China becomes world's third-largest economy with 13% '07 GDP growth, surpassing Germany & closing rapidly on Japan

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China has become the world's third-largest economy, surpassing Germany and closing rapidly on Japan, according to government and World Bank figures. The Chinese government revised its growth figures for 2007 from 11.9 percent to 13 percent this week, bringing its estimated gross domestic product to $3.4 trillion -- about 3 percent larger than Germany's $3.3 trillion for the same year, based on World Bank estimates. Beijing is expected to release its 2008 GDP figures next week.

Although the world's top economies, the United States and Japan, are in recession, the most pessimistic estimates for China's growth in upcoming years runs about 5 percent. That could allow China's GDP to overtake Japan's, currently $4.3 trillion, within a few years. The U.S. economy, the world's largest, was about $13.8 trillion in 2007.

The German economy grew by 1.3 percent in 2008, only about half the previous year's rate as the global financial crisis took its toll on exports, preliminary government figures showed Wednesday. Europe's biggest economy grew 2.5 percent in 2007 and 3 percent in 2006. It managed healthy growth of 1.4 percent in last year's first quarter, but then started shrinking and went into recession in the third quarter as the financial turmoil intensified.

The World Bank's estimate of China's economic growth is about 7.5 percent. But China has seen a sharp decline in exports in November and December as other major economies struggle, and the bank's analysts say rates below 6 percent could worsen the rest of the world's slump.

And Michael Santoro, author of the 2008 book "China 2020," said China will have other problems to overcome if it is to maintain its rapid expansion. "It's no longer sufficient for China to become a manufacturer of sneakers or toys and the like," Santoro said. "Now they're looking to become players in the area of pharmaceuticals and foods and other high value-added products, where safety and quality are important characteristics for improving in the global economy."

China recently announced a $600 billion economic stimulus package, and its State Council on Wednesday laid out a new plan to boost its steel and auto industries -- including about $1.5 billion to develop alternative-fuel vehicles.

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Photos courtesy of Bloomberg and AP Photo/Markus Schreiber

Original Source: CNN and AP

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