China becomes world's second largest economy

China has overtaken Japan to become the world’s second-largest economy, the fruit of three decades of rapid growth that has lifted hundreds of millions of people out of poverty. Depending on how fast its exchange rate rises, China is on course to overtake the US and vault to the No.1 spot in 2025, according to projections by the World Bank, Goldman Sachs and others. China came close to surpassing Japan in 2009 and the disclosure by a senior official that it had now done so comes as no surprise. Indeed, Yi Gang, China’s chief currency regulator, mentioned the milestone in passing in remarks published on Friday.“China, in fact, is now already the world’s second largest economy,” he said in an interview with China Reform magazine.Cruising past Japan might give China bragging rights, but its per capita income of about $3,800 a year is a fraction of Japan’s or America’s. “China is still a developing country, and we should be wise enough to know ourselves,” Yi said, when asked whether the time was ripe for the yuan to become an international currency. China’s economy expanded 11.1% in the first half of 2010, from a year earlier, and is likely to log growth of more than 9% for the whole year, according to Yi. China has averaged more than 9.5% growth annually since it embarked on market reforms in 1978. But that pace was bound to slow over time as a matter of arithmetic, Yi said. If China could jack up an annual growth of 7-8% this decade, that would still be a strong performance. If China can keep up a clip of 5-6% a year in the 2020s, it will have maintained rapid growth for 50 years, which Yi said would be unprecedented in human history. The economic ascent, which saw China overtake Britain and France in 2005 and Germany in 2007, is translating into clout on the world stage. China is a leading member of the G20 rich and emerging nations, which since the 2008 financial crisis has become the world's premier economic policy-setting forum.