China’s Competitiveness. More Or Less.

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As China’s trade surplus and stock markets rise still further, so does China’s (and Greater China’s) competitiveness – according to at least one report. People’s Daily notes:

    “[The] Swiss-based International Institute of Management Development, released its World Competitiveness Yearbook on May 10. It raised the competitiveness of the Chinese Mainland by three places, from 18th to 15th…the Chinese mainland was, for the first time, more competitive than Chinese Taiwan [which fell] from 17th to 18th…Experts have raised the Chinese Mainland’s competitiveness because of China’s rapidly growing economy and the expansion of foreign trade”.

The US was at #1, with Singapore and Hong Kong SAR at #2 and #3 respectively. BusinessWeek notes that: “In the words of Professor Stéphane Garelli, who heads up the yearbook project for IMD, the big news this year is that emerging economies are closing the gap with the U.S”. While the US remains at the top of the tree, as with all research the outputs depends on the inputs. BusinessWeek provides some background on what goes into the mix:

    “The study—the most comprehensive of its kind—examines 323 criteria, ranging from gross domestic product growth and trade levels to mobile-phone rates and higher education. Roughly two-thirds of the inputs are quantitative, gathered from sources such as the U.N. and the World Bank. The balance are qualitative responses to an annual survey conducted by IMD that examines topics such as business attitudes, regulation, and the environment.”

BusinessWeek usefully presents the results together with two other very different studies here:

    • Network Readiness (China # 59): The World Economic Forum – ranking countries “according to their “network-readiness,” or how prepared they are to succeed in the knowledge-based economy of the 21st century”.

    • Happiness (China # 82): A British researcher (oddly unnamed) – ranking countries “by how happy they are, calculated through a mix of statistics about health and welfare, plus answers to survey questions about satisfaction”

Another World Economic Forum survey last year, on Global Competitiveness Rankings, noted that China had slipped 6 places to #54, after taking into account weakness in the banking sector, low technology penetration, and challenges of education and the environment.

So it seems that China’s competitiveness is still focused at the low end of the market, though continuing efforts to promote R&D and to climb the value chain will have increasing impact – as will low-end competition from places like Vietnam.

And happiness in the “Harmonious Society”? It seems to be some way off (on this measure at least). As is any consensus on China’s competitiveness. As we say in the UK, it is a case of “horses for courses”, not absolute truth, where these surveys are concerned.

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