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1、The Chinese Economy, vol. 40, no. 6, November–December 2007, pp. 6–23. © 2007 M.E. Sharpe, Inc. All rights reserved. ISSN 1097–1475/2007 $9.50 + 0.00. DOI 10.2753/CES 1097-1475400601ZHONGXIU ZHAO AND KEVIN HONGLIN Z

2、HANGChina’s Industrial Competitiveness in the WorldAbstract: This article studies China’s industrial competitiveness using international perspectives and comparison. Adopting the index of competitive industrial perfor

3、mance 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

4、: 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 associa

5、ted 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 i

6、ndustrial power only if it succeeds in upgrading industry and domestic innovation.What is the state of China’s industrial competitiveness in the world? Perhaps the clearest impression is one of rapid economic growth si

7、nce 1979, when China started its economic reforms and open-door policy. However, as a developing country in the era of globalization, China faces the challenge of how industrial enterprises can become and remain inte

8、rnationally competitive.Zhongxiu Zhao is a professor at the School of International Trade and Econom- ics, University of International Business and Economics, Beijing, China. Kevin Honglin Zhang is an associate professo

9、r in the Department of Economics, Illinois State University, Normal, IL 61790–4200.6 8 THE CHINESE ECONOMYby the United Nations Industrial Development Organization (UNIDO), we assess China’s position in the world and a

10、nalyze the dynamics of its industrial capabilities in the period 1985–1998; and (c) problems and challenges for China to sustain its industrial growth since 1998—some policy issues facing China are identified in recen

11、t industrial development, especially how to increase domestic value added in global production systems and what should be done in industrial upgrading and domestic innovation.Industrial CompetitivenessTheory and Evide

12、nceWhy does industrial competitiveness matter? Since the Industrial Revo- lution, manufacturing has been the engine for economic growth and for transforming the economic structure of poor countries. In particular, it h

13、as been the catalyst for shifting them from simple, low-value activities with poor growth prospects to activities with high productivity, increas- ing returns, and strong growth potential (UNIDO 2002). The growth of te

14、chnology-driven economic activities in the past two decades does not change this fact, despite the rising share of services in income and the much-hyped growth of the “new economy.” Indeed, rapid technical progress ma

15、kes industrialization even more important to developing countries.1Industrial performance reflects the complex interaction of many fac- tors, including institutions, skills, technologies, infrastructure, network- ing, p

16、olitical and social stability, and other factors. To make analyses useful and also workable, we have to be limited to a few of the most important determinants, instead of including all factors. A recent study by UNIDO

17、 (2002) identified five drivers that are directly relevant to in- dustrial competitiveness: skills, technological effort, inward foreign FDI, royalty and technical payments abroad, and modern infrastructure.SkillsSkills

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