Mastercard Caixin BBD China New Economy Index(June 2018)

Overview

In June 2018, the Mastercard Caixin BBD New Economy Index (NEI) reading came in at 29.2, indicating that the New Economy accounted for 29.2% of overall economic input activities that month, down 0.4 ppts from May (Chart 1). The declining NEI was due to the decrease 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 decline in the June NEI reading came from the decrease of technology input (Chart 2). Technology input index fluctuated widely since October 2017, coming in at 27.4, with 2.9 MoM decrease. Capital investment showed a slow downtrend since March 2018, but it rose slightly to 32.0 this month, with 1.0 MoM increase. Labor input index declined moderately since July 2017, dropping to 27.8 this month, with 0.1 MoM decrease.

Taking the weight into account, percentage changes in labor, capital and technology inputs were 0.0, 0.4, and -0.7 ppts, respectively. The net NEI change was -0.4 ppts in total (Chart 3). 

Looking at the sectors, the New IT industry formed the largest proportion of the New Economy Index, contributing 11.0 ppts to NEI. Culture, Sports & Entertainment was the industry with fastest growth in June, contributing 5.0 ppts and ranking the second. Advanced Materials came eighth from second, the biggest drop in ranking, contributing 0.6 ppts in June (Chart 4). 

New Economy Employment

In June 2018, the average monthly entry level salary of the New Economy was RMB 10,369 per month, decreasing from last month’s level of RMB 10,444 (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 openings.

Hiring in the New Economy sectors accounted for 27.25% of total hiring in June, slightly lower than the previous month’s 27.3%. At the same time, the total compensation share of New Economy sectors remained stable to 28.4%, 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 4.3% as compared to economy-wide counterparts, increasing from 4.0% in May (Chart 6). In the recent half year, the average salary premium of the New Economy was lower than the first half of 2017 generally, while we saw an uptrend in recent two months. 

Decomposition of New Established Enterprises

We use newly-established enterprises data to monitor new enterprises in sub-sectors (Chart 7).

Sub-sectors which were continuously ranking up in last two years include the following: Construction Engineering (No.25 in 2016, rising to No.22 and No.12 in 2017 and 2018, 0.03% decrease and 0.36% increase in proportion in 2017 and 2018 respectively); Building Materials (No. 17 in 2016, rising to No. 16 and No. 14 in 2017 and 2018, 0.04% decrease and 0.18% increase in proportion 2017 and 2018 respectively).

Sub-sectors which were continuously ranking down in two last years include the following: Communication (No. 16 in 2016, dropping to No. 17 and No. 21 in 2017 and 2018, 0.06% decrease and 0.05% increase in proportion 2017 and 2018 respectively); E-commerce (No. 9 in 2016, dropping to No. 14 and No. 18 in 2017 and 2018, 0.34% decrease and 0.01% increase in proportion 2017 and 2018 respectively).

Sub-sectors with fluctuating ranks in last two years include the following: Information (No.15 in 2016, rose to No.11 in 2017 and dropped to No.13 in 2018); Education (No.18 in 2016, rose to No.15 in 2017 and dropped to No.17 in 2018); Logistics (No.21 in 2016, rose to No.19 in 2017 and dropped to No.25 in 2018); Real Estate (No.24 in 2016, rose to No.18 in 2017 and dropped to No.23 in 2018); Agriculture (No.13 in 2016, dropped to No.24 in 2017 and rose to No.22 in 2018); Service (No.4 in 2016, dropped to No.7 in 2017 and rose to No.4 in 2018); Labor (No.22 in 2016, dropped to No.25 in 2017 and rose to No.19 in 2018); Business (No.2 in 2016, dropped to No.4 in 2017 and rose to No.2 in 2018). Other subsectors with fluctuating ranks were IT, Construction, Trade, Consulting, Engineering, Catering and Media.

Industrial Value-Added Based on Employment Data

Last month, we explored China’s industrial value-added using the employment of low-skilled general workers and operators and had good fitting results. This indicates strong correlations of official industrial production and online recruiting data.

This month, we focused on patterns in different provincial areas. We compared the year-on-year growth rate of the employment in various regions in Q2 with the year-on-year growth rate of industrial value-added in May, and found significant positive correlation between the two indicators (Chart 8). In Chart 8, it can be seen that most regions were located in the first and third quadrants, indicating positive correlation similar to national data.

However, some exceptions were observed in the second and fourth quadrants. In particular, the provinces in the second quadrants showed a much higher growth rate of industrial value-added, including Shaanxi, Qinghai and Shanxi. And the provinces in the fourth quadrants showed a much higher growth rate of employment, including Chongqing and Guangxi. We need to keep close eyes in the future on the regions with divergence between statistical data and big data.

Change of Passenger Inflow Based on Major Airports

We are keeping tracking the change of daily passengers flow at major airports in the past two years (Chart 9). In terms of net inflow, we found differences between the first-tier cities’ airports and the second- and third-tier cities’ ones. As we know, the increase of passenger inflow at the first-tier cities’ airports was much lower than that at the second- and third-tiers cities’ airports in recent years. The passenger inflow at the first-tier cities’ airports showed a flat trend, with moderate increase compared to April 2016, which included airports in Beijing, Shanghai and Guangzhou. However, the passenger inflow at the second- and third-tier cities’ airports fluctuated with over 100% increase. The boost in Shijiazhuang was so remarkable that from April 2016 to October 2017 passenger inflows at Shijiazhuang airport increased by 6.2 times.

By comparing the passenger inflow of two groups, we found an inverted U-shaped trend of passengers inflow peaking around October 2017, which was similar to that of industrial value-added and fixed asset investment. In the light of this, the recovery of China’ s macroeconomy is yet to start.

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, Shenzhen 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 December 2017 and June 2018. The top five cities were Guangzhou, Beijing, Shanghai, Hangzhou and Nanjing.

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/.

Download the report in PDF