In 2010, China became the world's second-largest economy by dislodging Japan. Before 2014 ended, China repeated the feat by again overtaking Japan as the second-largest stock market in the world after the U.S.

This was the result of China's market capitalization going up to $4.48 trillion on Thursday, while Japan's market cap went down to $4.46 trillion. It was actually the second time for China to become number 2 when the March 11, 2011 magnitude 9 earthquake rattled Japan and caused the country's shares to tumble down, but Japan eventually recovered and regained the second spot.

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Since January, China's market cap has logged 33 percent growth compared to the 3.2 percent contraction in the Japanese market cap since the start of 2014.

Bloomberg attributed the spectacular growth of the Chinese stock market to the weakening yen, the resumption of initial public offerings in January and opening of the country's stock market through the Shanghai-Hong Kong exchange link.

The fast growth was also seen in the Shanghai Composite Index increasing three times as much compared to Tokyo's Topix for 2014. The index closed on Friday up 2 percent to 2,682.84, up 27 percent reckoned from January. But reported earnings were lower with its index trades at 12.8 compared with Topix index's 16.2.

With more liberalization policies being put in place by Chinese President Xi Jinping such as the plan to free the interest rate and plans to place a 500,000-yuan cap on deposit insurance by January 2015, experts foresee China continuing its rise in global economy despite its slow down.

Douglas Morton, head of Asia research at Aviate Global, urges investors to keep on buying China. He explains, quoted by Bloomberg, "It is this time of the year we generally get government policy supporting the economy to hit full-year targets and when next year's growth targets are announced. We expect more supportive policy and an imminent reserve-requirement ratio cut."

However, Shen Meng, executive director of Chanson Capital, said the preference for stocks is due to the lack of investment options in China.

"Now that property prices are falling, gold prices are falling and yields on bonds and wealth management products are as well, people really have no choice but to buy stocks," The Wall Street Journal quotes Shen.

Tagsstock market, market capitalization, Shanghai Stock Exchange