China has topped a key economic index that measures the global effects being delivered by a country’s “soft power”, or its ability to influence the actions of others through intangible assets such as culture, political values and institutions.

According to E&Y’s Rapid Growth Market Soft Power Index, in conjunction with the Moscow-based Skolkovo Institute for Emerging Markets Studies, countries with strong soft power brands attract significantly more foreign direct investment.

And in its most recent examination, China’s soaring “hard” power — driven by its rapid economic growth, which has seen it become the world’s second-largest economy from the sixth a decade ago — has meant a similarly impressive performance by its “soft” strength over the past five years, bringing it to the top of the global ranking.

According to the index, China leads the emerging market economies, followed closely by India, Russia and Brazil and Turkey.

The economies of Eastern Europe comprise the largest number (10 countries) in the 20 examined; while Central and South America combined have only five. Africa has just one country represented, South Africa, which is ranked in seventh position.

Backed by data from 2005 to 2010, China wins the intangible power race, with a score of 30.7, 10.3 points higher than India’s.

The soft power of a nation refers to the ability to influence the actions of others through intangible assets such as culture, political values and institutions, rather than coercion.

Alexis Karklins-Marchay, co-leader of the Ernst & Young Emerging Markets Center, said: “Soft power has gained widespread currency and is now regarded as an important and comprehensive indicator of national strength. In addition, soft power is essential in raising and reinforcing a nation’s brand.”

Currently, a country’s intangible power varies in terms of global image, integration and integrity. They are affected by factors including media exports, language enrollments, English fluency, university ranking, tourism, immigration, rule of law and carbon emissions, according to the report.

The strength of China’s soft power within the emerging world is primarily driven by the growth of its multinational powerhouses, booming tourism and the rapid expansion and ranking of its universities, said the report, with the country ranking first among all emerging economies in these three key aspects.

In addition, China has boosted its relative soft power ranking with its recent Olympic performances, increases in its exports of film and music, and growing interest in language, E&Y said.

But it’s the country’s “hard” economic progress that has driven its ongoing “soft” success. The consulting firm noted that in 2011, 69 Chinese enterprises became Fortune 500 companies, compared to 10 in 2005, and by the end of 2011, China had set up more than 350 Confucius Institutes in 105 countries and regions around the world to teach Chinese language and culture.

Hao Ping, vice-minister of education, said that by 2015, the number of Confucius Institutes is expected to surpass 500 around the world.

The global consultants added that the creation of thousands of cultural and Chinese language centers in foreign countries has helped disseminate its language and cultural awareness.

The country’s support of international students has also contributed, lifting the number of foreign students studying in China to 250,000. It is expected that by 2020, the number will reach 500,000.

Amid the rising global expansion of State-owned enterprises, the State-owned Assets Supervision and Administration Commission has called for SOEs to elevate their corporate social responsibilities abroad.

In May, the commission established the State-owned Enterprises Supervisory CSR Committee, attaching great importance to SOEs’ CSR at home and abroad.

Karklins-Marchay added: “Several recent trends have made the deployment and use of soft power critical and it is no surprise that the BRIC countries dominate this index.

“First, the recent rapid growth of the emerging market economies; and second the issue of soft power has become vital as countries compete to attract foreign direct investment.

“Today’s economic and political environments are fluid. If the decline of the West is faster than anyone expects, rather than slow and relative, then the shift in soft power toward the developing world may be faster than anyone has anticipated.”

By Bao Chang