BEIJING - China ranks 26th in competitiveness, up one notch from a year earlier, on the back of strong economic fundamentals, according to the Global Competitiveness Report released by the World Economic Forum on Sept 7.

"China continues its relentless upward trend in the ranking with across-the-board strength in many areas," said Jennifer Blanke, lead economist and head of the Center for Global Competitiveness and Performance, World Economic Forum.

The one-position rise in the ranking is attributable to good performance in most of the 12 pillars of the Global Competitiveness Index (GCI), a measure of the competitiveness of 142 economies in the report.

China has improved its score and rank each year since 2005, and it leads the BRICS (Brazil, Russia, India, China and South Africa) economies by a significant margin - South Africa, second among the BRICS, placed 50th.

Despite continuous inflation since October 2010, the Chinese economy still fares favorably, with $14 trillion in GDP, contributing to 19.74 percent of the world's total, the report says.

Meanwhile, the world's second-largest economy has also one of the lowest rates of debt.

Improved access to healthcare and education, which economists at the World Economic Forum said are the key measures of a country's competitiveness, also enhances China's performance in the ranking.

According to the report, China has made remarkable advances in business sophistication and innovation, spurred by the government's staunch efforts to encourage innovation and heavy spending in research and development.

However, inflation, access to financing and inefficient government bureaucracy are the top three complicating factors for those doing business in China, it said.

Moreover, standards of business ethics and corporate accountability are below those found in a number of other economies, according to the report.

In previous years, China's poor results in the financial market development and technological readiness pillars lowered the economy's overall competitiveness performance. But it shows marked improvement in the first of these (up nine spots) owing to an increased availability and affordability of financial services and better access to credit.

Among the most competitive, Switzerland remains the No 1 for the third year, followed by Singapore, edging up one notch this year. Sweden and Finland came in third and fourth.

The United States dropped for a third year in a row to fifth place amid growing macroeconomic vulnerabilities and deteriorating public confidence in politicians' ability to address critical issues.

Lu Dong contributed to this story