China surpassed Japan as the world’s second-largest economy last quarter, capping the nation’s three-decade rise from Communist isolation to emerging superpower. Japan’s nominal gross domestic product for the second quarter totaled $1.288 trillion, less than China’s $1.337 trillion. Japan remained bigger in the first half of 2010, with an annual GDP of $5.07 trillion, while China’s GDP was more than $4.9 trillion. The country of 1.3 billion people will overtake the U.S., where annual GDP is about $14 trillion, as the world’s largest economy by 2027, according to Goldman Sachs Group Inc.

China’s surpassing of Japan “is a marker of its increasingly dominant role in the global economy,” said Eswar Prasad, a senior fellow at the Brookings Institution and former head of the China division at the International Monetary Fund. “The resilience of China’s growth during the crisis enabled a number of other countries, particularly commodity-exporting economies, to ride on its coattails.”

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