China Slips Below S. Korea in Competitiveness Rankings

China slipped below S. Korea in world competitiveness rankings but both nations remain above Japan which had been the world’s most competitive nation 23 years ago, according to the 2012 World Competitiveness Yearbook released by eminent Swiss business school IMD.

China slipped four places, from 19th place last year to 23rd place this year, while S. Korea retained its 22nd place. China’s decline is largely due to the government’s cooling measures which have severely crimped credit availability. The only other nation to slip as much or more are Australia which fell from 9th to 15th and debt-crisis-hit Spain which fell from 35th to 39th.

Japan slipped a notch to 27th place from 26th last year. Among the factors hurting Japan’s competitiveness is the impact of the earthquake and tsunami of last March 11. Its export businesses have also been hampered by the yen’s rise against the dollar and the euro. Japan had first fallen below China in 2007.

Hong Kong topped the list for the second year in a row. But the United States, which shared the top spot with Hong Kong in 2011, slipped to second place. In third place is Switzerland which rose two notches while Singapore and Sweden each slipped a notch from 3rd and 4th, respectively, to 4th and 5th places.

Taiwan and Canada, which had occupied the 6th and 7th slots, swapped places this year.

IMD began releasing the annual competitiveness rankings in 1989 when Japan was ranked first and the United States ranked third.

The United States “remains at the center of world competitiveness because of its unique economic power, the dynamism of its enterprises and its capacity for innovation,” said IMD.

“U.S. competitiveness has a deep impact on the rest of the world because it is uniquely interacting with every economy, advanced or emerging. No other nation can exercise such a strong ‘pull effect’ on the world,” said the report.