Why is China so Competitive? Measuring and Explaining China's Competitiveness

This paper evaluates factors responsible for the competitiveness of China in the world economy and relative to its East Asian rivals. China has been highly successful in capturing world export markets. Chinese competitiveness is not just a matter of an undervalued exchange rate and extremely low labour costs. It reflects the coincidence of favourable cost conditions with improvements in China's ability to produce products that meet world market specififications. These improvements are closely related to foreign participation in China's economy through foreign direct investment and joint venture enterprises.