Japanese Economics Minister said on Thursday China probably has sailed past Japan to emerge as the second biggest economy in the world after the United States, according to a Reuters report.

China's dynamic economic development merits our appreciation and is something the Japanese people should be happy about, Economics Minister Kaoru Yosano he added.

Official data from the National Bureau of Statistics showed that China's economy grew 10.3 percent during 2010.

Japan, which has long been projected to eventually lose the status as the second largest economy in the world to its regional rival, had launched a defense of its No.2 title as late as in December last year.

The Cabinet Office had raised its raised its third quarter gross domestic product growth to 4.5 percent on an annual basis and affirmed that Japan still remained the second-largest economy.

According to Reuters, preliminary data showed China's gross domestic product (GDP) for 2010 was $6,045 billion while Japan's GDP was $5,872 billion in annualized nominal terms in July-September.

Though Japan has lost the psychologically important tag to rival China, its people are wealthier than the Chinese. China's breakneck growth in the past couple of decades brought in its wake glaring socio-economic contradictions, with massive numbers still remaining shackled by poverty. While China's super rich compete with the richest in the world, its per capita income is a lowly $3,600 per year, comparing poorly against Japan's $37,800.