The announcement marks the first time in over four decades that Japan's economy has been overtaken, but Japanese Economics Minister Kaoru Yosano has welcomed the news by saying it is advantageous for China's trading partners in the region. In speaking of Japan, he stated that "as an economy, we are not competing for rankings but working to improve citizens' lives".
It is unclear whether his comment was directed at China, who has made great efforts recently to win the 'rankings war' by beating out other countries in fields such as computing and green energy, but who has done little to improve the living standards of the Chinese people, many of whom still live in poverty and face a rising cost of daily necessities.
China's recent manufacturing boom, fuelled by cheap and abundant labour, has led to phenomenal economic growth. For Japan, the rising strength of its currency the Yen combined with a drop in exports and consumer demand has led to a decline, and Mr. Yosano has said that Japan must closely watch "risks from overseas economies and currency moves".
China is now Japan's largest trading partner, but experts are warning that the size of its economy alone can be misleading. Mr. Miller of GK Dragonomics has pointed out that while China's GDP is about $4,500 per person, Japan's sits at a much larger $40,000, and that the average Chinese person is far poorer than citizens of many other countries.
Another problem faced by Japan is its aging population, and with the population crisis in China and the CCP's one-child policy which has been running since 1979, it is likely that China too will be hit by the same problem in the years to come.