Mastercard Caixin BBD China New Economy Index(September 2018)

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

Overview

In September 2018, the Mastercard Caixin BBD New Economy Index (NEI) reading came in at 31.3, indicating that the New Economy accounted for 31.3% of overall economic input activities that month, up 2.2 ppts from August (Chart 1). The rising NEI was due to the increase of capital 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 September NEI reading came from the increase of capital input (Chart 2). Capital input fluctuated widely in the recent year, coming in at 39.1 this month, with 7.2 MoM increase. Technology input index went down since March 2018, dropping to 26.7 this month, with 1.4 MoM decrease. Labor input index showed a stable trend in the past two months, increasing slightly to 27.4 this month, with 0.1 MoM increase.

Taking the weights into account, percentage changes in labor, capital and technology inputs were 0.0, 2.5, and -0.3 ppts, respectively. The net NEI change was 2.2 ppts in total (Chart 3).

As for sectors, the New IT industry formed the largest proportion of the New Economy Index, contributing 10.7 ppts to NEI. Finance & Legal Service, Culture, Sports & Entertainment and Advanced Equipment Manufacturing were the ranking-up industries, ranking the second, fifth and seventh, respectively. Ranking-down industries include Advanced Materials, Energy Conservation & Environmental Protection, and Science Research and Hi-tech Services, which ranked the third, sixth and eighth in September, respectively (Chart 4). 

New Economy Employment

In September 2018, the average monthly entry level salary of the New Economy was RMB 10,161 per month, decreasing from last month’s level of RMB 10,320 (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 remained the same as the previous month’s 26.9%. The compensation share of New Economy increased slightly to 27.9%. Accordingly, the entry level salary premium of the New Economy increased, from 3.1% in August to 3.8% as compared to economy-wide counterparts (Chart 6).

Economic Trends Based on Employment Data

The employment of general workers and operators is closely related to industrial production. In September, the employment data remained low, although rebounded compared to previous month. We showed in Chart 7 a new indicator, the average hiring per company. This variable showed an up-trend as well, on which we will keep a close eye thereafter.

Operation of Different Enterprises Based on Employment Data

In the previous months, we found the distribution of enterprises was skewed to the left. Large enterprises grew well but some smaller ones diminished. Some evidence was shown in Chart 8 and 9. We checked the growth rates of new employment for enterprises with different ownership structures from 2016 to 2018. The growth rates of state-owned and collected-owned enterprises kept rising since 2016 but those of private, Hong Kong, Macao & Taiwan funded, and foreign funded enterprises declined sharply in the period, even falling below zero in 2018 (Chart 8).

We evaluated the effects of export proportion on employment growth econometrically (Chart 9). The ratios of value of exports to gross output in 2013 in each enterprise were used to explain the differences in employment growth rates. The effects turned out to be significantly positive in 2016, barely negative in 2017 and significantly negative in 2018. In other words, export-oriented enterprises experienced expansions in 2016 but shrank in following years. Along with Chart 8, we might conclude that Chinese private export-oriented enterprises were hurt most in recent recession.

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, Shenzhen, Guangzhou and Nanjing. Rankings are based on a weighted average of the percentile rank of indicators for the city in the past six months.

Chart 11 showed the average NEI city rankings between March 2018 and September 2018. The top five cities were Beijing, Guangzhou, Nanjing, Shanghai and Shenzhen. 

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