China has overtaken the UK as the world's fourth largest economy, it emerged yesterday in what will be seen as a key economic landmark for the new century.

Sources in Beijing have indicated that China's economy is much bigger than was thought. The Asian giant is understood to have raised its estimate of the size of the economy in 2004 by $300bn or 20 per cent to almost $2 trillion.

On official exchange rates used by the Bank of England this would be worth £1.13tr, putting it a whisker ahead of the UK's economy which weighed in at £1.11tr.

Jim O'Neill, the head of global economics at Goldman Sachs - which forecast two years ago that China would overtake the UK by 2007 - said the watershed had come two years early. With China expected to post nominal growth of 12.5 per cent against the UK's cash terms growth of 4.5 per cent, it would "definitely" have overtaken this year. "If these figures are confirmed then it will mean that China will become the fourth largest economy in the world," he said.

He said the revision would not come as a "huge surprise" as many analysts had cast doubt on Chinese statistics: "The other important thing is that it probably means that the investment share of GDP is lower than people had been talking about which means that speculation about a investment bubble that will have to crash are misplaced."

In an influential report on Brazil, Russia, India and China (Brics) two years ago, Goldmans forecast they would enjoy strong growth over the next 30 to 50 years, by which time only the US would still be ahead in pure size terms.

Julian Jessop, the chief international economist at Capital Economics, said: "It's another reflection of the importance of China in the world economy. This increases the case for China to join the G7, perhaps in place of one of the smaller countries like Canada.

China's bureau of statistics will next week announce some of the findings of the census and "revisions of the GDP data for 2004", reports from Beijing said. Economists believe a revision of China's service sector data - which official figures showmaking up just a quarter of the economy - will show the sector has been has underscored, especially in areas such as accountancy, banking and advertising.

This will echo warnings from Gordon Brown, the Chancellor of the Exchequer, that China presents a growing economic threat to Europe, particularly the UK. Two months ago he warned union leaders that China and India were now training more engineers, computer scientists, and university graduates - 4 million a year - than Europe and the US combined.

Dr Frithjof Schmidt, a German Greens MEP, said the news would fan Western protectionism. "China's success has made even strong industrial nations nervous," he said. "They are beginning to wonder if they will really be the winners of this [WTO] game as they expected. These higher than previously revealed GDP figures show us that China is growing much faster than they told us, so those who advocate free trade in Europe are beginning to rethink their strategy."

Largest economys are US, Japan and Germnay, followed by UK at $2.2 trillion GDP , France at $2.00 trillion and Italy at $1.67 trillion, but now China has surpassed UKs $2.2 trillion, what a miracle turnaround. I thought it wouldnt be till 2010. Japans days are numbered.

==Sources in Beijing have indicated that China's economy is much bigger than was thought. The Asian giant is understood to have raised its estimate of the size of the economy in 2004 by $300bn or 20 per cent to almost $2 trillion.


I knew that long times ago. On many arguements I posted my calculation.
The math is very simple and logic is not complicate neither. There were
2 big population countries had number over there year(s) ago.

India: GDP $650B, service counted 52% = $338B.
China: GDP $1,200B, industry 50%, service 35% = $420B.
Since China has 30% more population, each Indian produced $338 service/year
where each Chinese produced $323 service/year. That was complete a joke.
more clearly was a dirty lie. Math does not fool people, only people fool people.
either China hided the number huge or India over cooked the GDP. in fact,
beleive in Indian number since it is very low can not go even lower.
them means *most-likely* Chinese official number was the bad one.


by the way, this article was a good found,
please post a link and repost it to "China & Far Eastern Strategic Issues"
I almost missed it.

go china! pakistan and china's free trade agreement (the only country to have such an agreement with china) will go into effect in two weeks (january 1st). pakistan stands to benefit immensely from this. consider the case of mexico and canada after the implementation of the NAFTA and FTA's with the US. free trade with an economy the size of china puts pakistan in an enviable position. i think we'll see a substantial jump in exports starting in january and february of this year. should take us past the $17 billion mark quite easily.

well,
china has produced more than 300 million tons of irons,over 30% of ones in the world,and so is concrete.China produced over 40% of concrete in the world.

china has produced 6 million cars&trucks last year,overtaking Germany and staying on the 3 rd position following U.S and Japan.

china has produced more than 15% of ships in the world,in the 3rd position in the world.

The adding value of chinese electronic industry is also the third biggest just following U.S.and Japan even by the methed of exhange rate.

China has the second largest net of electric power ,and even the increaser of power plants last year is more powerful than that of France,let alone india and other developing countries.

In the way of quatitiy,china has also produced most household electrical appliances ,foods&cottons, computers,telephones,let alone textiles&garments sweeping all over the world.

BTW,Chinese freight volume of sea ports occupies over 30% in the world and has three sea ports among top 10 sea ports.SHANGHAI,NINGBO,DALIANG,TIANJING,QINGDAO,GUANGZHOU AND SHENZHEN are all super seaport owing a annual freight volume of over 100 million tons.

But in the ###### way of exchange, China is still fouth biggest economy,which is rather ironical!

As a Chinese ,I certainly welcome such a free trade agreements with pakistan,but I really doubt if Pakistan can benifit from such a free trade.on my impression,not every country can benifit from free trade,on the contrary,lots of developing counties,especially those without comparative advantages, are suffering from "free trade" those rich developed countries. after all ,you can't always turn your eyes to those successful countries such as China ,mexico and so on,which is quite rare.

when it come to Pakistan,I don't think Pakistanian Industry can macth Chinese one.If free trade is carried out effectly,Chinese Industry can sweep pakistanian market easily and make millions of Pakistanian workers laid off.Although Pakistanian acricuture,especially fruits, maybe benefit from free trade,I don't think that will make up for the loss in industry sector.

so, Pkistanian friends should maybe more cautious to celeblate such a agreement.

yes you are absolutely right. the only issue is that pakistan and china have agreed to open up free trade in roughly 700 or so items that were accepted by both sides. so pakistan must have only agreed to those things which it felt it has sort of a comparative advantage (textiles, finished goods, and stuff of that nature). obviously, china is a much bigger and well developed economy. but again, it cannot produce everything with an advantage. so we'll see where things go after the new year starts.