China's National Bureau of Statistics said the economy expanded by 13 per cent in 2007, a sharp increase from the 11.9 per cent growth rate the authorities had previously stated.
With only the US and Japan now larger than China, the new figures highlight the rapid transformation the Chinese economy has undergone during the past 30 years since Mao-era controls were eased, although the economy is now experiencing the toughest period in a decade as a result of the global financial crisis.
The fresh data will reinforce the case to give China and other large emerging economies a bigger role in global financial decision-making, even though China has been hesitant about taking on new responsibilities.
“It is symbolically significant that China is now bigger than Germany and it will not be too long before its economy overtakes [that of] Japan,” said Mark Williams at Capital Economics in London.
Many economists reckon this year Chinese growth will fall well short of the 8 per cent government officials are forecasting. It has slowed sharply in recent months. However, given the steep declines forecast for many developed economies, China will remain one of the main contributors to global growth.
In the medium-term, economists say there is plenty of scope for China to maintain relatively high growth rates. Urbanisation and technology catch-up have decades to run. But the outlook is complicated by a rapidly ageing population and costs of heavy damage to the environment.
Goldman Sachs forecasts the Chinese economy will overtake that of the US by about 2040. The Economist Intelligence Unit forecasts in terms of purchasing power parity – which adjusts for price differences between countries to reflect actual buying power of local incomes – China will outstrip the US by 2017.
