China continues its steady rise in competitiveness and is leading other BRICS nations and other emerging economies by a large margin, according to a recent global economic report.

The world's second largest economy came in at 26th place on this year's Global Competitiveness Report 2011-2012 form the World Economic Forum (WEF).

The determining factors for China were a sound macroeconomic situation, a moderate budget deficit, a high savings rate, and increased access to healthcare and education.

Competitiveness among other BRICS economies varied, with South Africa up from a year earlier, at 50th place and Brazil up to 53rd, while India slid down to 56th and Russia to 66th.

There are three categories that the WEF examines: basic requirements, efficiency enhancers, and innovation. And, while China shows strength in such factors as macroeconomic environment, and access to health and education, it is seriously challenged by inflation, finance difficulties, and policy instability.

The economic development of the 142 countries studied by the WEF has three stages. In China's case, it has successfully made the move from a factor-driven stage, with cheap prices as the primary consideration, to a stage where efficient practices increase productivity. But it has yet to enter the stage of development based primarily on innovation and business sophistication.

Nonetheless, the improved ranking in innovation suggests good prospects for China.

The WEF said that countries make the transition to the innovation stage when they cross the 9,000 per capita GDP threshold, with increased weight given to innovation and business sophistication. China had a per capita GDP equal to $4,800 in 2010 and currently resides at the efficiency-driven stage, the report said.

Rankings over the past five years show a convergence in competitiveness as emerging economies slowly catch up with their wealthier counterparts, whose competitiveness is etched away over time.

The United States was at the top of the ranking in 2004, but has slid to fifth place this year after three years of decline. And, in spite of some restored confidence in its banks and financial institutions, its political atmosphere, marked by growing partisanship, complicates the decision-making process and hinders competitiveness.

Japan saw a three-place drop in its ranking to 9th place this year, amid mounting public debt, which accounted for more than 200 percent of its GDP in 2010.

The March 11 earthquake and tsunami hit in the middle of the data collection process, so their impact has not been fully recorded in the rankings, researchers have said.

Meanwhile, European nations plagued by a sovereign debt crisis experienced a decline in this year's rankings. Germany was down one place to 6th, while France dropped to 18th, and Greece way down to 90th.

"Reforms that improve competitiveness will play a key role in revitalizing growth in that region, as will fiscal consolidation and persistent unemployment," the report said.

Lu Dong contributed to the story.

(China Daily 09/14/2011 page45)