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September 2019
Mastercard Caixin BBD China New Economy Index
Released: 10:00 am Beijing Time October-02-2019
Overview
In September 2019, the Mastercard Caixin BBD New Economy Index (NEI) reading came in at
28.7, indicating that the New Economy accounted for 28.7% of overall economic input activities
that month, down 0.7 ppts from August (Chart 1). The declining NEI was due to the decrease 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 declining in the September NEI reading came from
the decrease of capital input (Chart 2). Capital input fluctuated widely in the recent year, coming
in at 33.1 this month, with 1.3 MoM decrease. Technology input index was on a downtrend since
March 2019, dropping to 26.3 this month, with 0.8 MoM decrease. Labor input index declined
moderately in the recent year, decreasing slightly to 26.4 this month, with 0.1 MoM decrease.
Taking the weights into account, percentage changes in labor, capital and technology inputs were
0.0, -0.5, and -0.2 ppts, respectively. The net NEI change was -0.7 ppts in total (Chart 3).
As for sectors, the New IT industry formed the largest proportion of the New Economy Index,
contributing 8.1 ppts to NEI. Culture, Sport & Entertainment was the industry with fastest growth
in September, contributing 3.3 ppts and ranking the forth. Biotech came fifth from forth, the
biggest drop in ranking, contributing 3.3 ppts in September (Chart 4).
New Economy Employment
In September 2019, the average monthly entry-level salary of the New Economy was RMB 11,054,
increasing from last month’s level of RMB 10,960 (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.
The ratio of hiring in the New Economy sectors to that in total dropped by 0.2%. At the same time,
the compensation share of New Economy remained the same as previous month. Accordingly, the
average entry salary level of New Economy increased compared to the whole economy. The
entry-level salary premium of the New Economy increased to 6.1% as compared to economy-wide
counterparts (Chart 6).
Economic Trend Based on Employment Data
In September, the NEI reading came in at 28.7, showing a relatively stable trend since May 2019.
This month we focused on the employment of the enterprises affected by trade friction. As we did
before, using detailed exporting data and U.S. tariff list in 2018, we categorized all manufacturing
enterprises into six groups by the percentage of products exported to United States
(0-50%,50%-100%) and the average tariff rates (0-10%,10%-20%, above 20%). Please refer to
our previous reports (August 2018 and May 2019) for details.
The YoY employment changes of exporting enterprises dropped in January 2019 compared to that
of non-exporting enterprises. But the growth of exporting groups rose since then. In recent months,
the ratio moved close to and above 1, indicating strong employment expansion of exporting
enterprises (Chart 7). For example, the employment of high-export & high-tariff group declined
by 4.4% in September, improving significantly compared to that in January (37%). The
employment growth rates of other groups started to rise as well. The negative effect of trade
friction might be weakening.
However, the share of middle and low-end position job creation further dropped to 26.9%,
reaching the lowest recorded level (Chart 8). How to reconcile the decline in the proportion of
new jobs with the weakening effect of trade friction? A potential justification is the divergence
between the large and small enterprises. The ratio of employment of largest enterprises to that of
small ones reached the peak of 2.89 (Chart 9-1). In our framework, the aggressiveness of large
enterprises, which are more likely to be stated-owned, leads to low economic activity and
efficiency. When the large enterprises attracted more employees, their small counterparts were
losing people. The growth rate of employment in small enterprises fell below that of large
enterprises this month (Chart 9-2), overshadowing the economic growth in the fourth quarter.
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 Hangzhou. Rankings are based on a
weighted average of the percentile ranks of indicators for the city in the past six months.
Chart 11 showed the average NEI city rankings between March 2019 and September 2019. The
top five cities were Beijing, Hangzhou, Qingdao, Shenzhen and Shanghai.
In addition, we showed the city rankings adjusted by living cost by taking housing price,
minimum wage and disposable income per capita into account (Chart 12). After the adjustment,
the top five cities were Beijing, Chengdu, Shanghai, Chongqing and Nanjing, following by
Shenzhen, Hangzhou and Dongguan.
For further information please contact:
Mastercard
Mr. Wu Huanyu, Director, Communications
Tel：+86-10-8519-9304
Email：[email protected]
Caixin Insight Group
Dr. Wang Zhe, Senior Economist Ma Ling, Public Relations
Tel：+86-10-85905019 Tel：+86-10-8590-5204
Emails：[email protected] Email：[email protected]
BBD
Dr. Chen Qin, Chief Economist
Tel：+86-28-65290823
Emails：[email protected]
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 visitwww.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/.
