New Economy Index Dips to Over Three-Year Low

The contribution of high value-added industries to China’s overall economic inputs dropped in February for the third month in a row to its lowest in more than three years, due to a decrease in capital inputs in country’s new economy industries, according to a private index released on Saturday.

The Mastercard Caixin BBD New Economy Index (NEI) dropped to a reading of 27.4, indicating that new economy accounted for 27.4% of overall economic input activity. The monthly reading is the lowest in available data dating back to October 2015.

The index measures labor, capital and technology inputs in 10 emerging industries relative to those used in all industries.

The drop in the reading of last month’s index was mainly due to a large drop in the subindex for capital inputs, which fell to 26.1 in February from 31.4 the previous month. Among the three subindexes that make up the NEI, capital inputs have a weighting of 35%.

The subindex for labor inputs, which has a weighting of 40%, was relatively stable last month, slipping 0.4 to a reading of 26.7. The technology input subindex has been on an uptrend since July 2018, coming in at 30.4 last month, up 2.4 from January.

Launched three years ago, the NEI defines a new economy industry as one that is labor- and technology-intensive but asset-light; experiences sustainable and rapid growth; and is in a strategic sector encouraged by the government.

The new information technology industry made the largest contribution to the NEI in February. The energy conservation and environment protection industry posted the biggest input growth gain in February, providing the second largest contribution of 4.7 percentage points. Advanced materials posted the largest drop in February, falling to sixth place from third in the previous month and contributing 1.8 percentage points in February.

The average monthly entry-level salary in new-economy sectors, based on data compiled from online career and recruitment websites, was 10,627 yuan ($1,585) in February, increasing from January's level of 10,541 yuan.

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.

A previous version of this story incorrectly stated how long it had been since the index had fallen below February’s reading of 27.4. That reading was the lowest since October 2015.

Contact reporter Leng Cheng (chengleng@caixin.com)