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ECONOMY

China New Economy Index Rises to Three-Month High

By Fran Wang
Intelligent robots are sold in a Suning appliance store in July in Qingdao, Shandong province. Photo: Visual China
Intelligent robots are sold in a Suning appliance store in July in Qingdao, Shandong province. Photo: Visual China

(Beijing) — A private index that aims to track the size and change in China’s new economy using big data rose to the highest in three months in July, suggesting that emerging higher value-added industries such as biotechnology are making a bigger contribution than traditional sectors to the economy.

The Mastercard Caixin BBD China New Economy Index (NEI) shows that new economy industries accounted for 31.5% of total economic inputs used to make goods and services last month, up from 29.3% in June and 28.2% in May. The index measures labor, capital and technology inputs in 10 emerging industries relative to those used by all industries.

The reading rose in July on the back of a recovery in capital and technology inputs, two of the three subindexes in the NEI, while the labor input dropped slightly, according to the report compiled by Caixin Insight Group, the financial data and analysis platform of Caixin Media, and big-data research firm BBD, in collaboration with the National Development School of Peking University. The index is sponsored by global payments service provider Mastercard,

The NEI, launched in March 2016, defines a “new economy” industry as one that is labor and technology intensive but has a relative low ratio of fixed capital, has sustainable and rapid growth, and is one of the strategic new industries encouraged by the government. The industries included in the index are: energy conservation and environmental protection, new energy, new-energy vehicles, advanced materials, new information technology (IT) and information services, high-tech services and research and development (R&D), biotechnology, financial and legal services, advanced equipment manufacturing, and culture, sports and entertainment.

The technology input subindex was the main driver of the NEI in July, rising to 31.6 from 25.1 in June, marking the strongest reading since November. The subindex has a weighting of 25% in the NEI and gauges the number of scientific research personnel recruited by the tracked industries and the number of inventions and patents they obtained.

The gauge of capital investment, which accounts for 35% of the NEI, rose to a three-month high of 32.7, while the labor input subindex, which accounts for 40%, edged down to 30.3 from June’s 30.6.

New IT and information services remained the top contributor among the 10 major industrial categories, making up 12.2 percentage points of the NEI reading last month, unchanged from June. Advanced equipment manufacturing was second, rising to its highest ranking in half a year and contributing 4.0 percentage points. Financial and legal services made the third-biggest contribution of 3.4 percentage points, slightly lower than the previous month.

The average monthly entry-level salary in new economy sectors, based on data compiled from online career and recruitment websites, rose 1.9% from June to 9,146 yuan ($1,360) in July and enjoyed a premium of 7.6% over entry-level salaries in the economy as a whole. But hiring in new economy sectors fell to 29.2% of total hiring in the economy in July from 29.5% the previous month.

Contact reporter Fran Wang (fangwang@caixin.com)

Read more reports of Caixin indexes here.

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