China's economy overtook Japan's in 2010 to become the world's second largest, but analysts told CNBC China still lags Japan in terms of the quality of its growth.
The Japanese economy expanded 0.7 percent on year in the final quarter of 2013, substantially slower than China's 7.7 percent expansion. While growth in the mainland economy has slowed from double-digit levels in recent years it remains on course to overtake the U.S. as the world's largest economy as early as 2019 according to the Economist Intelligence Unit.
Yet, the quality of growth in China's economy is questionable, which becomes evident when comparing it with Japan, analysts at Standard & Poors pointed out in a note.
"There is more to the Asian financial leadership story than just the GDP (gross domestic product) level," S&P said. "When we examine metrics other than the level of GDP, China still lags Japan in many areas, sometimes by a sizable margin - although it is catching up."
The quality of growth
While China has a labor force advantage over Japan due to its large population as well as a higher overall GDP output, S&P analysts said that when viewed from the perspective of per capita GDP the picture changes dramatically.
As of 2013, China's per capita GDP – often viewed as a broad measure on a country's average living standards or economic well-being – was $9,828, one quarter of Japan's $37,135.
"Despite China's impressive growth run over three decades and having left Japan's economy in its shadow in terms of size in recent years, it is easy to forget that China is still a developing country...hundreds of millions of people on the mainland still live in relative poverty when compared to standards in advanced nations," Frederic Neumann, co-head of Asian economic research at HSBC said.
The value of China's exports also outpaces that of Japan by a long shot; China's exports reached $2.9 trillion in 2012, far above Japan's $1.2 trillion. Yet, S&P says the qualitative progress of Japan's exports has actually outpaced that of China by 15 percent over the past five years.
Medium and high-tech exports have consistently accounted for 70-80 percent of Japan's exports, S&P said. China has clawed its way up from near zero in the mid-1980s to nearly 60 percent in the mid-2000s.
China's development on the export front has been uneven, HSBC's Neumann said, noting that some areas such as telecommunications and internet gear are relatively sophisticated, while at the same time China still ships T-shirts and sneakers to markets elsewhere.