China's competitiveness ranking improved this year from 27th to 26th among 142 economies in the world, continuing to lead the way among large developing economies, the World Economic Forum (WEF) announced in an annual report released Wednesday.

Switzerland, Singapore and Sweden top the Global Competitiveness Report 2011-2012 ranking, and the United States continues the decline it began three years ago, falling one more place to the fifth position.

The report was released just a week ahead of this year's WEF Annual Meeting of the New Champions, also known as the Summer Davos Forum, which is to be held in China's northeast coastal city of Dalian. It was released in Geneva, but the press conference was relayed live via video in Beijing.

The report says China continues its steady progression in the rankings and has improved its score and rank each year since 2005.

Among the four other BRICS economies, South Africa (50th) and Brazil (53rd) moved upward, while India (56th) and Russia (66th) experienced small declines.

"China's performance improves in most pillars of the GCI (Global Competitiveness Index) and is stable in the remaining ones," the report says, noting that China's macroeconomic situation is again very favorable (10th) despite inflation.

It says China is one of the world's least indebted countries, boasts a savings rate of some 53 percent of gross domestic product, and runs only moderate budget deficits.

"These factors, combined with good economic prospects, contribute to an improvement of the quality of its sovereign debt far greater than that of the other BRICS," it says.

China also achieved relatively high standards in terms of health and basic education (32nd), with positive trends in health indicators and nearly universal access to primary education, which is well assessed in terms of quality, according to the report.

In addition, China ranks high in business sophistication (37th) and innovation (29th), particularly when considering its level of development, the report says.

However, the report points out that China's fairly poor results in the financial market development and technological readiness pillars pull down its overall competitiveness performance.

The Global Competitiveness Report's competitiveness ranking is based on the GCI, which comprises 12 categories, or the pillars of competitiveness.

The pillars include institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labor market efficiency, financial market development, technological readiness, market size, business sophistication and innovation.

In ranking the U.S., the report points out that in addition to the macroeconomic vulnerabilities that continue to mount, some aspects of the country's institutional environment continue to raise concern among business leaders, particularly related to low public trust in politicians and concerns about government inefficiency.

Germany maintains a strong position within the Eurozone, although it went down one position to sixth, while the Netherlands (7th) improved by one position in the rankings. France dropped three places to 18th, and Greece continues its downward trend to 90th.

"The results show that while competitiveness in advanced economies has stagnated over the past seven years, in many emerging markets it has improved, placing their growth on more stable footing and mirroring the shift in economic activity from advanced to emerging economies," the report says.

Several other Asian economies performed strongly, with Japan (9th) and Hong Kong (11th) in the top 20.

In the Middle East, Qatar (14th) solidifies its place in the top 20, while Saudi Arabia (17th) entered it for the first time, followed by Israel (22nd), the United Arab Emirates (27th), Kuwait (34th) and Bahrain (37th). Most Gulf States continued their upward trend of recent years.

In sub-Saharan Africa, South Africa (50th) and Mauritius (54th) featured in the top half of the rankings, followed by second-tier best regional performers Rwanda (70th), Botswana (80th) and Namibia (83rd).

In Latin America, Chile (31st) retained the lead and a number of countries saw their competitiveness improve, such as Panama (49th), Brazil (53rd), Mexico (58th) and Peru (67th).

"After a number of difficult years, a recovery from the economic crisis is tentatively emerging, although it has been very unequally distributed," said Klaus Schwab, founder and executive chairman of WEF.

"The complexity of today's global economic environment has made it more important than ever to recognize and encourage the qualitative as well as the quantitative aspects of growth, integrating such concepts as inclusiveness and environmental sustainability to provide a fuller picture of what is needed and what works," he said.