China's world competitiveness ranking dropped three places from a year earlier to 29th in 2012, the first decline since 2005, the World Economic Forum said yesterday.

China's world competitiveness ranking dropped three places from a year earlier to 29th in 2012, the first decline since 2005, the World Economic Forum said yesterday.

But China continues to lead the group of emerging market economies and play an active role in the world economy, the Global Competitiveness Report 2012-2013 said.

Switzerland, for the fourth consecutive year, topped the overall ranking, followed by Singapore and Finland.

Among the other four BRICS (Brazil, Russia, India, China and South Africa) economies, only Brazil, listed 48th, moved up this year.

"China loses some ground this year," the report said. "After five years of incremental but steady progression, it has now returned to its 2009 level."

The deterioration is more pronounced in areas including financial market development (54th, down 6), technological readiness (88th, down 11) and market efficiency (59th, down 14), which are important to evaluate a country's overall competitiveness, the report said.

It said "insufficient domestic and foreign competition is of particular concern, as the various barriers to entry appear to be more prevalent than in previous years."

Sun Lijian, an economics professor at Fudan University, said China needed to beef up efforts to address fundamental problems.

"China's weaknesses, especially the structural ones, are exposed more when the economy is in a downturn," Sun said. "The Chinese government should focus on issues such as raising market efficiency and further regulating the capital market."

But the report, produced by a Western organization, could be biased, Sun said, adding that there was no need to attach much weight to the loss of three places.

China's macroeconomic situation remained very favorable, the report said, while the country received relatively high marks in health and basic education, and enrollment figures for higher education were also on the rise, even though quality of education remained an issue.

Margareta Drzeniek Hanouz, senior economist of the World Economic Forum and co-author of the report, said: "It's only very tiny decline, China is still doing very well," she said.

Countries in southern Europe - Spain, Italy, Portugal and Greece - still suffered from weaker competitiveness due to the deepening debt crisis, and the United States continued its decline in the ranking for the fourth consecutive year, falling two places to seventh.