China outstrips Japan for economy, is it so?
Early this month the world was agitated by the news of BBC quoting the Government of the People's Republic of China that China has outstripped Japan in terms of economy and ranked the second in the world after the United States on this indicator. However, the news did not contain any evidence of this long-awaited fact.
While none of the international organizations has confirmed the statement of Beijing. According to experts, China has to become the world's leading economy by 2025.
Earlier it was reported that China has become the largest energy consumer in 2009. According to the International Energy Agency, last year the Celestial Empire consumed 2.252 billion tons of oil equivalent (coal, oil, gas and electricity), outstripping the leader of the past year, the U.S., by about 4 percent.
However, China itself does not agree with this estimate and mentioned erroneous the calculations by the IEA. According to a representative of the Chinese National Energy Administration Chou Hsiang, the IEA figures for the energy consumption in the country are overstated and not credible. However, he did not describe energy consumption figures in China.
According to a new analytical report by Goldman Sachs Group, Japan's economy in the near future expects weakening after the completion of the incentive programs. Experts forecast that Japan's GDP in 2011 will grow by 1.4 percent, but not by 1.7 percent as predicted earlier. Governmental incentives are completing, and the growth of Japanese GDP in the second quarter of 2010 was two times lower than a year earlier, Goldman Sachs noted.
Economy of Japan
Japan's GDP in the first quarter of 2010 increased by 1.2 percent compared with last quarter. According to the latest data provided by the Japanese government, which had been amended to reflect fluctuations in commodity prices, real GDP in Japan in the first quarter of this year increased by 1.2 percent compared with the previous quarter, annualized GDP growth in Japan was 5.0 percent. Due to domestic demand, Japan's GDP in the first quarter grew by 0.6 percent, while external demand - by 0.7 percent.
In Japan was also recorded growth of nominal GDP. In the first quarter, this index in Japan was 1.3 percent compared to 1.2 percent in the previous quarter, and on an annualized basis - 5.4 percent compared to 4.9 per cent.
Ministry of Commerce reported that industrial production fell by 1.5 percent last month. In a survey conducted by Bloomberg, economists predicted 0.2 percent more. A preliminary index of industrial production in Japan in June amounted to -1.5 percent for the month, +17.0 percent for the year (the forecast was +0.2 percent for the month, +18.9 percent for the year, the previous value +0.1 percent for the month, +20.4 percent for year).
Upon the revised data, industrial production in Japan in May 2010 grew by 0.1 percent compared to the previous month. In this case, according to preliminary data, this index decreased by 0.1 percent. In April 2010, industrial production in Japan increased by 1.3 percent compared with March.
In addition, according to the data provided by the Ministry of Economy, Trade and Industry of Japan, coefficient of utilization of industrial capacity in May this year grew by 0.8 percent on a monthly basis - up to 91.3 points.
Black ink in trade balance of Japan in June 2010 totaled 686.96 billion yen ($7.66 billion). The amount of exports at an annual rate in June grew by 27.7 percent - up to 5.9 trillion yen ($65.4 billion), the amount of imports increased by 26.1 percent - up to 5.2 trillion yen ($57.7 billion).
Consumer price index in Japan in June amounted to 0.0 percent for the month, -0.7 percent for the year. Consumer price index, excluding prices for food and energy, in Japan in June amounted to -1.0 percent per year (forecast was -1.1 percent per year, the previous value -1.2 percent per year).
The June jobless rate was below the record high of 5.6% hit in July 2009, but was still higher than the 4.2% rate seen at the start of 2009. In June, the number of unemployed rose by a seasonally adjusted 70,000 from the previous month, or 2.1%, to 3.47 million, compared with a rise of 10,000 in May.
The number of payroll jobs rose by a seasonally adjusted 40,000 month-on-month, or 0.1%, to 62.25 million, after falling 240,000 m/m in May.
Economic recovery in Japan will probably stop in the second half of 2010 because of a slowdown in exports and the completion of the program to stimulate the economy. This forecast was made by the International Monetary Fund. The Fund noted that moderate economic growth in the country will still continue. The IMF expects GDP growth of Japan in 2010 by 2.4 percent, in 2011 - by 1.8 percent.
Economy of China
Economic growth in China slowed down in the second quarter of 2010 in the conditions of further gradual completion of incentive spending, as well as due to controls on bank lending and speculation in real estate market. According to data provided by National Bureau of Statistics, China's GDP rose in the second quarter by 10.3 percent compared to the same period of the previous year, whereas in the first quarter grew by 11.9 percent. The degree of slowing down in economic growth slightly exceeded market expectations. The average forecast assumes that the growth of China's GDP in the second quarter will be 10.5 percent.
Economists had expected for a long time the slowdown in economic growth in China in the second quarter, and in itself it might not to be a cause for concern. However, it could increase pressure on the authorities in order to lift restrictions on the real estate market and find new ways to support economic growth, especially if it continues to slow significantly in the second half year.
In the coming months, Chinese exports may feel the impact of the debt crisis of the Euro-zone, and most analysts believe that the Chinese government's restrictions on the purchase of housing will lead to a further slowdown in the construction industry, which has been an important driver of growth in China.
Inflation rates in China were lower than expected. Consumer price index rose 2.9 percent in June after 3.1 percent rising in May. The June increase was much less than expected by economists. Their forecast assumes an increase of 3.3 percent.