Germany and the US were ranked second and third after China in manufacturing competitiveness. But both these nations could be replaced by India and Brazil over the next five years, the survey said.

Meanwhile, members of the American Chamber of Commerce in South China expect their investment budgets to total more than $16.5 billion over the next three years, an increase of 40 percent on the previous three years. These companies in the region expressed strong confidence in the market and in China's economic reforms, according to a survey published on Feb 26 in Guangzhou.

Ricky Tung, co-leader of the manufacturing industry group of Deloitte China, said the ratings suggest that China is now more of a developed economy competitor rather than an emerging economy player.

"In addition to supportive policies, China still has relatively lower labor costs and is above average in the attractiveness of its corporate tax rates. With its focused efforts to localize supply chains and create innovation hubs, China is also seen by CEOs as the only emerging economy offering the same supplier network advantages as developed economies," Tung said.

A closer look at how China has scored in each category of manufacturing competitiveness in this survey also indicates China's strengths and weaknesses. Among 38 countries, China ranked high in "cost and availability of labor and raw materials", "attractiveness of local market" and "government's investment in manufacturing and innovation". But China ranked low in "legal system" and "healthcare system".

With labor costs, which is a grave concern domestically, the study shows China's average cost ($2.80 per hour) is lower than most manufacturing powers. By comparison, Brazil's labor cost is $12 per hour while in the US it is $35.40 per hour.