Has China Overtook Japan???

Today (17.08.2010) when I was browsing the Economist website found 2 contradict statements. One states that "China's economy overtakes Japan's in real terms" and other States that "Japan overtakes China as the world's third largest economy". The beauty is both the Articles are published on 16th  August 2010. 

Later I went on to do some research regarding this and found that Japan’s nominal Gross Domestic Product for the second quarter was $1.288 trillion which is less than China’s  $1.337 trillion. During the first quarter(first half of 2010) Japan remained bigger than China. Japan’s annual GDP is $5.07 trillion, while China’s is more than $4.9 trillion as per official data. 

It is believed that by some estimates China’s quarterly output actually overtook Japan’s in nominal (US dollar) terms in the fourth quarter of last year. Since the last quarter China has continued to grow rapidly while Japan’s recovery has stalled (due to weak policy framework and outlook?).

In terms of purchasing power parity, China replaced Japan as the world’s second largest economy nearly 10 years back. As per the world bank data 2009, China GDP - PPP is $ 8,887,863 million and Japan's $ 4,138,481. China’s economy also moderated from 11.9 per cent year-on-year growth in the first quarter to 10.3 per cent in the second.

As per Monday’s (16.08.2010) data the deflation remains entrenched in the Japan economy, which prevents people from spending as they expect prices could fall further. The Nominal growth dropped by 3.7 per cent annualised in the second quarter after two quarters of positive growth. In Japan, weak growth in the second quarter has raised questions about the strength of its economic recovery. 

Japan’s slow growth is due to the stalling on consumer spending, falling public investment and slower exports. Net export growth slowed but remained solid and was the main contributor to growth.

But still Japan is relatively richer than China in terms of Per Capita Income. According to world bank ranking Japan is ranked at 39 ($ 33, 280) and China (main China land - excludes Hong Kong SAR, China & Macao SAR, China) is ranked at 120 ($ 6,710)

This arises few questions 

1. How much one can rely on China's Data?  It is believed that the current Data are not strictly comparable because the Japan's data have been seasonally adjusted while China's data have not. 

2.  If China has really overtook Japan's economy in real terms, then how much their overall GDP growth (real GDP) will be this year?

3. How Japan is going to handle crisis (or) crunch in their economy after having positive growth rates in 2 consecutive quarters?