From Chinese Press

China's strong points, weak points in competitiveness

By Zhang Ming (People's Daily Online)
Updated: 2010-10-11 17:29

The Global Competitiveness Report by the World Economic Forum (WEF) issued recently cites Sweden, Switzerland, Singapore, the United States and Germany as the top five in the WEF competitiveness ranking. Meanwhile, China is ranked the 27th in the Global competitiveness Review (GCR), compared with the 29th place a year back. As for three other BRIC nations, India ranks the 51st, Brazil 58th and Russia 63rd place in this year's ranking.

The Global Competitiveness Report is a yearly report published by WEF, a Geneva-based not-profit organization, and the first report was released in 1979.

As the assessment report on an overall competitiveness status of various countries, the "Global Competitiveness Index" covers 12 indicators, including the systems, infrastructure, macroeconomic environment, health and basic education, higher education and training, commodity market efficiency, labor market efficiency and financial market development. Among these 12 indicators, China's ranking is much higher than the overall ranking in three items, namely, the market size (No 2), macroeconomic environment (No 4) and innovative capacity (No 26).

As far as market size is concerned, the per-capita income and spending power of Chinese residents have risen significantly in the three-decade reform and opening to the outside ever since the late 1970s, and the nation has become the world's second largest market after the United States. In the contest of trade globalization, whoever providing the import market would obtain a more important say in the global economic arena.

From the realm of macroeconomic environment, China ranks only after Brunei, Kuwait and Yemen, three minor economies. Cyclical fluctuations in Chinese economy have weakened significantly in recent years, while the macroeconomic environment enhanced remarkably. And China is not easy to make such attainments as a major developing nation.

China's lowest three indicators in ranking among the 12 indicators are the technological progress (79th), the higher education and training (60th) and the development of financial market (57th). These reflect to some extent a number of factors that have constrained the nation's sustainable economic development.

Rapid economic growth in China has benefited mainly from the introduction of technology from overseas over the last three decades or so, but along with a rise in the size of its economic growth and industrial upgrading, the domestic technological innovation and progress is especially essential. The reason the US has become a leader in the innovative capacity and technological progress rests with a higher research and development (R&D) spending for its gross national product (GNP), a rigorous mechanism for intellectual property protection and the recruitment of gifted individuals on a global scale.

In the field of higher education and training, the number of college graduates in China has multiplied in recent years. Its vocation education and training, however, is lagging behind the developed countries, which generally underline both higher education and vocation education. The US ranks the 9th and the Republic of Korea the 15th in this regard.

Concerning the aspect on the growth of financial markets, the global top three economies are Hong Kong, Singapore and Australia. The eruption of global financial crisis nevertheless revealed the inherent fragility or weakness of the US financial setup, which is ranked only 31st this year.

At present, China's financial market hinges mainly on indirect financing by individual banks and, in this financing setup, there is a risk of over-focusing on the commercial banking system, while small and middle enterprises are pretty hard to get sufficient funds for their development. Hence, the endeavor to advance the reform for marketization of the banking sector, to develop the direct financing and merge it into the global competitions would facilitate promoting the balanced growth of China's financial markets.

Moreover, "The Global Competitiveness Index" has offered a perspective for monitoring China's comprehensive national strength. Therefore, through itemization to compare with other countries, we would sum up the useful experience and make up weak points, so as to better improve the nation's all-round national strength and international competitive power.