No one would have expected China's economy to develop so rapidly and China will replace Germany in a few years, German radio Deutsch Welle quoted Schmidt as saying when he met Wednesday with Chinese Premier Wen Jiabao at a Sino-European economic summit in Hamburg.

China may overtake Japan within 15 to 20 years, said Schmidt who served as German chancellor between 1974-1982.

"It's a miracle, really. There has never been such a phenomenon in the world's history," he said.

Meanwhile, Schmidt criticized those who fear or resent the rise of China.

"For those who believe in competition, they have to accept new competitors on the market -- just as people had to with Japan over 100 years ago, or South Korea, Taiwan or Hong Kong 40 years ago," he said.

"Now the People's Republic of China has come along and the West feels uneasy. Morally speaking, the uneasiness is not justified," he added.

Talking about China's political reforms, Schmidt said the western world is not in the right position to decide what is the best for China.

"I don't practice that type of Western criticism. China must decide itself what is best; that is not something for foreigners or the West to dictate," he said.

Schmidt, a Social Democrat, was the first German chancellor who traveled to China in German history. He has been there more than 10 times since then.

The former chancellor will publish his new book Nachbarland China (Neighboring China) by the end of this month.

As for what he hoped to deliver through his book, Schmidt said "people in Western Europe and in my own country, Germany, must accept that it is in our own interests to foster a good, neighborly relationship with China."