Caixin New Economy Index Slips as Key Inputs Fall Across the Board

The contribution of high value-added industries such as advanced materials and new energy to China’s total economic inputs declined in July, with capital, technology and labor inputs all down from the previous month, a Caixin index showed.

The Mastercard Caixin BBD New Economy Index (NEI) came in at 31.5 last month, indicating that new economy industries accounted for 31.5% of China’s overall economic input activities. The reading was down from 32.1 in the previous month.

The NEI, which was released Sunday, aims to track the size of China’s nascent industries by using big data. It measures labor, capital and technology inputs in 10 emerging industries relative to those used by all industries.

The drop in last month’s NEI was mainly due to a decline in the subindex for capital inputs, which has a 35% weighting. The subindex fell 1.3 points month-on-month to 41.2 in July.

The technology input subindex, which has a 25% weighting, edged down 0.3 points from the previous month to 27.5, marking the third monthly decline in a row. This gauge measures the number of research personnel recruited by the tracked industries, and the number of inventions they have created and patents they have obtained.

The subindex for labor inputs, which has a weighting of 40%, slipped slightly by 0.2 points from the previous month to 25.4 in July.

The NEI, launched in March 2016, defines a new economy industry as one that is human capital- and technology-intensive but asset-light, experiences sustainable and rapid growth, and is a strategic new industry encouraged by the government.

Of the 10 tracked industries, the new information technology industry remained the largest contributor in July, making up 11.5 percentage points of the NEI reading. The high-end equipment manufacturing industry ranked second, contributing 5.9 percentage points to the reading.

The average monthly entry-level salary in new economy industries, based on data compiled from online career and recruitment websites, dropped to 11,456 yuan ($1,649) in July, 4.5 yuan lower than the month before.

The monthly NEI reports are written by Caixin Data Technology Co. Ltd. and Chinese big-data research firm BBD, in collaboration with the National School of Development at Peking University.

Contact editor Michael Bellart (michaelbellart@caixin.com)

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