China ends Japan's reign of 42 years as world's second-largest economy

China has become the world's second-largest economy after the US, ending Japan's 42-year reign in the second spot, according to Tokyo's gross domestic product (GDP) figures released Monday.

Japan's GDP fell 1.1 percent from a year earlier in the fourth quarter of 2010, the first contraction in five quarters, the Shanghai Daily reported citing the Japanese Cabinet Office.

It said Japanese economic output was at $5.47 trillion in 2010, compared to China's $6.03 trillion, according to Sify.

"While weakness will remain for the time being, the Japanese economy is expected to pick up on improvements in overseas economies and effects of government policy steps," Kaoru Yosano, economy minister, told reporters after the release of the data.

The outlook has lowered expectations that the Bank of Japan, which is starting a two-day policy meeting on Monday, will take any imminent measures to ease monetary policy, New York Times reports.