China Becomes World's Second Largest Economy
China's GDP surpassed Japan's in the second quarter of 2010, making it the world's second-largest economy after the United States, cementing three decades of reform-era growth that lifted an estimated 800 million people out of poverty.
Surpassing Japan
In the second quarter of 2010, China's GDP of $1.337 trillion exceeded Japan's $1.288 trillion for the first time, making China the world's second-largest economy behind the United States. Japan had held that position for 42 years. The crossing was not entirely surprising — China had been closing the gap rapidly — but its symbolic weight was enormous, representing the most consequential shift in the global economic hierarchy since the United States overtook the United Kingdom in the late nineteenth century.
Three Decades of Growth
The milestone was the culmination of three decades of sustained growth averaging nearly 10% per year since Deng Xiaoping launched reform and opening-up in 1978. Over this period, China lifted an estimated 800 million people out of extreme poverty — the largest poverty reduction in human history. Manufacturing output expanded fifty-fold. China became the world's largest exporter, the largest holder of foreign exchange reserves, and the largest buyer of commodities from iron ore to soybeans.
A New Economic Superpower
China's rise as an economic superpower reshaped global supply chains, commodity markets, and geopolitical alignments. It financed US government debt through Treasury bond purchases, powered growth in resource-exporting nations from Australia to Angola, and became the largest trading partner of most Asian countries. By 2014, on a purchasing-power-parity basis, China's economy surpassed that of the United States, making it — by some measures — already the world's largest economy.