Data released by the Japanese government has shown that China now has the world's second largest economy - the United States is still the biggest. China's growth rates in recent years have been staggering and it was only a matter of time before it caught up with Japan, which did hold second place, and begin to challenge the US for top spot. It has been estimated that China will have the biggest economy by 2025 but could overtake the US earlier than that.

The figures show that the Japanese economy was worth $5.474 trillion at the end of 2010 but that China's was worth $5.879 trillion. The US economy is estimated to be worth around $17 trillion. The Japanese economy grew by 3.9 per cent in 2010 whilst the Chinese economy grew by 10.3 per cent. However, it is not just last year that has led to China overtaking Japan it is a combination of factors.

China has been growing strongly for some time now albeit from a relatively low base. However, the 'rule of 70' shows that if some variable - economic growth in this case - grows at x per cent per year, then the variable will double in around 70/x years. If China has an average growth rate of, say, 10 per cent, then its economy will double every 7 years. Japan's economic growth in the years following the Second World War was impressive but since the mid-1990s has slowed considerably. In the latter part of the 1990s and into the 2000s, the economy has stuttered and Japan was particularly hard hit by the global recession; its recorded negative growth of 1.2 per cent in 2008 and over 6 per cent in 2009.

China may now be the second largest economy overall but it is still way down the list in terms of gross domestic product per head (GDP per capita). According to the International Monetary Fund (IMF), China ranks 93rd in the world with a per capita income of $7 518 compared to $33 828 in Japan who rank 24th in the world. Top of this list comes Qatar ($88 232) and Luxembourg at $80 304.