Mastercard Caixin BBD China New Economy Index(December 2017)

Released: 10:00 am Beijing Time January-02-2018

Overview

In December 2017, the Mastercard Caixin BBD New Economy Index (NEI) reading came in at 31.4, indicating that the New Economy accounted for 31.4% of overall economic input activities that month, up 1.1 ppts from November (Chart 1). The rising NEI was due to the increase of technology input. New economy is defined as following: 1) human capital intensive, technology intensive and capital light; 2) sustainable rapid growth, and 3) in line with the strategic new industries defined by the government. Please refer to our previous reports (March 2016 and March 2017) for the list of NEI sectors.

Primary Inputs

The NEI includes labor, capital and technology inputs that account for 40%, 35% and 25% of the total weights of the index, respectively. The rise in the December NEI reading came from the increase of technology inputs (Chart 2). Technology input index showed strong growth trend. After declining in November, it increased to 32.3 this month, with 3.2 MoM increase. Capital investment fluctuated widely in the recent half year. In December, it continued to rise to 32.6, with 1.2 MoM increase. Labor input index remained stable with slightly decrease to 29.6.

Taking the weight into account, percentage changes in labor, capital and technology inputs were -0.1, 0.4, and 0.8 ppts, respectively. The net NEI change was 1.1 ppts in total (Chart 3).

Looking at the sectors, the New IT industry formed the largest proportion of the New Economy Index, contributing 10 ppts to NEI. New Energy was the industry with fast growth in December, contributing 5.6 ppts and ranking the second. Biotech came fourth from second, the biggest drop in ranking, contributing 3.3 ppts in December (Chart 4).

New Economy Employment

In December 2017, the average monthly entry level salary of the New Economy was RMB 10,261 per month, increasing from last month’s level of RMB 10,122 and reaching the highest level since 2016 (Chart 5). New Economy wage information is compiled from online websites of career platforms and recruitment services including 51job and Zhaopin, as well as other sites that list job demands.

Hiring in the New Economy sectors accounted for 28.9% of total hiring in December, slightly lower than the previous month’s 29.2%. At the same time, the total compensation share of New Economy sectors decreased slightly to 30.3%, which meant the average entry salary level of New Economy was higher than national average entry wage level. The entry level salary premium of the New Economy was 5.1% as compared to economy-wide counterparts, increasing from 4.8% in November (Chart 6). In the recent half year, the average salary premium of the New Economy was lower than the first half year generally, while we saw an uptrend.

Change of Average Salaries across Cities

In 2017, the changes of average salaries in different cities diverged. The top five cities with the fastest growth in average salary were Hefei, Xuzhou, Changzhou, Chongqing and Yangzhou (Chart 7), most of which were second-tier industrial cities located in east coast and midwest of China. In addition, the average salaries in northeastern cities such as Harbin and Changchun also rose rapidly, which might indicate a recovering northeastern economy.

Among the cities with the slowest growth in average salary, Shanghai ranked the first, which saw a decrease of average salary for new employees in 2017. Shanghai was followed by Huizhou, Zhuhai, Wuxi, Hangzhou and Zhongshan. Most of cities with slow growth were traditionally coastal industrial cities.

Combining the results and our findings in previous reports, we might observe the business cycle began to shift geographically from coast to inland. This might make room for growth of New Economy in coastal cities.

Change of Passengers Inflow Based on Major Ariports

We tracked the change of daily passengers inflow at major airports in 2017 (Chart 8). We calculate the changes of net daily passengers inflow average by subtracting daily net passengers inflow average in 4Q16 from that in 4Q17. Based on the methodology, we got the growth in daily net passengers inflow. Some cities with the fastest population growth in 2016 experienced decrease in net inflows, such as Wuhan, Changsha, Guiyang, Nanning and Zhengzhou. Other cities like Kunming, Beijing, Chengdu, Guangzhou and Shanghai experienced increase in net inflows.

Decomposition of New Established Enterprises

We use newly-established enterprises data to monitor new enterprises in sub-sectors (Chart 9).

Ranking up sub-sectors (from December 2016 to December 2017) include the following. Architectural Engineering (No.24 to No.11, 75.5% increase in proportion, the fastest growth sector in terms of ranking in December), Meterials (No.20 to No.12, 50.6% increase in proportion), Farming (No.25 to No.20, 67.5% increase in proportion), Decoration (No.9 to No.7, 18.9% increase in proportion). In addition, Engineering, Automobile, Catering and Agriculture saw a ranking up as well.

Ranking down sub-sectors (from December 2016 to December 2017) include the following. Communication (No.14 to No.22, 27.4% decrease in proportion, the largest drop this month), Sales (No.12 to No.15, 8.5% decrease in proportion), Logistics (No.17 to No.25, 6.1% decrease in proportion), E-commerce (No.13 to No.17, 16.8% decrease in proportion), Information (No.10 to No.13, 17.5% decrease in proportion). The other ranking down sub-sectors were IT, Education, Culture, Real Estate and Consulting.

City Rankings of the New Economy

Based on overall New Economy rankings, the top twenty cities were shown in Chart 10. The top five cities were Beijing, Shanghai, Guangzhou, Hangzhou, and Nanjing. Rankings are based on a weighted average of the percentile rank of indicators for the city in the past 6 months.

Chart 11 showed the average NEI city rankings between April 2017 and December 2017. The top five cities were Beijing, Hangzhou, Shanghai, Nanjing and Xiamen.

For further information please contact:

Mastercard

Mr. Wu Huanyu, Director, Communications

Tel：+86-10-8519-9304

Email：Huanyu_wu@mastercard.com

Caixin Insight Group

Dr. Wang Zhe, Senior Economist

Tel：+86-10-85905019

Emails：zhewang@caixin.com

Ma Ling, Public Relations

Tel：+86-10-8590-5204

Email：lingma@caixin.com

BBD

Dr. Chen Qin, Chief Economist

Tel：+86-28-65290823

Emails：chenqin@bbdservice.com

The Mastercard Caixin BBD China New Economy Index is the fruit of a research partnership between Caixin Insight Group and BBD, in collaboration with the National Development School, Peking University. The subject of a year of research, the NEI was first publically released on March 2, 2016 and will be issued the 2nd of every month at 10:00am China Standard Time.

About Caixin

Caixin Media is China's leading media group dedicated to providing financial and business news through periodicals, online content, mobile applications, conferences, books and TV/video programs. Caixin Media aims to blaze a trail that helps traditional media prosper in the new media age through integrated multimedia platforms. Caixin Insight Group is a high-end financial data and analysis platform. For more information, please visit www.caixin.com.

About Mastercard

Mastercard (NYSE: MA), www.mastercard.com, is a technology company in the global payments industry. We operate the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. Mastercard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter @MastercardAP and @MastercardNews, join the discussion on the Beyond the Transaction Blog and subscribe for the latest news on the Engagement Bureau.

About BBD (Business Big Data)

BBD is a leading Big Data and quantitative business analytics firm specializing in the analysis of the high-growth industries emerging in Mainland China. Through dynamic data tracking, credit analysis, risk pricing and economic index construction, BBD provides its clients with a wide range of services at both the macro and micro level. For more information, please visit http://www.bbdservice.com/.

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