China falls as HK climbs global ranks
City's sound infrastructure helps it into top 10 of World Economic Forum's competitiveness table while mainland drops to 29th place
The mainland has slipped in a global ranking of competitiveness, partly because of its closed financial markets. Hong Kong's sound infrastructure, however, helped lift the city into the top 10.
European countries still dominate the world's most competitive markets this year, as ranked by the World Economic Forum (WEF), despite the region's debt crisis. Switzerland retains its top position from last year.
The WEF's report measures not only economic performance but assesses 144 countries and territories on other aspects as well, such as infrastructure, education system, investment and business environment.
Hong Kong moved up to ninth from 11th last year, owing in part to its good infrastructure for transport, telecommunications and electricity. The city ranks behind Switzerland, Singapore, Finland, Sweden, the Netherlands, Germany, the United States and Britain but ahead of Japan.
The WEF said Hong Kong's "financial markets are second to none, revealing high efficiency and trustworthiness and stability of the banking sector".
But it warned: "Although the quality of education in Hong Kong is good, participation remains below levels found in other advanced economies. Improving educational outcomes will also help boost Hong Kong's innovative capacity, which remains constrained by the limited availability of scientists and engineers, among other things."
Mainland China fell to 29th from 26th last year, returning to its 2009 level. "The deterioration is more pronounced in those areas that have become critical for China's competitiveness," the report said, noting that its financial market development fell six places to 54th.
However, its macroeconomic situation remained favourable.
"China runs a moderate budget deficit; boasts a low, albeit increasing, government debt-to-GDP ratio of 26 per cent; and its gross savings rate remains above 50 per cent of GDP," it said.
Edward Chow Kwong-fai, a deputy chairman of the Business and Professionals Federation of Hong Kong, said the report was fair.
"Mainland China should not only focus on economic development but also needs to improve its social infrastructure to enhance its overall competitiveness worldwide," Chow said.
"China has not changed its policy on foreign direct investment, yet we have seen these types of investments fall recently.
"This shows foreigners may slow down their investment in China not because China has not opened up enough, but rather, because of their internal problems and the euro-zone crisis."
The euro zone is likely to have slipped back into recession this quarter, Reuters reported yesterday. A survey showed a seventh month of contraction for the private sector as new orders dwindled. Markit's composite purchasing managers' index for last month fell to 46.3 from July's 46.5.