This week, I received an e-mail from a friend in Tokyo tagged: “Greetings from Number Three, Japan.” He was mourning the passing of an era.
The quarterly numbers he was alluding to suggest that, even in dollar terms, China is now the world’s second-biggest economy. There it will remain until, catastrophe or stagnation aside, it overtakes the US to become Number One.
Dollar comparisons are pretty arbitrary, as much influenced by currency fluctuations as by economic activity. They do not take into account that it is much cheaper to buy a house, a meal or a foot massage in Beijing than in Tokyo. In purchasing power terms, China’s economy surpassed Japan’s nearly a decade ago. But symbolism counts. And by that measure, China’s usurpation indeed ushers in a new order. For the first time since 1968, when Japan overhauled the then West Germany to become the second-largest capitalist economy, there is a new pretender to the US throne.