Do not be fooled by the figures. China may have now officially overtaken Japan to become the world's second biggest economy with a GDP of $5.9 trillion. This is an important symbolic shift for the country whose economy will eventually become bigger than that of the United States, an inevitability in the long run given that it has four times the population. But second biggest is not second wealthiest.

The average Japanese earns almost $40,000 a year compared with just $3,600 per head in China. Though Shanghai and Beijing now boast luxury boutiques, hundreds of millions of Chinese still live in severe hardship, particularly in rural areas – from which people are migrating with such speed that China will have 221 cities of over one million inhabitants each by 2025. China's rapid economic growth has had costs in pollution, frustrated civil liberties and poor infrastructure.

China is the world's manufacturer in some areas. It makes nearly 60 per cent of the world's clothes and 80 per cent of its toys. One day its population will constitute a huge consumer market for the West's goods, but at present it buys just 2 per cent of UK exports. Huge trade deficits will remain for some time and pressure will increase on Beijing to allow its currency to rise in value.

China's hunger for natural resources and energy will also drive up the cost of commodities and raise the potential for conflict. It will also mean trade deals in Africa, Latin America and Asia which undermine the human rights and good governance reforms desired by the West. Gentle pressure will need to be maintained on Beijing on that. The same is true of global warming, for no meaningful international deal can be done without China. Though given the country's lack of per capita wealth, it will still be the West that needs to lead on climate change.

What is clear is that the Chinese economy, which has more than doubled in size in the past 10 years and will double in size again in the next 10, is becoming an important engine of global growth. That should be an investment opportunity for the richer world, rather than a cause for apprehension.