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The Chinese mainland overtook Japan and Taiwan in this year's world competitiveness rankings, the Swiss-based International Institute for Management Development (IMD) said yesterday.

 

The mainland jumped to 15th place from last year's 18th, while Japan fell from 16th to 24th and Taiwan slipped from 17th to 18th. South Korea moved up to 29th from last year's 32th.

 

It is the first time that the Chinese mainland has moved ahead of Japan and Taiwan since the IMD launched the annual list in 1989.

 

This year's report measured the competitiveness of 55 economies in four areas -- economic performance, government efficiency, business efficiency and infrastructure, using 323 criteria.

 

The United States remained top, followed by Singapore and Hong Kong, which exchanged positions from the previous year. Luxembourg, Denmark, Switzerland, Iceland, the Netherlands, Sweden and Canada round up the top 10.

 

The IMD said one of the major factors behind the Chinese mainland's rise is its strong economic performance, which is ranked only second to the US. The mainland's government efficiency and infrastructure scores also showed dramatic increases.

 

Japan registered weakness in direct investment, corporate tax rates, total general government debt and language skills, although it still ranked high in inflation performance, total reserves and life expectancy.

 

The report said Taiwan performed poorly in basic infrastructure and government efficiency, as well as in financial risk and transparency, stock market index and cell phone charges.

 

Zhao Yanyun, director of the Assessment and Competitiveness Research Center of Renmin University of China, said the report reflects the true picture of a rising Chinese mainland.

 

But he cautioned that although the mainland has gained ground in the IMD report, which is considered the most scientific and authoritative competitiveness report in the world, it still lagged behind in criteria such as the environment and corporate social responsibility.

 

IMD experts believe that the Chinese mainland needs to tackle domestic problems such as environmental degradation and imbalanced development if it wanted to be among the top 10.

 

It is believed that non-economic factors were behind Taiwan's drop.

 

"Foreign companies won't invest in a region where economic policies are inconsistent and unpredictable," IMD President Peter Lorange said in a speech at the Taipei-based Taiwan University in March.

 

Lin Chu-chia, a professor in economics at Chengchi University in Taiwan, said political chaos should be blamed. "Taiwan's ranking will continue to drop if the Democratic Progressive Party continues to rule," he said.

 

Meanwhile, experts predicted that protectionist measures would increase in Europe and the US as the report showed that emerging nations such as China, India (27th) and Russia (43rd) are catching up fast with industrialized nations.

 

This year and beyond, economic relations will be more tense than ever as emerging markets turn into emerging powers and challenge the established order for competitiveness, said Stephane Garelli, director of IMD's World Competitiveness Center.

 

(China Daily May 11, 2007)