November 2018 Mastercard Caixin BBD China New Economy Index Released: 10:00 am Beijing Time December-02-2018 Overview In November 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 1.5 ppts from October (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 rising in the November NEI reading came from the increase of capital input (Chart 2). Technology input index was on an uptrend since July, coming in at 29.3 this month, with 1.9 MoM increase. Capital input fluctuated widely in the recent year, rebounding to 37.1 this month, with 2.5 MoM increase. Labor input index showed a stable trend, increasing slightly to 27.6 this month, with 0.5 MoM increase.
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November 2018
Mastercard Caixin BBD China New Economy Index
Released: 10:00 am Beijing Time December-02-2018
Overview
In November 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 1.5 ppts from October (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 rising in the November NEI reading came from the
increase of capital input (Chart 2). Technology input index was on an uptrend since July, coming
in at 29.3 this month, with 1.9 MoM increase. Capital input fluctuated widely in the recent year,
rebounding to 37.1 this month, with 2.5 MoM increase. Labor input index showed a stable trend,
increasing slightly to 27.6 this month, with 0.5 MoM increase.
Taking the weights into account, percentage changes in labor, capital and technology inputs were
0.2, 0.9, and 0.5 ppts, respectively. The net NEI change was 1.5 ppts in total (Chart 3).
As for sectors, the rankings were the same as previous month, with the New IT industry forming
the largest proportion of the New Economy Index and contributing 12.1 ppts to NEI. New Energy
Vehicles was the industry with the lowest ranking, only contributing 0.1 ppts this month (Chart 4).
New Economy Employment
In November 2018, the average monthly entry-level salary of the New Economy was RMB 10,212,
increasing from last month’s level of RMB 10,150 (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 accounted for 27.1% of the total in November, 0.5% higher
than the previous month. At the same time, the compensation share of New Economy increased by
0.4%. Accordingly, the average entry salary level of New Economy declined compared to the
whole economy. The entry-level salary premium of the New Economy decreased, from 3.2% in
October to 3.1% as compared to economy-wide counterparts (Chart 6).
Economic Trends Based on Employment Data
This month we broke down employment data of enterprises above designated size. We defined
enterprises as exporting ones if the proportion of delivery value for exports is nonzero, and
employment data of both exporting and non-exporting enterprises were collected dated back to
April, 2017. In the past 18 months, both export and non-export enterprises’ employment showed
an inverted U-shape (Chart 7), while exporting enterprises experienced faster rises and declines.
When U.S.-China trade friction worsened in March & April 2018, the employment of exporting
enterprises increased sharply by 40% to 50% higher than their non-exporting counterparts, but half
a year later, the employment gap between two groups shrank.
We decomposed the employment data of exporting enterprises in Chart 8. In the first half year of
2018, recruitment of general workers and operators contributed to large part of new employment
but declined after June. Since August, employment of sales representatives increased sharply. It’s
apparent that exporting enterprises expanded production when there were signs of trade friction
and focused on sales promotion after trade war occurred.
We also explored the employment of waiter, food courier and express courier to find the change of
consumption structure. Waiter is irreplaceable for traditional catering industry and demands for
waiters are determined by customers in the restaurants. Couriers are more related to food take-outs
and e-commerce. As shown in Chart 9-1, the employment of waiters declined since May, dropping
to about half amount of May. The employment of couriers peaked in June and July and decreased
since then.
Last year, the employment and average salary of express couriers jumped in September in
response to Nov.11 Shopping Festival (Chart 9-1 and 9-2). The effect didn’t reoccur this year. It’s
noted that recently both the employment and average salary of food couriers were significantly
higher than that of waiters, indicating the high demands for take-out dining. It is yet to be verified
whether it was consumption upgrading or downgrading.
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 May 2018 and November 2018. The top
five cities were Beijing, Nanjing, Guangzhou, Shanghai and Shenzhen.