China Still Leads the BRICs in the Global Competitiveness Report

In the World Economic Forum’s Global Competitiveness Report 2014 – 2015, China continues to lead the BRICS economies by a wide margin – coming in at 28th place between Chile and Colombia. WEF had this to say about China:

The country continues to lead the BRICS economies by a wide margin—well ahead of Russia (53rd), South Africa (56th),Brazil (57th), and India (71st). Small gains in most pillars of the GCI contribute to creating a more conducive ecosystem for entrepreneurship and innovation: higher education and training (65th, up five); business sophistication (43rd, up two); and the technological readiness pillar, which constitutes China’s weakest showing in the GCI, (83rd, up two). Problems endure in the critically important financial sector (54th), the assessment of which is weakened by the relative fragility of the banking industry. Access to loans remains very difficult for a large number of SMEs. The functioning of the market (56th, up five) is also improving, but various limiting measures and barriers to entry, along with investment rules, greatly limit competition. China is becoming more innovative (32nd), but it is not yet an innovation powerhouse. There is very little change in the assessment of the country’s governance structures(47th). Government efficiency is improving (now 31st), but corruption (66th), security concerns (68th, up seven), and low levels of accountability (80th, up two) and lack of transparency (43rd) continue to weaken the institutional framework. The macroeconomic situation remains favorable (10th): inflation is below 3 percent; budget deficit has been reduced; and public debt-to-GDP ratio,at 22.4 percent, is among the lowest in the world. Gross savings rate amounts to a staggering 50 percent of GDP. This rate is probably too high in light of the need for China to rebalance its economy away from investment and toward more consumption. Despite the persistence of bottlenecks, the country also boasts good transport infrastructure and connectivity (21st), thanks to decades of massive investments. Trends are largely positive, but now is not the time for China to be complacent. The country is no longer an inexpensive location for labor-intensive activities and is losing manufacturing jobs to less-developed countries and even to some more advanced economies. China must now create the high-value jobs that will sustain the increasing standards of living.

The Global Competitiveness Report 2014 – 2015 report can be downloaded on the World Economic Forum’s website.

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