The Japanese government revealed the country's GDP grew at an annualised rate of just 0.4% in the second quarter, far below the 4.4% growth seen in the first quarter, and the 2.3% expected by economists.
The figures saw Japan's economy slip to third place by size behind China - its economic output in the second quarter was 1.29 trillion US dollars, compared with Chinese economic output of 1.34 trillion US dollars in the same quarter.
At London Business School’s Business Leaders Series in Shanghai last month, Andrew Scott, Professor of Economics, predicted China is likely to see substantial growth in domestic demand with associated growth in basic banking, insurance, pensions and wealth management.
The figures underscore China's emergence as a major economic power - it is already the biggest exporter, auto buyer and steel producer in the world.
China has been a major force behind the world's emergence from deep recession, feeding its growing demand with exports from the US, Japan and Europe.
On the future for China and the world's other major emerging markets, Linda Yueh, Assistant Professor of Economics, said the rest of the world would need to: "Keep attuned to differential economic growth patterns around the world, paying particular attention to policy initiatives that are liberalising markets.
"By focusing on those economies with stable institutional systems and a track record of delivering growth, the next big opportunity can be anticipated and capitalised on. The fastest growing markets in the world in the 21st century will be emerging economies; it's time to build a strategy to get ahead of the tide."