The move to second place is not complete yet but depends primarily in the near term on weakness in the japanese Yen. If the yen moves to 110 to the US Dollar over the next couple of months or to 105 to the US Dollar later in the year and the Chinese Yuan stays about constant then China's GDP will be larger than Japan's on an exchange rate basis.
The USD-Yen exchange rate can be seen at this link
Encouraging economic data flowed out of China over the weekend and on Monday. Domestic lending hit a record in March, in a signal that stimulus spending is trickling through the economy, and exports fell less than expected (See "And Beijing Said: Let There Be Loans"). But Fan Gang, a member of the central bank monetary advisory committee, warned that the Chinese economy has not yet 'bottomed out,' and still needs one or two years to rebound. He said he expected the global recession to last for three or four years, according to the official Shanghai Securities News.
Some technical analysis of the USD and Yen suggests further weakness in the Yen with resistance in its exchange rate slide at 103.3
China is planning a new economic stimulus package targeted at boosting consumption, the China Securities Journal reported on Monday, citing a senior official of the State Information Center, which is affiliated with the country's top planning agency.
Japan is trying to fight off a slide toward deflation.
This site had looked at China's and Japan's GDP situation and forecast.