China's declining competitiveness


In recent months the mainstream media has been overflowing with articles discussing the economic threat that China poses to the global economy in industries ranging from textiles to autos.  But according to a report recently released by the World Economic Forum, China's overall global competitiveness has, in fact, declined for the past three years.

While the United States maintained the second spot for the second year in row (only behind Finland), China fell to 49th in the world for economic competitiveness, down three notches from the same list last year. 

Even though every economic evaluation system has its defects, this report should be required reading for every member of Congress and anyone thinking of investing in the Middle Kingdom.  The report cites China's inefficient government institutions and corruption as major causes for the country's fall in the rankings. While it is undeniably true that China's rise creates a major challenge for the Western economies, it is important for us to keep its economic rise in perspective. China possesses no magic.

While it is true many Americans and Europeans face the possibility of layoffs and lower wages caused by intense Chinese competition, the picture painted in many Western media reports is overly optimistic about China's future growth path.

Brian Schwarz    9 29 05