China's general competitive advantage took a dive this year,
largely due to a decline in the quality of the country's
macroeconomic environment, according to the Global
Competitiveness Report 2005-2006 released by the
World Economic Forum (WEF) on September 28.
According to the report, Finland remains the most competitive
economy in the world and tops the rankings table for the fourth
time in five years. The United States second, followed by Sweden,
Denmark, Taiwan and Singapore, respectively. Hong Kong is ranked
28th.
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Top 10 of Global Competitiveness Rankings
2005
|
|
Economies
|
Ranking 2005
|
Ranking 2004
|
|
Finland
|
1
|
1
|
|
USA
|
2
|
2
|
|
Sweden
|
3
|
3
|
|
Denmark
|
4
|
5
|
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Taiwan, China
|
5
|
4
|
|
Singapore
|
6
|
7
|
|
Iceland
|
7
|
10
|
|
Switzerland
|
8
|
8
|
|
Norway
|
9
|
6
|
|
Australia
|
10
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14
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Among the 117 global economies covered in the report, China
ranks 49th, three places down from last year. One of the reasons
for this is that the WEF expanded the report's country coverage for
this year's survey, and many of the new listings came in at higher
rankings than China. The WEF added that rankings that float within
a range of 10 places up or down do not necessarily reflect a
substantial change in the country's competitive advantage. However,
a drop in ranking on some indices is noteworthy.
Ranking criteria includes factors related to business
environment, which are crucial for sustainable economic growth.
Researchers paid particular attention to macroeconomic environment,
quality of public institutions, and technology innovation and
operational readiness.
China’s macroeconomic environment ranked 24th last year, but
dipped to 33rd this year. Augusto Lopez-Claros, chief economist and
director of the WEF's Global Competitiveness Programme, offered
some possible reasons for the decline. He cited government
restraints on personal savings, a decline in related loan indices,
and accelerated inflation due to a marked rise in consumption.
On the business competitiveness index, China experienced a slide
in rank as well, from 47th last year to 57th this year. This index
measures current enterprise productivity and the effective use of
available resources. Operation and strategy are also taken into
account when measuring business competitiveness.
On the technology index, China ranked a low 64th, two places
lower than last year.
China's public institutions were ranked 56th this year, dropping
one place from last year.
Claros pointed out that the growth of the Chinese economy can be
attributed to factors including improved resource distribution
efficiency, increased productivity as a result of more open
policies, and urbanization, a key promoter of gross domestic
product (GDP) growth.
However, problems with China's public institutions have had an impact on the economy.
If these problems are not solved, China’s competitiveness will not
improve, said an International Finance News report on
September 26. Areas that need urgent attention include banking
system efficiencies, basic social security especially in relation
to the growing number of unemployed and aged people, healthcare and
education to ensure the sustainable development of human resources,
and the legal system.
The first global competitiveness report was issued by the WEF 26
years ago. It is published annually and combines “hard data” –
country statistics that are publicly available – and “soft data” –
results from enterprise surveys.
(China.org.cn by Xu Lin September 30, 2005)