New Economy Plays Bigger Role in China, Caixin Report Shows

The share of China’s overall economic inputs contributed by high-value added industries such as biotechnology, advanced-equipment manufacturing, and financial and legal services grew again in December, a private index showed.

The Mastercard Caixin BBD China New Economy Index (NEI) shows that new economy industries accounted for 31.4% of total economic inputs used to make goods and services in December, up from 30.2% in November and 29.3% in October.

The index aims to track the size of, and changes in, China’s nascent industries using big data. It measures labor, capital and technology inputs in 10 emerging industries relative to those used by all industries.

The rise in last month’s NEI was underpinned by a jump in capital and technology inputs, two of the three subindexes of the indicator. The labor input subindex, meanwhile, slid moderately in December from the previous month, 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 relatively low ratio of fixed capital, and has sustainable and rapid growth.

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, biotechnology, financial and legal services, advanced equipment manufacturing, and culture, sports and entertainment.

The new IT industry continued to be the biggest contributor among the 10 major industrial categories, making up 10 percentage points of the NEI figure last month, although this was down from 11.6 percentage points in November.

The new-energy industry was the second-biggest contributor, which saw rapid growth in December, contributing 5.6 percentage points. The biotechnology industry’s monthly ranking dropped to the fourth place from second in November, contributing 3.3 percentage points to the NEI index in December, down from 4.0 percentage points in November.

The average monthly entry-level salary in new economy sectors, based on data compiled from online career and recruitment websites, rose 1.4% from November to 10,261 yuan ($1,540) in December, reaching the highest level since 2016.

The salary enjoyed a premium of 5.1% over entry-level salaries in the economy as a whole.

Hiring in new economy sectors edged down to 28.9% of total hiring in the economy in December from 29.2% in the previous month.

Contact reporter Pan Che (chepan@caixin.com)