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China ranks 34th in Global Competitiveness Index (2)
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16:40, October 31, 2007

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China's greatest weakness is financial market sophistication which ranked 118th, with poor ratings in terms of soundness of its banks, legal rights, restriction on capital flows, regulation of securities exchanges and ease of access to loans.

China also needs to improve in higher education attainment. It ranks 91st and 80th in terms of secondary and tertiary enrollment rates respectively.

Compared with India whose innovation and sophistication factors rank 26th, China ranks 50th. In efficiency enhancers, India ranks 31st while China ranks 45th.

Singapore ranks 7th in GCI while Japan ranks 8th and South Korea ranks 11th. China's Hong Kong SAR and Taiwan province ranks 12th and 14th respectively.

In chapter 2 of the Global Competitive Report, it also listed Business Competitiveness Index. Determinants of competitiveness in business are macroeconomic, political, legal and social context. Indicators of competitiveness in business are domestic investment, exports, imports, inbound foreign direct investment, outbound foreign direct investment and domestic innovation.

China ranks 57th in Business Competitiveness Index while the US, Germany, Finland, Sweden and Denmark rank the top five. While people recognize the fast development in China, the report also shows the real position of the Chinese economy in terms of per capita GDP.

Christian Ketels who is from both Harvard Business School and Swedish Business School participated in writing the Business Competitiveness Index. He comments on China's position.

"I think a lot of people would be surprised about China's ranking. I mean China did improve much this year than last year, but China is still ranking relatively low compared with what people expect. What we try to explain is the level of GDP per capita. And we find good reasons for why China is still not a rich country. It is a very fast going economy, but there are a lot of barriers in dealing with business and environment, there are a lot of things that need to change so that the companies in China will be able to be really productive and innovative. A lot of the poles in Chinese economy that have been created have been driven by two things. One is the big market, China is one of the largest market in the world, and the other one is that wages in China is relatively low in China. So there is an opportunity for companies really make money because of that imbalance. It is not that China is already that competitive in terms of being sustained high wages, I think that needs to be the long term goal for the country, but that's one of the things we see in our report. Of course there are a lot of positive changes in China and I think it is a good environment now that in China domestic enterprises and foreign enterprises are equalized in terms of tax and other treatment. I think there will be a shift of a lot of money from Hong Kong to the mainland. China is not America in three years, there is still a lot of things that need to build up. And these are processes that take their time. And different regions in China are different. China is such a huge country compared with Sweden."

On the other hand, experts think that there has been a rising of protectionism in western countries in recent years.

"What we have seen that when China or India invest in OECD countries, some countries feel uneasy. For instance in the US with Chinese oil company's aborted deal, in France and Italy and a number of other countries that comes political pressure in dealing with business that is regarded as strategic importance. It is almost a surprise to see this happen. This is because the cultures in China or India are still very little known here in Europe or in the US, which explains such unease. This will create difficulty in the natural flow of businesses;” Commented Magnus Runnbeck, from Invest in Sweden Agency.

Meanwhile, General Director of Invest in Sweden Agency Kai Hammerich said Sweden welcomes investors from the newly emerged economies such as China to invest in Sweden.

"We think China or India are not just countries to absorb investment, they can be investors in the west too. They can invest in both market oriented and technological businesses.”

By Xuefei Chen, People's Daily Online correspondent in Stockholm.

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