China New Economy Gauge Slips on Weaker Labor, Tech Inputs

1. The Caixin BBD New Economy Index (NEI) for May came in at 32.4, down 0.1 points from the previous month, indicating that new economy industries accounted for 32.4% of China’s overall economic inputs. [para. 1][para. 2] The NEI uses big data to track the size of China’s new economy industries by measuring labor, capital, and technology inputs in 10 emerging industries relative to all industries. [para. 4] The overall decline was driven by drops in high value-added industries such as biomedicine, with both labor and technology inputs decreasing. [para. 1]

2. The labor input subindex, which has a 40% weighting in the NEI, dropped 1 point month-on-month to 20.3. [para. 5] This subindex tracks salaries and the number of positions at new economy companies. [para. 5] The technology input subindex, with a 25% weighting, fell 2.1 points to 31.2. [para. 6] It measures the number of research personnel recruited as well as inventions created and patents obtained. [para. 6]

3. The capital input subindex, which carries a 35% weighting in the index, rose 2.2 points to 47. [para. 7] This increase partially offset declines in labor and technology inputs. [para. 7]

4. Among the 10 tracked industries, the new information technology industry remained the largest contributor to the index, contributing 13.4 points in May. [para. 9] Additionally, the average monthly entry-level salary in these 10 industries was 13,353 yuan ($1,974), down 95 yuan compared to the previous month, based on data from online career and recruitment websites. [para. 10]

5. The NEI was launched in March 2016 and defines a new economy industry as one that is technology- and human capital-intensive but asset-light, experiences sustainable and rapid growth, and is strategically encouraged by the government. [para. 8] Monthly NEI reports are written by Caixin Insight Group and Chinese big-data research firm BBD, in collaboration with the National School of Development at Peking University. [para. 11]