China’s New Economy Index Dips in August

The contribution of emerging and high-value-added industries to China’s overall economy dipped in August after a short bounce-back in July, a private index showed Sunday.

The Mastercard Caixin BBD New Economy Index (NEI) fell to 29.1 in August from 30.6 in the previous month, showing that new-economy industries such as biotechnology and advanced manufacturing accounted for 29.1% 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, a financial data and analysis platform of Caixin Media, and Chinese big-data research firm BBD, in collaboration with the National School of Development at Peking University.

In the latest NEI, the subindex of capital investment inputs, which has a weighting of 35% in the NEI, dropped 4.9 points to 31.9 in August from the previous month. The subindex of technology inputs, which has a weighting of 25%, rose to 28.1 in August, off a 13-month low of 26.6 in July. The technology gauge 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 basically sliding since October, declined to 27.3 in August from 27.6 in July.

The average monthly entry-level salary in new-economy sectors, based on data compiled from online career and recruitment websites, was 10,320 yuan ($1,510) in August, 37 yuan less than the previous month, according to the report. The premium over the average entry-level salary for the economy as a whole fell to 3.1% in August from 3.6% in July, the lowest since the NEI was launched.

Hiring in new-economy sectors as a proportion of economywide hiring fell to 26.9% in August, down from 27.1% in July.

The new IT sector was the top contributor among the 10 major industrial categories, making up 9.8 percentage points of the NEI reading, while the sector of advanced materials was in second place, contributing 5.5 percentage points, and was the industry with the fastest growth.

Contact reporter Lin Jinbing (jinbinglin@caixin.com)

Read more about Caixin’s economic indexes.