‘China’s GDP Could Surpass Japan’s This Year’

China’s gross domestic product could exceed Japan’s as early as this year, a Japanese securities firm said in a report released Monday.

Mizuho Securities, a subsidiary of Japan’s second-largest banking group Mizuho Financial Group, generated four GDP scenarios for Japan and China depending on nominal growth and foreign exchange rates.

The brokerage said China’s GDP has a 10-percent chance of surpassing that of Japan this year, and 40 percent next year and in 2010.

China’s GDP will reach 4.58 trillion dollars this year, surpassing Japan’s 4.529 trillion dollars, if the Chinese economy grows 17 percent and its foreign exchange rate stays at 6.3 yuan per dollar, the report said.

The Japanese economy is expected to grow a mere one percent and the yen-dollar exchange rate will likely remain 115 yen per dollar this year.

One of the four scenarios assumed that the yen will appreciate to 105 per dollar, and that China will see lower growth of 11 percent and a depreciation of the yuan to 7.1 per dollar.

The report, however, estimated that even under such conditions, China’s GDP will reach 5.853 trillion dollars in 2012, higher than Japan’s 5.694 trillion dollars.

Mizuho said the yuan’s value will rise to six per dollar next year since the Chinese currency is expected to keep appreciating due to the widening interest rate gap between the United States and China, steady inflow of foreign capital into China and surging tourism revenue from the Beijing Summer Olympics.

isityou@donga.com