China's Industrial Competitiveness in the World

Abstract

This article studies China's industrial competitiveness using international perspectives and comparison. Adopting the index of competitive industrial performance developed by the United Nations Industrial Organization (UNIDO), we assess China's position in the world and analyze the dynamics of its industrial capabilities, focusing on five drivers of industrial capability: skills, technological efforts, inward foreign direct investment (FDI), royalty and technical payments abroad, and modern infrastructure. We find that China's big jump in industrial competitiveness is largely associated with its participating international production networks. The corresponding dangers with such connection, however, are low domestic value added and merely serving as an export platform. China can become a global industrial power only if it succeeds in upgrading industry and domestic innovation.

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