China overtakes Germany

China overtakes Germany

Scripps Howard News Service: This was inevitable, but when it came last week it was still a little bit of a shock: China surpassed Germany to become the world’s third-largest economy.

Revised figures show China with a 2007 gross domestic product of $3.5 trillion; Germany with $3.3 trillion. Economists say it is only three or four years away from overtaking Japan, with a GDP of $4.4 trillion, for second place. It is still decades from catching up with the United States, by far the world’s largest economy at $13.8 trillion.

It caps an amazing economic run. Since Deng Xiaoping began introducing market reforms into China’s ossified command economy, the GDP has increased more than tenfold. However, it still doesn’t make China a rich country. The per capita GDP is only $2,800. In Germany, the country it just overtook, per capita GDP is $38,800. The huge differences in wealth between those who have benefited mightily from the export-driven economy and the huge mass of rural poor threaten social disruption.

Once isolated from the world economy, China is now feeling the effects of the global economic slowdown. Its economy grew 13 percent in 2007, 9 percent last year and forecasts are that it will grow 8 percent or less in 2009. The United States is in the throes of a recession, and by one estimate its economy will contract 2.8 percent this year.

China’s rulers have thus far been able to balance increasing economic freedom with tight political and social control over the population. It may not last. Already, a once-hopelessly impoverished population is using its newfound well-being to speak out against official corruption and incompetence.