The economy contracted in the three months through December, allowing Japan to officially crown China the world's second-biggest economy, a status it had held for more than 40 years, the government said Monday.

Gross domestic product shrank a seasonally adjusted, annualized 1.1 percent in real, or price-adjusted, terms in the final quarter of 2010 to mark its first decline in five quarters, the Cabinet Office said in a preliminary report.

Private consumption dropped 0.7 percent as the effects of the government's fiscal stimulus measures waned.