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Chinese industries to remain world's most competitive in 2012, but face risks

Source:   Time:

BEIJING, Dec. 12 (Xinhua) -- China's industries will remain the most competitive in the global market in 2012, but their strength will be weakened due to the impacts of the global financial crisis, a government think tank report said Monday.

According to a blue paper published by the Chinese Academy of Social Sciences (CASS), two important factors -- stagnant growth in developed economies and pressures on the yuan's appreciation -- will trim down the global competitiveness of Chinese industries in 2012.

Chinese industries will still maintain the top position in terms of global competitiveness next year, but its shares in global exports showed signs of downward trending in 2011 and risks of a decline in 2012, Zhang Qizi, a researcher at the Institute of Industrial Economics of CASS, said at the press conference held to release the report.

"The global economic slump will put great pressures on China's exports. As trade protectionism against Chinese products is on the rise, global trade is unlikely to grow much," Zhang said.

Chinese exports accounted for 8.7 percent of the world's total in 2007, and later rose to 8.86 percent in 2008, 9.6 percent in 2009 and 10 percent in 2010, according to Zhang.

Meanwhile, the Currency Exchange Rate Oversight Reform Act of 2011, a bill passed by the U.S. Senate that aims to push for a faster appreciation of the yuan, will also affect China's exports, Zhang added.

Zhang said the ultimate goal of the bill is to impose punitive tariffs on China's products that have a competitive edge. If turned into U.S. law, it will affect China's low-tech industries and exert a far greater impact on high-tech products and strategic emerging industries.

The controversial bill, which still needs to get approval from the House of Representatives and be signed by President Barack Obama, has a greater chance to get through as the U.S. has no better means to solve its growth and employment issues, Zhang said.

Zhang noted that Chinese industries are competitive as a whole but still face structural flaws, creating a challenge for China as it tries to avoid the middle-income trap -- a situation featuring poor industrial competitiveness.

"The key is for the nation to launch strategic transformation, changing from an export-led strategy to an import-substituting strategy," Zhang said.

The middle-income trap refers to countries stagnating and not growing to meet the level of advanced countries. Their per capita income ranges from 2,000 to 6,000 U.S. dollars, unable to make breakthroughs. China's per capita GDP has grown from 155 U.S. dollars in 1978 to over 4,000 U.S. dollars in 2010.

Chinese industries' global competitiveness ranked the first globally in 2011, but its index fell below that of 2010, as the nation's export growth slowed, according to Zhang.

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