Japan's full year GDP amounted to US$5.47 trillion, about 7% smaller than the US$5.88 trillion China reported in January.
Japan's real GDP for the full year expanded by 3.9% (-6.3% in 2009); for China it's expected at 10.3% for 2010 as a whole, up from 9.2% in 2009.
Thus China became the world's second largest economy in 2010, ending Japan's 42-year reign in that position.
But both Japan and China together remain considerably smaller than the US economy: still worth 23% less (at US$11.35 trillion) than the US '10 GDP of US$14.66 trillion.
The new rankings merely symbolise China's rise and Japan's decline as global growth engines. For the US, as I see it, while Japan was in a way an economic rival, it has been also a geopolitical and military ally. China, however, poses as a challenger on all fronts.
But China remains in many ways poor. Whereas, Japan is an extremely wealthy nation.
In terms of GDP per capita, Japan is No. 1 in Asia and No. 18 globally.
China still lags behind Japan in many respects in the face of a reality that their growing interdependence makes them partners as well as rivals.
By comparison, China's income per capita (at US$4,400) is only one-tenth of Japan's. World Bank estimates that more than 100 million people - nearly Japan's entire population - live on less than US$2 a day.
If you look at China's development, its standard of living is much like Thailand, even Indonesia. But if you look at China's mere size, besides being now the world's No. 2 economy, it's also its largest exporter (counting euro-zone members separately); second largest importer; largest surplus nation (with current surplus peaking at 11% of GDP); and largest holder of the world's stock of foreign currency reserves (equivalent to 50% of its GDP).
China's economy probably will surpass US in outright size within 20 years.
But, quite obviously, the GDP landmark can't reflect the true condition of the Chinese society, which been described as “rich country, poor people.”
Her notion of Japan as a centre of creativity and innovation (e.g. hybrid cars, 3-D video games), in contrast to its image 30 years ago as a copycat and later, outperformed the originals with excellent design, manufacturing and craftsmanship. That label is now passed-on to China.
It's a matter of quality over quantity: “Japan is still a wealthy nation in many sense of the word.”
In the meantime, Chinese attitudes have also changed in a world as it sees it today. There are already indications that the young are growing impatient and increasingly ignoring the advice of Deng Xiaoping (architect of modern China) to “hide our capacities; bide our time; never claim leadership.”
China still has much to do just to keep pace with the people's aspirations for higher incomes and higher living standards.
Simon Kuznets (who won the Nobel Prize in economics in 1971): There is more to life than money: “The welfare of a nation can scarcely be inferred from a measure of national income.”
Cameron (Britain's Prime Minister) sums it best: “we need to look for alternative measures that would show national progress not just by how our economy is growing, but by how our lives are improving; not just by our standard of living, but by our quality of life.”
In the 60s, Robert Kennedy criticised GDP as measuring everything (including pollution, cigarette advertising, napalm & nuclear warheads) “except that which makes life worthwhile (the arts, wit, wisdom, compassion).”
It concluded that the level of GDP per capita was far from the best measure of material living standards.
The trouble is people do quite poorly at predicting what makes them happy. They focus too much on initial responses and overlook how fleeting moments of pleasure are, leaving them no happier than before.
Granted many studies have shown that wealthier nations tend to be happier than poorer ones; and rich people appear more satisfied than the less affluent.
Yet, other studies on the US and South Korea suggest people are no happier than they were 50 years ago despite sharp rises in income per capita.
A recent Canadian study concluded the happiest people reside in the poorest provinces (Nova Scotia), while those in the richest (British Columbia) were among the least happy.
Since happiness is what people finally want and wealth is only a means towards this end, Prof. D. Bok (former Harvard President) made it known “the primacy now accorded to economic growth would appear to be a mistake.”
Based on latest research findings, two conclusions have emerged:
(i) things that bring enduring satisfaction for individuals are also good for most others (e.g. helping others, close relationships);
(ii) experiences that bring lasting happiness do not feature as priority in government (e.g. medical afflictions, such as chronic pain, depression, sleep disorders, give vast relief to sufferers once treated, but such people are often under-served in hospitals).
For sure, people who claim to be happy tend to live longer, are less prune to commit suicide, don't abuse drugs, get promoted more often and enjoy good friends.
Be that as it may, it's still premature to initiate new bold policies on happiness based on research alone.
Nevertheless, they can be useful in assigning priorities or identifying new possibilities for public intervention.
Perhaps, public officials may even use these research insights as a basis for informed decisions. Surely, you can't go wrong with prioritising happiness.
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