Rethinking China's Competitiveness

Abstract

China's much-touted competitiveness in the international marketplace has inspired admiration and apprehension. Seen from an international perspective, the nation's export economy appears to be a hypercompetitive juggernaut, making its mark in industry after industry, ready to roll over everything in its path. From within China, however, the picture is that of a developing economy that needs to dramatically improve its competitiveness if it is to provide its people the standard of living to which they aspire. China is still a poor nation, with per capita incomes similar to Egypt, Syria and Paraguay. It may be a major exporter, but its share of world exports is significantly lower than those of Germany and the US, while Japan, Russia, Germany, Canada, Ireland and Norway run higher trade surpluses. Failure to take into account the complementarities that have fostered China's export rise leaves China's competitiveness both underrated and overrated.