China’s New Economy Index Sees First Increase in Four Months

The contribution of emerging and high-value-added industries to China’s overall economy picked up in July for the first time in four months, a private index showed Thursday.

The Mastercard Caixin BBD New Economy Index (NEI) rose to 30.6 from 29.2 in June, showing that new-economy industries such as biotechnology and advanced manufacturing accounted for 30.6% of total economic inputs used to make goods and services. The index measures labor, capital and technology inputs in 10 emerging industries relative to those used by all industries.

Launched in March 2016, the NEI defines a new-economy industry as one that is labor- and technology-intensive but has a relatively low ratio of fixed capital, has sustainable and rapid growth, and is in a strategic industrial sector encouraged by the government. The monthly NEI reports are 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 subindex of capital investment inputs, which has a weighting of 35% in the NEI, rose 4.8 points to 36.8 in July from the previous month, the highest reading since August 2017. The subindex of technology inputs fell 0.8 points to 26.6 in July, marking the fourth consecutive monthly drop. The technology gauge, which has a weighting of 25%, measures the number of scientific research personnel recruited by the tracked industries and the number of inventions and patents they obtained.

The subindex of labor inputs, which has been sliding since October, declined to 27.6 in July from 27.8 in June.

The average monthly entry-level salary in new-economy sectors, based on data compiled from online career and recruitment websites, was 10,357 yuan ($1,518) in July, little-changed from the previous month, according to the report. The premium over the average entry-level salary for the economy as a whole fell to 3.6% from 4.3%, the lowest since the NEI was launched.

Hiring in new-economy sectors as a proportion of total economywide hiring fell to 27.1% in July, down from 27.3% in June.

The new IT sector was the top contributor among the 10 major industrial categories, making up 13.5 percentage points of the NEI reading, while biotechnology was in second place, contributing 4 percentage points and was the industry with the fastest growth.

Contact reporter Lin Jinbing (jinbinglin@caixin.com)

Read more about Caixin’s economic indexes.