keeping the creation of money under government control. But that doesn't mean you don't have to create the right amount of money, still going to have bubbles and problems if you create too much.

There is also the theory out there that China doesn't actually lend any money to the USA. It is more like the USA doesn't pay full price for the goods it buys from China, and the money it doesn't pay is kept in the USA and put in bonds that give China a bit of interest. All to keep US / world prices down, and the Chinese currency weak so they can keep people busy making stuff. If they didn't keep the money in the USA, or "lend" it to the USA, the Yuan would rise so much that the whole thing would fall apart.

Not claiming to understand what is going on, just claiming that there is a lot of really weird stuff going on.

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Fat lot of good buying up those bonds did for japan... Caught in the old bond trap...

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As one poster said, mass immigration is needed, but we all know that that will most likely not happen. What Japan can and should do is allow more foreign business to enter the market, stop the discriminatory methods of doing business, allow credit to be more easily accessed and ease up on the taxes, labor rules, issuing of stock for employees.

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Junn, Japan bought a lot of US treasuries. In the 80's, there were rampant japan bashing ( just like China bashing now ). Japan did not show up for the bond auction for 2 days. Guess what ? Japan bashing stopped.

I kid you not.

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@The true, you know about those big American garages bigger than houses here in Japan, that is true. But Americans mistake comfort for happiness. This is unlike most Japanese and maybe Chinese as far as I have seen when I visit China. But comfort is not happiness. That is why Americans use so many drugs and eat so much to become obese. Even rather poor Chinese seem rather happy and willing to work hard for a better life. That is the strength of Chinese. I hope Japanese get the same fire in their stomach someday like the Chinese have. A hard life is not necessarily an unhappy life.

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Myth, even at it's best japan never bought more than 15% of us bonds and japan bashing never stopped in the 80's :)

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SuperLib: "I believe you're saying China has overtaken Japan because of "an entire generation of young people who have always gotten what they want and haven't had to work very hard" and "they've lost their edge." Yep, can't debate with those factual statements."

Nope, but not surprised you're reading into things as you please. What I said is that Japan will have a hard time REGAINING the top spot (in Asia) because of said apathy, never did I say they lost it as a result. China was destined to overtake Japan at this point in time, and while, as I said, Japan is quite good at coming back from behind in this case, because of said apathy, I don't think they can.

"A the end you threw in some token statements about the declining birthrate and taxes and yadda yadda yadda as if Japan could somehow overcome the population gap by manipulating these variables. Sure, just bump up the birthrate to about 12.7 and Japan could stay at #2....but they're just so lazy!"

Dude, what are you talking about? Are you suggesting the fact that Japan has a declining birthrate has no relevance, and my bringing it up was just 'yada yada yada'? I find it interesting you automatically jump to some inane conclusion that I'm slamming Japan when pointing out the facts, then you later say, "It's a numbers game, pure and simple" as if the number of people in each nation contributing to growth or feeding off the system has no relevance.

"Your personal opinions about Japanese people are as irrelevant as your comments about demographics and government."

Says the guy who admits it's a numbers game. I have stated no opinions here, only fact, and followed it in previous posts with predictions based on trends. I'm sorry you cannot distinguish between what is fact and your own fiction. Shall I define 'fact' and 'opinion' in a dictionary for you? Shall we go back and look at my posts -- ah wait, whenever you are asked to back up your statements with facts you suddenly, "don't have time", as I recall from the myriad of other times you can't back up your wrongful assertions with fact.

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Right on Shinjukuboy Education is the key to prosperity! Spot on about this! There is a difference between just plain complacency plus downright laziness and then there`s the inner fire in the stomach (that hunger drive) to want to be better!

As said its very much ultra competitive out there either win it or lose it! Sounds cold but that`s the reality

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shinjukuboy: "But comfort is not happiness. That is why Americans use so many drugs and eat so much to become obese."

So discomfort is happiness? Happiness depends on the person, of course. You're correct in assuming that happiness is not defined by the size of one's property, but in correct to say in general that people CAN'T be happy with larger spaces.

"That is why Americans use so many drugs and eat so much to become obese."

What?? So the Japanese who use drugs here do it because they have large garages? How about all the enkais and completely out of control drinking habits of so many here? How is that different from drugs, and are you suggesting they are happy?

" I hope Japanese get the same fire in their stomach someday like the Chinese have. A hard life is not necessarily an unhappy life."

That I can agree with. I don't think your blanket statement about 'poor Chinese being happy to work hard' is true, but they do, as you borrow from another poster, have a 'fire in their stomach' (personally I'd say heart, not stomach, but hey). Don't tell this to SuperLib, though... he'll say your opinion doesn't matter.

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SuperLib: "Your personal opinions about Japanese people are as irrelevant as your comments about demographics and government."

Sadly, what you're saying is that half or more of the people on this thread have stated opinions that don't matter, since they're along the same lines. Or do you admit you are simply biased and extremely subjective?

Still makes me laugh that you think the depopulation problem is an 'opinion', or that many youth here don't suffer from apathy ('parasite singles', 'NEAT', and what's that Japanese word for people who never leave their rooms despite being adults?). Keep it up, my friend, you do yourself wonders in terms of credibility.

Moderator: Readers, enough of this nonsense. Please focus your comments on the story and not at or about each other.

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Hikkikomori is the word you're looking for...

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SuperLib: One more thing... I notice you had no response for your original snarky comment on the fact that this is old news (and that others have said the same), and that Japan can no longer deny it. That is what set you off on this tangent, no? So what did you think of the articles I linked you to that backed up what I said?

Just curious. :) Happy Valentine's, friend. Spread the love.

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And it`s that the crystal clear difference between the ant and the grasshopper! That simple story makes plenty of sense

Notice how the countries of Switzerland, Sweden, Germany, England, France are very much prosperous as well as the top of their game, in fact far more wealthier even happier than the U.S (look at the prosperity rank right now) surprising no one is mentioning them! These nations have been keeping very steady at the top for quite some time!

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I've never noticed my home country to be unhappy. Violent and self important, yes, but unhappy... Not really ;)

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@SmithinJapan You are right that I quote another poster about "fire in the stomach". That poster was me, incidentally. All I meant to say by the expression "comfort is not equal to happiness" is that if you are happy, of course you can enjoy your big house and big car. But if you are not happy, these will not make you happy. People look at the small houses here in Japan or the delapidated places you see in China outside Shanghai and think these people must be miserable. But that is not necessarily true (of course, some people are). A hard life can be happy, and an easy life may be miserablely boring. You know, needing drugs, like Paris Hilton or what's her name, Lohan?. They have lots of money and a big house, but I guess that does not bring happiness. Tipsy Japnese salarymen is not so much misery but trying to lossen inhibitions like shyness.

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4 things necessary for a superpower, I may be wrong? Resources Population Military power Higher education

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Honestly, as a half Japanese American I never ever want to see Japan and U.S fall below 5th place ever!

The pessimism though needs to become optimism

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shinjukuboy: "@SmithinJapan You are right that I quote another poster about "fire in the stomach". That poster was me, incidentally. All I meant to say by the expression "comfort is not equal to happiness" is that if you are happy, of course you can enjoy your big house and big car. But if you are not happy, these will not make you happy."

I understand what you mean about the 'fire in the stomach', and did not recall it was you who posted the same thing earlier. My bad. I notice you slightly changed your comment about the big house and being comfortable, as well. I still think your comments suffer from some pretty gross generalizations.

For example: "You know, needing drugs, like Paris Hilton or what's her name, Lohan?. They have lots of money and a big house, but I guess that does not bring happiness."

Paris Hilton is just a moron, but I doubt very much she is unhappy. True, she might not know what true happiness means, but I don't think that's because of wealth as much as it is a lack of general education and experience. The whole drug thing is just part of the elite circle she happened to hang out with. Lohan certainly doesn't seem very happy, but I reckon that's in large part BECAUSE of being busted for drugs. Bottom line is I'm not sure why you seemed to suggest this is limited to Americans (celebrities) and doesn't apply to Japan or China.

"Tipsy Japnese salarymen is not so much misery but trying to lossen inhibitions like shyness."

So what about someone who takes a snort of cocaine to loosen up? How's that different, legality aside? How about contrasting that person who smokes a bit of a joint (marijuana) at a party with Japanese Tanaka who gets drunk EVERY night with buddies because it's the only time he feels happy and he doesn't want to go home? You want to see unhappiness? Well, if you want to get into generalizations, go to an Izakaya and ask the local salary-men whey they're not at home.... I guarantee in most cases the first response will be a laugh (and not a happy one).

Anyway, I agree with you that happiness is not necessarily akin to material possessions, if that's what you are trying to say.

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CONGRATULATIONS CHINA!!!

Note for a guy who wrote before: No, South Korea is not going to surpass Japan, that's impossible (believe me).

Well, about China, I hope to see China a bit open and I really wish to see better relations with Japan from now.

Congratulations China!

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Junnnama: "Hikkikomori is the word you're looking for..."

Thanks! For some reason I suddenly couldn't remember it. I believe it entered the English language dictionary recently (in its original Japanese), as it is more of a foreign concept overseas.

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3rd place is still great, although i think they should add the all-over debts of a country in this measure. Japan has the heighest public debt percent worldwide. At the latest when Japans population will decrease more and more, the ranking position can not be held. India is the next candidate for the top 3...

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Everyone seems to be 100% certain that the top 4 will definitely be 1st China, U.S, India, then Japan. As long as U.S and Japan stay in the top 5 I`m satisfied!

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skylark21: "Everyone seems to be 100% certain that the top 4 will definitely be 1st China, U.S, India, then Japan. As long as U.S and Japan stay in the top 5 I`m satisfied!"

So long as it doesn't hurt you too badly, what does it matter what 'global position' a nation is in? The only reason this is big news is that Japan is now second to China. They were perfectly happy being second to a Western nation, but now that it's an Asian nation it's being considered an embarrassment in political circles and among a lot of people in general. Just look at some of the overreactions by some posters on here; they don't seem to care that their lives haven't changed at all from when the J-government was denying the facts yesterday, or even from when China became number 2 in August... they just care about the idea they are suddenly and officially behind another Asian nation. Bizarre. Watching China and Japan bicker like this is like watching children and all the while you can just laugh and say, "you're still not number one". I have no doubt the black trucks will be out on the streets protesting the facts. Again, so long as it's a Western nation ahead of them they don't care.

It would be nice if both the US and Japan can stay in the top five. I guess we'll just have to wait and see.

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Japan gave over 1 trillion USD to China to feed their poor children to buy food and medicine for the last 40 years. Now they are adult and made a country keep going alive. Japan give all the technology and training to labours to work in a capitalit style production. Note: If it was Japan had that much resources and man power? you would have seen a no1 GDP which would have 2/3 of world GDP from 1970 up. Now you see the quality of No2 in 2011 of China.

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Well FYI no one likes to be a loser period In the game of life there are always winners and losers It`s competition plain and simple And I do agree with your last statement

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With regards to competition whether you like it or not, its all about that! You people cant deny this really!

Win or lose which is not hard to see! It just a bummer to lose!

Whether U.S and Japan want to either be a loser or winner will ultimately depend on the Japanese and the Americans. The ant or the grasshopper can`t have both LOL

It`s a no brainer the Chinese want to be the winners and aim for number one!

I respect the Chinese for this, they have the intense drive to wanna be better and to aim for the winner side! Go for the Gold not the bronze duh!

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Who cares about becoming No 3 of the economic championship. Most of the Japanese banks are still black and no need the hand outs from tax payers and Government. The objective of bank is protecting the people assets and cash. Not for ripping off the depositors. Not for crippling the economy of the nation.The strength of economy can be also measured on the Foreign reserve amount, GDP, sovereign debt and national saving.

For the foreign reserve amount, Japan is No 2 behind China. Comparing with their huge population, vast land and oversea Chinese network, Japan is destined to become a second champion of foreign reserve. Japanese Government has huge debt however it was borrowed from citizens not from foreigners. Japan will not become and behave like Greece, Iceland or Ireland. Japan does not need the beg from European Union. As a individual , Japanese saving is higher than most western nations.

Japan was an only nation in the world which was nuked and ruined to ashes. Postwar Japanese transformed ashes into high rise buildings and infrastructure. Phoenix can be risen again from burning fire according the legend.

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What? what do you mean who cares about No. 3 economic championship! What you are just gonna give up and say Shouganai I dont think so. Its competition brother, you better get used to it! Thats one part I have to disagree on! Obviously China cares very much about being number one, dont kid yourself! Just look at Shanghai, which far outdoes NYC already and are light years ahead!

With that attitude Zenpun thats not a winners attitude dude!

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YOu will see a unified Korea will become number one by 2030. I am not joking. NK has all the rare metals which will cost a 100 billions of trillion. Unified Korea will have the best labour and Newest technology from south and north. Well China knows it and afraid of it.

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China afraid? I dont think so. They sure bounce between each other recently Kim Jong Il going to China not once but several times already vice versa doesnt open one`s eyes?

Surely theres something more to this! A unified Korea, yes we already know thats bound to happen! North Korea has already made that rather clear it`s real intentions.

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Congrats to China.

Now for the $64,000 question: Can they hold on to #2? Seems Robert Schiller, Samuel Huntington Jr, Fred Barnes, and Peter Schiff think not. China has many problems like ... oh say ... quality and safety concerns of their goods.

China could be #2 right now, but the important qualifier is holding on to it and many economic, political, and societal experts say, "No".

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As has been stated a number of times, the rankings are not all that important when compared to the various economic systems and their abilities to adapt to change. One of Japan's biggest weaknesses is its inability to change and adapt its business styles, laws, and economic policies. Unfortunately, this weakness runs rather deep, all the way down to the education system to the very core of Japanese culture, and it is going to take some big changes to turn Japan around again. The good thing, though, is that Japan seems to be changing. I'm fairly optimistic about Japan's future.

And though China is currently growing like crazy, they have a lot of structural problems to overcome, and their government is one of them. I suspect it will take at least a couple generations for China to become a stable, developed superpower.

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Hong Kong is the tail that wagged the dog which was communist, collectivist China, and finally woke her.

We can of course trace HK's stupendous rise back to the laissez faire "Thatcherite" policies the British allowed there, before and after Maggie.

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They passed those countries because they've got over a billion people. And their nominal GDP will eventually pass the USA as well.......................................

if that's the case, then India, indonesia and other nations with huge population should be among the top ten. This agrument is invalid.

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a 100 billions of trillion

LOL. I don't know whether to say go back to math class or English class!

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OK what are the exact poverty rates of these nations? Do the math!

U.S? 20% in poverty and rising with unemployment still at 9% At risk Japan? 17% in poverty, at high risk of rising Unemployment at 5% right now! At risk as well India---Half in poverty, but decreasing! Another nation with over 1 billion! India has always had the engineers, the computer whiz, etc...I expect them to be a force to contend with competitively speaking.

China? 75% in poverty and decreasing, many below the poverty line up to now..during the Beijing Olympics noticed China tried very hard to hide the negatives because the slums were easily seen when you actually go there and the below par air quality! Chinas population is so large that they will squeeze out all thats left in resources, produce more C02 then you`ll ever believe, and the push to make it a Green Economy LOL yeah good luck! 1.3 billion people Resources competition will be a very fierce one! People keep forgetting that China used to be a world superpower in history!

EU doesn`t look good either---another at risk!

Also, a healthy birth rate is important can`t have too little or too many!

There has to be a balance and who says Japanese don`t have procreation drive!

Seems like in China, for example, most of the riches are only concentrated in these three big cities Shanghai, Beijing, and Hong Kong that`s it, the rest of China is in absolute poverty folks.

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Second or third doesn't surprise me. What's surprising is that Japan is only about the same size of California but ranked second in the worlds economy for the longest time. If Japan can grap the number two spot again in the near future, that would be awesome....again.

Japan has reached the peak of its potential. It will suffer from contractions for 2 reasons. Population decline resulting in a smaller market and higher efficiency in industry meaning loss of jobs in manufacturing. This is a capitalist phenomena and a trend that will continue.

But think about how many millions in China are dirt poor. Look at the inflation going on too. China will break up soon enough.

The inflation problem is not a Chinese problem it is coming from the Chinese central bank having to print ever more RMB to keep the USD peg which the Federal Reserve is putting the printing presses 24/7. Which means sooner or later this arrangement will end and China will witness tremendous increase in living standards due to a stronger currency while Made in China goods will no longer be that cheap anymore and America will witness huge declines in living standards. It is more likely that the U.S will break up because of this.

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As said, as long as U.S and Japan stay within the top 5 Im satisfied with it! Im trying to be optimistic! Even if its top 10 thats still not bad again but seriously guys it ultimately depends on the people above all whether they want to lose or win thats it! Whether they want to be number 10 or 1? Its the people! You don`t believe this all about competition---you are big time incorrect on that one you all! No joke at all China is being seriously competitive and looking to kick economic butt, and they have 100% ambition behind it at least!

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Disagree with your comments on Japan zstar sorry You can say the same for the US that it has reached its maximum potential even for all the G-8 nations!

Saying the G-8 developed countries can`t advance and develop is wrong man! It all comes down to whether one wants to be better or not! Win or lose dude choose one

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zstar: "Japan has reached the peak of its potential. It will suffer from contractions for 2 reasons. Population decline resulting in a smaller market and higher efficiency in industry meaning loss of jobs in manufacturing. This is a capitalist phenomena and a trend that will continue."

Agreed 100%, and very much along the lines of what I said earlier before SuperLib claimed it was Japan bashing and has no relevancy. Be careful -- there are people on here who are afraid of the facts! As I also stated on other threads one of the only ways Japan can counter it is through mass immigration, but they won't take that into consideration until they've already collapsed.

"The inflation problem is not a Chinese problem it is coming from the Chinese central bank having to print ever more RMB to keep the USD peg which the Federal Reserve is putting the printing presses 24/7. Which means sooner or later this arrangement will end and China will witness tremendous increase in living standards due to a stronger currency while Made in China goods will no longer be that cheap anymore and America will witness huge declines in living standards. It is more likely that the U.S will break up because of this."

Agreed again, but man that's going to make some people here upset! I watched an amazing report about the history of the economies and how, as you have said here more simplified, China will not only match the US within the next decade but will surpass them (which of course means Japan at at least No. 3, still). It also said Viet Nam and India will gain a lot more momentum and do better.

Either way, scary for Japan. If they think having to bow to China at second is bad, wait until they realize that the US also has to bow and China is #1 (I exaggerate based on how ultra-rightists fear it here).

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No joke at all China is being seriously competitive and looking to kick economic butt..................

problem is it's easier to dismiss China as a passing phenomenon ( witness the numerous messages here ) than to recognise the fact happening right now. China is NOT going away soon, so be prepared to meet the challenge before it's a foregone conclusion.

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I dont want to ever see Japan and U.S losing or becoming Third World Nations either, I speak personally on this as its my life...it`s not cool to lose at all! Nobody likes losing

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And it all comes down to this who`s ultimately making the big cash! No denying it Money=Power Look at Dubai thanx to oil!

Donald Trump can tell you that one!

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the relationship between Japan and China will become like the Chinese Olympics. The great opening day show was put on by China, but all the costumes were designed by the New York-based Japanese designer Ishioka Eiko. That will be the pattern in the future. Both can thrive, and the show will be great.

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I agree with shinjukuboy.

Even though China has replaced Japan as the No.2 economy, the relationship can be complementary. After all, China is the only nation that pulled the world out of the most recent financial crisis. Being tied to the largest growing economy on earth which is China will only bring abundant opportunities to smart Japanese that don't hold sour grapes due to China's success.

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OK think about this:

No joke it all comes down to the money! Money talks! U.S is not as wealthy anymore now but still maintains a strong number of millionaires and billionaires though. Look at the poverty rates of the U.S and Japan. But look at the Nordic countries, Netherlands, Germany, Australia, France, Switzerland, even England Ex Dubai (because of the OIL=riches) Switzerland is where Davos Economic Forum takes place and the World Bank has its headquarters there! Their poverty levels are almost nonexistent! Having gone to Switzerland, you can smell the money over there! Look at France and Italy---most of the world`s luxury brands come from there (Ferrari, Lamborghini, Ducati, Hermes, Louis Vuitton) and they are definitely loaded in wealth!

They are not superpowers but are far richer, far better quality of life, even superior standard of living than the superpowers and have maintained very steady top world ranking for many years! Look at Finland and Sweden, they outdo the U.S in just wealth alone, I mean, just look at their GDP and GDP per capita figures! Military power only seperates them thats it basically! Superpower doesnt mean jack if you do not have the money to back it up!

Take a good gander at either the annual Prosperity Index, Wikipedia, GNP or the GDP plus GDP per capita (personal wealth) ranking to see! Luxemburg, though, I can`t figure that one out LOL

A superpower, as said, must have certain conditions to be a superpower but that does not mean they got the money and such even though they have the muscle! Remember the ole saying more muscle than brains Again Money Talks period! Money=Power and that separates one from being 1st place to last place.

So the having a tank nor its size doesnt mean you are better off than the other guy which Nordic countries have time and time again proven quite clearly! Size dont mean jack either

One could argue that U.S and Japan should go the way of Nordic, Swiss and English routes to really be in the top ranking!

Think competition is a joke! You are wrong on that one! It creates winners or losers not rocket science people!

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Oberst- have you ever watched the first Die Hard movie? There are no foregone conclusions. Japan didn't take over the world, China won't either. A bubble is never acknowledged until it is too late.

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Economic dynamism, political environment are also necessities along with the wealth. GDP and GDP per capita really matter! But can`t stress this enough education (also higher education) is key to prosperity period and the reduction of poverty!

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I mean an excellent political environment to clarify

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smithinjapan: What I said is that Japan will have a hard time REGAINING the top spot (in Asia) because of said apathy, never did I say they lost it as a result. China was destined to overtake Japan at this point in time, and while, as I said, Japan is quite good at coming back from behind in this case, because of said apathy, I don't think they can.

My only guess is that you're talking about some kind of temporary "regaining" for a few years or something...? One last "hurrah" that's being undercut by the lazy Japanese? Is that the point you're making here?

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U.S as well, the way it looks now (not looking too wonderful), sure looks to be next to be beaten by China and India even.

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And Japanese and Americans ultimately caused their downfall basically

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Disagree with your comments on Japan zstar sorry You can say the same for the US that it has reached its maximum potential even for all the G-8 nations!

Saying the G-8 developed countries can`t advance and develop is wrong man! It all comes down to whether one wants to be better or not! Win or lose dude choose one

I didn't say the G-8 nations won't develop technologically. In fact the technology will accelerate in the next century however this has nothing to do with capitalist economics.

GDP is nothing more than the amount of money that circulates in the economy good or bad so it is hardly a good measure of progress.

The rapid growth of China is merely the result of increased demand and ability to meet those demands thus the huge GDP growth in China.

The U.S and Japan face different problems. America does not have the severe population decline problems as Japan due to high rates of immigration however it has skyrocketing debts and a shrinking manufacturing sector.

These problems have nothing to do with if "one wants to become better on not". They are the result of contradictions within the capitalist system.

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The Lehman crisis didnt help either and that didnt start in Japan there sir

With GM and Chrysler asking for a free handout doesn`t look good brother...Toyota never asked for a free handout.

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I have total respect to Toyota and Ford, but not GM and Chrysler sorry man

Guaranteed if it wasn`t for Obama, U.S would have really lost it and taken the world with it.

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If China gets its entire population above the poverty level, it will be the worlds largest economy. However, it still lags far behind Japan, German, and the US in per capita GDP and standard of living which I believe is what most people are really concerned about.

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mushroomcloud at 11:06 AM JST - 14th February So it's quite an achievement for Japan to hold on to the No.2 spot for >over 40 years. Too bad that the No.2 title for Japan is now a permanent >thing of the past.

Shroom, one day China's economic title and growth will also become a permanent thing of the past. That's how economies work, there's no such thing as eternal prosperity and growth. And we all know that China's Economic title is a joke on a per capita basis. You don't see hordes of Japanese trying to illegally emmigrate to China do you? China didn't single handely save the world from financial collapse as you seem to think, they are in a growth period because they had holes in the ground for toilets just 10 years ago. Japan went from upper class to upper middle class. China is going from homeless to middle class. Of course China's growth is robust. Want to impress the world? Let's see China make No2 GDP per capita.

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they are in a growth period because they had holes in the ground for toilets just 10 years ago. ,,,,,,,,,,,,,,,,,,,,,,,,,,,

look at it this way, the Chinese toilet makers will have a tremendously huge potential market locally as the living standard moves up. It pays for the japanese toilet makers to take advantage of this. But if japan keep bashing China as " backward ", she won't make too many friends and sell no toilets.

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the relationship between Japan and China will become like the Chinese Olympics. The great opening day show was put on by China, but all the costumes were designed by the New York-based Japanese designer Ishioka Eiko. That will be the pattern in the future. Both can thrive, and the show will be great.

,,,,,,,,,,,,,,,,,,,,,,,,,,,

precisely , a symbiotic trade relationship and a win win situation. If japan's domestic market is on the downward trend, then take advantage of the upward tick of the Chinese market. Improve bilateral diplomatic relationship. An uni-polar world is not good, just look at what happened in 2001

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I have just finished reading all interesting blogs. I am in the US. This is a great news for me (retired) to learn people of Japan still care. How exciting!

First, let's be honest about ourselves and bite the bullets. The reality is China is in #2 place in world economy. We should welcome this new challenge and move forward, trying to do it better and smarter. Do not shift blame to anyone, any country and to anything.

Second, the challenge should be addressed to yourself how you can do it better and smarter. As smithinjapan stated, Japanese do better when we are placed in a position of underdog. We can do this again as we have done it.

Third, stay positive. Do not ask your company or country what they can do for you. Instead what you can do for your company and country. (quote from JFK). Let's Rock & Roll and we are taking NO prisoners!

Fourth, stay focused in rapidly changing global economy (KNOWLEDGE based).

Fifth, take care yourself and your family while achieving this objectives.

TOGETHER, WE CAN DO THIS AGAIN!!

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Wow No2 belongs to China now and it keeps going UP fast! No wonder that Benjamin Rothschild of Rothschild family (it is thought to be the world richest family with asset of more than 500 trillion dollars) said that future belongs to China .

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China's easy money aimed at propping up growth is fueling a giant surge in property investment and prices. However, loose money, directed lending and government support is twisting the incentives in the economy in ways that may be propelling the rapid advancement of industry, but also may be misallocating resources and inflating asset bubbles. In other words, China's state capitalism is destroying the concept of risk just as it did in Japan and Korea. It's only a matter of time.

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To skylark21

Think competition is a joke! You are wrong on that one! It creates winners or losers not rocket science people?

Where have you been skylark21? The competition is not a joke, rather it is a reality, unfortunately. Winners get bread, loser get no bread on the table. It is a survival issue, skylark21. I did not know what to say to people who worked so hard for a billion dollar projects, yet they lost. I could not tell them what you have said, "competition is a joke". No way, skylark21.

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"China didn't single handely save the world from financial collapse as you seem to think, they are in a growth period because they had holes in the ground for toilets just 10 years ago"

Sorry Ossan,

Yes they did. Guess who loaned money (China) to the country that caused the financial collapse (U.S)?

Unfortunately for you, Ossan, you underestimate how close we came to entering into a depression. And when I say we, I mean it, as I live in the same country as you and saw the devastation with my very own eyes from the epicenter of where it happened. And yes, it was indeed China that saved the world from economic collapse by putting into overdrive a stimulus package that kept demand for every conceivable commodity. The United States did put a stimulus package together as well, but guess who loaned us the money to do so? This was all done at the time when the U.S. and Western Europe were begging the Chinese to buy their sovereign debt to keep their countries afloat. Yes, this happened. Perhaps you are blind, deaf, but certainly not mute to what has happened over the past 3 years? Or maybe you do not live in the United States?

And as for toilets, China still has holes in the ground, as does Japan. Trust me, I know. Seen them in both countries.

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Guess who loaned money (China) to the country that caused the financial collapse (U.S)?

I don't think U.S. ever asked for assistance from IMF.

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it's the US Treasury bills, Nigel

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China's main issue is its ability to still do more central planning and control than most other large economies. The reason this question is important is that on the macro level, efficiencies grow and decay as fostered by central planning, as opposed to an environment in which transactions between private parties are free from state intervention, including restrictive regulations, taxes, tariffs and enforced monopolies. Still, the free marketers have a point, and China is a great test case if planners can be smart enough bring efficiency and avoid distress better than forces of markets they have released.

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As to why it's important to be the creditors............ Quoting Feb 6, 2011 Star and Stripesnpage 5 ." Treasury report says China not manipulating its currency "

Get the picture? Lesson learned from Japan in the 80's and it's not my vivid " imagination " as other posters claimed. It happened and it's happening AGAIN.

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U.S. and Western Europe were begging the Chinese to buy their sovereign debt

Perhaps the US yes, but Western Europe was kept afloat by Germany.

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From the Economists magazine.............. China was buying Portugal, Spain etc ( the PIGS )sovereign debts thus " helping out " Germany in bailing out the Euro ( forget UK, she's in trouble herself and can't do too much )............

just the fact

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Why on earth would China want to be like the US (=free marketers)? Free market economies have only shown how efficiently they can destroy themselves. The big problems with Japan's economy started when Koizumi tried to refashion Japan's economy to look like the US, especially destroying the labor structure. Now those hens have returned to roost.

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What a lot of interesting reactions on this topic. Thanks to the people like oberst, zstar, mushroom, globalwatcher, smithinjapan and others giving balance to some of the irrational and emotional reactions above.

All folks posting here prepare yourselves for more fear mongering based on the Chinese economy growth and the supposedly following military threat. Not an expert myself on things economic, politic or military but I learn a lot of the information available on the internet recently.

Someone mentioned Donald Trump. I saw Donald Trump on CNN today in an interview insisting the Chinese are THE ENEMY while doing some handsome China bashing. And my god, he might run for the presidency next year.

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To freedomski

You got it right, freedomski. I think Donal Tramp (R) is seriously watching his political opportunity to run for the next US Presidential Election. He is an opportunist and executed his goal very well in the past. If he decides to run against Obama, it will stir up US policy into the Protectionism. He will use the card of HATE to win. Hope this guy is intelligent enough to know the difference between China and Japan. To eyes of general US public, Chinese, Korean, Japanese, Vietnamese, Thai, Phillipine..., we are all Asian, they do not know the difference. So Japan should be ready for next unfair trade dispute talks on the horizon.

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oberst at 03:04 AM JST - 15th February "they are in a growth period because they had holes in the ground for toilets just 10 years ago. ,,,,,,,,,,,,,,,,,,,,,,,,,,, look at it this way, the Chinese toilet makers will have a tremendously >huge potential market locally as the living standard moves up. It pays >for the japanese toilet makers to take advantage of this. But if japan >keep bashing China as " backward ", she won't make too many friends and >sell no toilets.

Bingo. That's why Japanese business' don't "bash" China, they are at the forefront of investing in China and getting into China's growing consumer market. The only ones that do any "bashing" economically are the China supporters who obviously still carry a big chip on their shoulder. This despite the fact that the well-to-do Chinese consumers actually prefer Japanese products and foods over domestic brands because of quality and safety.

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shinjukuboy at 06:05 AM JST - 15th February. Why on earth would China want to be like the US (=free marketers)? Free market economies have only shown how efficiently they can destroy themselves.

The Chinese system is doing incredibly well. But as you ask long-term, do we think that that authoritarian system, with the massive environmental degradation that's going on, with the troubled labor and demographic issues that will be coming down the pike, with the problems with indigenous innovation and entrepreneurship, especially when they are going to be more in confrontation with the West - whom do I want to bet on? Ultimately, the safer bet is the West, there's no question. But it's not as safe a bet as it would have been five years ago. The West can't do stupid. And the West has been doing a lot of stupid recently. It has to get its act in order sustainably.

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mushroomcloud at 04:42 AM JST - 15th February "China didn't single handely save the world from financial collapse as you seem to think, they are in a growth period because they had holes in the ground for toilets just 10 years ago" Sorry Ossan, Yes they did. Guess who loaned money (China) to the country that caused >the financial collapse (U.S)? Unfortunately for you, Ossan, you underestimate how close we came to >entering into a depression. And when I say we, I mean it, as I live in >the same country as you and saw the devastation with my very own eyes >from the epicenter of where it happened. And yes, it was indeed China >that saved the world from economic collapse by putting into overdrive a >stimulus package that kept demand for every conceivable commodity. The >United States did put a stimulus package together as well, but guess who >loaned us the money to do so? This was all done at the time when the >U.S. and Western Europe were begging the Chinese to buy their sovereign >debt to keep their countries afloat. Yes, this happened. Perhaps you are >blind, deaf, but certainly not mute to what has happened over the past 3 >years? Or maybe you do not live in the United States?

Sorry shroom but China did what it did to protect itself, it's own export markets, it's own foreign investments and foreign reserves. If the west's economy collapsed where would China be? Please don't give us this China was our savior routine as if there the world owes China a favor. And it really isavbout time you learned that buying debt securities is buying IOUs as an investment, not giving a LOAN as you like to repeat ad infinitum.

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OssanAmerica at 07:10 AM JST - 15th February. If the west's economy collapsed where would China be? Please don't give us this China was our savior routine as if there the world owes China a favor.

In the case of the relationship between the U.S. and China, if China fails, U.S. will have serious problems, and yet if China really succeed with the system, U.S. will have serious problems. So this is a very tough one to manage. You know what it's like? It may not be a sustainable relationship, but they are both sort of getting what they want.

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Completely agree with OssanAmerica's comment. China produces more than it can consume to keep the billion plus population employed, and the rest of the world needs cheap stuff to keep prices down and avoid inflation. A symbiotic relationship, and not a healthy one.

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Again the wishful thinking factor prevails when posters expect Japan to drop to fourth or fifth place soon. China just became the the world's 2nd economy for what it's worth. The Chinese government CREATES an image of stable growth while in reality that growth is not stable at all and the central government has only limited influence on that. About 30% of the companies in China don't follow the rules issued by the central government in Beijing. On the other hand, despite the strong yen, export of Japanese products to China and Korea keeps growing. Apparently Japanese companies are still held in high esteem despite their higher prices. Japan's trade surplus shows this. In 2010 Japan exported for about 200 billion more than it imported compared to the year before. Plus, the higher costs of food will have a much greater impact in countries like China than in Japan. China will have to spend a lot of money to avoid social unrest. Unlike Japan.

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it really isavbout time you learned that buying debt securities is buying IOUs as an investment, not giving a LOAN as you like to repeat ad infinitum,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,

sovereign debt is important ( not investment in IOU as some dismissed ), issusing of bonds is how government as we know it function. If you don't understand bonds( at least at 101 level ), then you really shouldn't be posting messages regarding economic issues. No nation that I know of function on a BALANCED budget. Please advise me if you know of one . Credits make capitalism go around..........unless you prefer some other system like communism ?

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For Skylark 21 at 7:44 pm JT-14 Feb

What? what do you mean who cares about No. 3 economic championship! What you are just gonna give up and say Shouganai I dont think so. Its competition brother, you better get used to it! Thats one part I have to disagree on! Obviously China cares very much about being number one, dont kid yourself! Just look at Shanghai, which far outdoes NYC already and are light years ahead!

With that attitude Zenpun thats not a winners attitude dude!

You might come from another planet. Mainland Chinese does not care about their government statics and data. What they care about is their retirement and medical safety net. Many Chinese feel they missed out from the China economic miracle.

For the dude comment, How big is China population and land? How big is Japan population and land? It is like a western fairy tale of David and Goliath. In the reality, size and speed does matter. No one can be always winner or loser. Being a loser means not end of the world. Japan lost the second world war. However it became the economic powerhouse within a few decades.

For economic development three major ingredients required. First one is huge, explosive and sustainable market. Japan has limited population, natural resources and land. Japanese market has already matured as old lady. China market like a sweet teen who is keep growing. In term of market, China is more promising than Japan.

Second one is strong leadership and touch management. As a democratic nation, Japan lacks the speed, drive and efficiency like autocratic China. In China, they can design, negotiate and implement the infrastructure project within a few days. For Olympic village project, China destroyed many old buildings with lightening speed. Residents have to accept the minimum compensation. In Japan, it is unacceptable. In China it is just a bad luck.

Third one is high saving and capital flow. As a individual Japanese are high savers. However Japan cost of living is more expensive than China. When transfer the saving into business investment, China saving is more fruitful. Their politicians can invest and spend the public money without the majority votes for diet. For capital flow, China is supported by thousands and thousands of oversea Chinese community. Japan is not supported by oversea Japanese community which will be so small.

However it is a big challenge for China for sustaining No 2 spot. They have inequality between have and have not. If No 1 default the large debt from China, China can slip into No 5 or No 6. According the Chinese proverb, nothing will last forever!

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SuperLib: "My only guess is that you're talking about some kind of temporary "regaining" for a few years or something...? One last "hurrah" that's being undercut by the lazy Japanese? Is that the point you're making here?"

Sad that that's your only 'guess', but at least you stated it as such instead of trying to proclaim that your statements are anything more. No, what I said is Japan will have a difficult time regaining the spot of #2 (I never listed for what amount of time) because of the aging society, declining birthrate, and apathy amongst the young.

I don't know where your misdirected angst about the truth plays in; be it the fact that this is old news and Japan is only now accepting it, or your 'interesting' thoughts that others are talking about a 'last hurrah'. You've already contradicted yourself a few times on this thread, and accused half the posters on here of being Japan-bashers and judging their comments as meaningless (given that they back up my facts and contradict yours), so what are you trying to say?

Forget about misconceptions you have had to date about my post, and leave your baggage at the door: how are the facts I stated earlier incorrect? I notice you have not been able to answer that.

A lot of people are upset by this news simply because, despite life not changing from yesterday, they officially have to admit they are number two to China (and not just the US!). It's been that way for going on a year now, but they just had to admit it this week. While I don't think it's a big deal, a lot of Japanese do (and Chinese, for that matter), so the question is how do they change it? Given the problems I mentioned earlier (depopulation, aging society, self-complacence, etc.) do you really think they'll be able to overtake China in the near future? Or wait... let me guess... you can't answer so therefore my question must just be Japan-bashing and if I don't like it I should go live in China, right? Isn't that the gist of your comments when you can't provide a legitimate retort?

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But Zempun, you'll remember that David defeated Goliath. How about quality over quantity? More than GDP, per capita income is what counts.

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No.2 is still the first loser. In China, building ghost cities and infrastructure contribute to the GDP. How many new cities are being built in Japan? None? China's infrastructure is likely to grow for the next little while, hence it's GDP too. As for Japan being more expensive than China, take a look at property values. I can get a pretty decent house in Kyushu for about 100g usd, here in countryside China, that amount of money will buy me a bigger flat. And in China, when you by property, you don't own it, nobody in China does, the government owns all the land. Education in China is sparkly propaganda at best, but an increasing number of post secondary students are choosing to finish their education in developed countries. Japanese have creativity and sense of perfection, the Chinese have neither of these qualities. I'm not bashing Chinese, I'm an overseas Chinese living in China myself and understand the culture and people quite well after 13 years of being here. And no, the poor are not happy unlike some previous poster mentioned. Having to slave most of your life for minimal pay does not mean 'fire in the stomach', it's just the need for survival. The rich here, well, they're like most rich in other places, as long as they're making money, they couldn't give a flying eff about the social condition of their country. The rich knows that China is not stable, at most 10 years, the Chinese economy is gonna tank and with that taking the whole government with it. I'm not preaching revolution, it's just that over the last couple hundred years, it seems to be the normal way for change to come to China. I wish China the best as it basks in it's glory for the next little bit till things fall apart. Old Chinese proverb; The 3 kingdoms once disunited will strive to be united and once united, sh!t will hit the fan and things will fall apart, again.

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I think China has had an easy time the last 10 years being chosen to be helped by the rest of the world to improve its economy. As a Chinese peoples individual wealth I think they are like still ranked like at 100.

To climb from 100 up to say top 10 will be much harder. No longer can it rely on being factory for the world or just copying things...will need to use its creative side much better and produce more for the world instead of just be more of cheap manufacturing base. Sure now one has flowed into China the Chinese can also be considered interesting consumers, so this is now a new way for other countries to make money from China.

But to climb from 100 upwards and reach the top 10 might be a bit more interesting time than the simpler time up to now of just being a cheap factory.

China would be nowhere without the rest of the world up until now, so how will it stand on its own feet in the future? Could be interesting to see the standard of life improve.

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In China, building ghost cities and infrastructure contribute to the GDP.

There were 64.5 million urban flats that showed no electrical usage for six consecutive months. According to some, the value of vacant apartments account for 15% of GDP. This is what happens when a country's money supply is 260% of the GDP, unheard of in today's standards. With a relatively miniscule % of consumption/GDP ratio (35%) and a large investment to GDP ratio (46%). China's policy is equivalent to building a high rise in middle of the desert knowing that nobody would occupy there.

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oberst at 04:14 PM JST - 15th February

If you don't know the difference between Bonds and Loans you shouldn't be posting comments abut it. There is a universe of a difference in terms of liquidity. Which is why one is an investment while the other is a loan.

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Hear a rumor today that much of the 600,000,000,000 JPY that Japan gives China in ODA every year is transformed by China into 'Chinese' investment into Africa. How much truth is there in this, I wonder?

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I think China has had an easy time the last 10 years being chosen to be helped by the rest of the world to improve its economy. .....................................

Is there any way the Japanese government can do so Japan can be chosen so she can regain the 2nd position ?

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There is a universe of a difference in terms of liquidity. Which is why one is an investment while the other is a loan. ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, If my memory does not fail me, you posted the message about country buying US Treasury( bonds ) as investment in IOU( loan ). Is that a good thing or a bad thing ? Since japan did ( and still do ) it must be good ? China now doing the same thing, it must be bad ?

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oberst at 02:05 AM JST - 16th February "There is a universe of a difference in terms of liquidity. Which is why one is an investment while the other is a loan." If my memory does not fail me, you posted the message about country >buying US Treasury( bonds ) as investment in IOU( loan ). Is that a good >thing or a bad thing ? Since japan did ( and still do ) it must be >good ? China now doing the same thing, it must be bad ?

Your memory does not fail you but you did not read the thread. Your fellow countryman labelled the Chinese bond purchase as a loan to help the United States. I clarified that bonds are an IOU, an investment vehicle easily bought and sold and a place to put China's vast US Dollar reserves. At the same time it supports the US economy upon which much of China's exports are reliant. It is NOT a loan. Nor is it a question of good or bad, it benefits both parties' own interests. It is not some big hearted action by China to which the United States or any other country owes China any particular thanks.

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At the same time it supports the US economy upon which much of China's exports are reliant. It is NOT a loan. Nor is it a question of good or bad, it benefits both parties' own interests.

To clarify, China "prints" their own currency to purchase U.S. Dollars or other foreign instruments thereby keeping their Yuan low. This explains the 260% of GDP money supply China currently has. Due to this devaluation, the Chinese yuan has very little purchasing power which explains the miniscule 35% domestic consumption/GDP ratio. (UN report on National Accounts Main Aggregate Database)

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China "prints" their own currency to purchase U.S. Dollars or other foreign instruments thereby keeping their Yuan low.,,,,,,,,,,,,,,,,,,,,,,

That's what our Fed called " quantitative easing ", if we can get away with it, I don't see why other nations ( among them , China ) can't. But of course, the USD being the world's reserve curreny, we can get away with more.

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and if you care to dig deeper about quantitative easing, go suss out wikipedia's entry, especially the " history " section ......seems like Bank of japan tried it a few times too ( read = print money ).

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OssanAmerica at 05:22 AM JST - 16th February. Nor is it a question of good or bad, it benefits both parties' own interests. It is not some big hearted action by China to which the United States or any other country owes China any particular than

Because China keeps buying U.S. Treasury bonds, the Treasury Department is able to keep long-term interest rates lower than they would be otherwise. If China weren't such a big buyer, the U.S. Treasury might need to raise rates to attract other investors. Since Treasury bonds are the benchmark for most long-term debt, those lower rates extend to credit cards and mortgages. So does that mean that changing China's money policy could hurt the U.S. economy? A accelerated revaluation could cause additional economic slowdown, even a prolong recession in the U.S. Now, if China revalues its currency abruptly, it won't have to buy so many Treasury bonds. As a result, mortgage and credit-card interest rates could jump upwards, which means U.S. consumers would stop spending so much money. It could bring a self-reinforcing downward economic spiral.

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Because China keeps buying U.S. Treasury bonds, the Treasury Department is able to keep long-term interest rates lower than they would be otherwise.

Let's not make a big deal out of this. 20%(China's share) of 28% (Total foreign ownership) accounts for only 5% of the total ownership. In addition, China has to buy them to devalue their currency which is crucial in keeping their competetive edge in their exports.

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The reasons for the U.S. high state indebtedness of private households is caused by stagnating or declining real incomes of the masses. If the U.S. population continues to save, then U.S. will be less dependent on financing by Chinese savers. There is American greed, living beyond their means, force the Chinese to supply them with cheap capital and bargain-priced goods.

U.S. know very well where their bread is buttered. They depend on the Chinese buying U.S. debts and provide citizens with cheap products that their own unproductive economy cannot produce. When China buys U.S. debts, it uses its own savings. To purchase a trillion dollars in U.S. Treasury bonds, the Federal Reserve must increase the money supply corresponding to amount leading to a sharp decline of the dollar. China has contributed enormously to the revival of the global economy and not only finances U.S. debts and supplies U.S. consumers with cheap consumer goods.

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China has a good ten years before the sh!t hits the fan. China will be number 1# soon.

China,Brazil and India are coming up fast !!!!!

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That is for sure China will explode and you will see the worst economic crisis in the human history. But other asian countires will benefit with that. A unified Korea will emerge as the top player then.

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Japan welcomes China becoming world's No. 2 economy

Was Japan getting tired of holding the No. 2 spot?

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@realmind I suggest you to learn about economy... In certain terms, South Korea has the same risk to explode as China (if not worse)

Congratulations China, hope to see better relations with Japan from now.

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For you all who do not believe being the creditor ( China )of US has any influence on policy....... Here's a special report on reuters.com Special report: China flexed its muscles using U.S. Treasuries

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...and there is yet more to come....

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Japan has done this to weaken the Yen, there is no way Japan would release this otherwise.

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How long can the USA be rated as number 1 when we soon to be payying $4.oo per gallon for gasoline? Especially when you have to go to the store to pay a higher price for just plain foodstuffs and it costs $20.00 just to come and go to the grocery store?

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oberst:

I read the article that you mention. Seems though many here have no idea how hooked we are on cheap Chinese products, and Chinese credit.

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Really? 'welcomes'?

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