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October 2018
Mastercard Caixin BBD China New Economy Index
Released: 10:00 am Beijing Time November-02-2018
Overview
In October 2018, the Mastercard Caixin BBD New Economy Index (NEI) reading came in at 29.8,
indicating that the New Economy accounted for 29.8% of overall economic input activities that
month, down 1.5 ppts from September (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 decline in the October NEI reading came from the
decrease of capital input (Chart 2). Capital input fluctuated widely in the recent year, dropping to
34.6 this month, with 4.5 MoM decrease. Technology input index went down since March 2018,
coming in at 27.4 this month, with 0.7 MoM increase. Labor input index showed a stable trend in
the past two months, decreasing slightly to 27.1 this month, with 0.3 MoM decrease.
Taking the weights into account, percentage changes in labor, capital and technology inputs were
-0.1, -1.6, and 0.2 ppts, respectively. The net NEI change was -1.5 ppts in total (Chart 3).
As for sectors, the New IT industry formed the largest proportion of the New Economy Index,
contributing 10.8 ppts to NEI. Advanced Equipment Manufacturing was the industry with fastest
growth in October, contributing 3.7 ppts and ranking the third. Advanced Materials came eighth
from third, the biggest drop in ranking, contributing 0.5 ppts in October (Chart 4).
New Economy Employment
In October 2018, the average monthly entry-level salary of the New Economy was RMB 10,150,
decreasing from last month’s level of RMB 10,161 (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 26.7% of the total in October, lower than the
previous month’s 26.9%. At the same time, the compensation share of New Economy decreased
0.26%. Accordingly, the average entry salary level of New Economy declined compared to the
national level. The entry-level salary premium of the New Economy decreased, from 3.8% in
September to 3.2% as compared to economy-wide counterparts (Chart 6).
Economic Trends Based on Employment Data
We focused on China’s economy this month. In 2018Q3, China’s real GDP growth rate fell to
6.5%. It was among the quarters with lowest growth since 1992 (1999Q4 and 2009Q1), which
indicated a business cycle typically lasting for 36 – 40 quarters. We are in the trough and the
macroeconomy won’t be worse in our opinion.
Chart 7 showed the employment of general workers and operators continued to decline and the
share of new jobs started to rebound in October. However, not all industries’ new jobs saw a rise.
Job creations in Electronic Technology, Petroleum and Hotel sectors were climbing, while the
new jobs of IT, New Media and Fund industries were still in decline. We are experiencing an
economic transformation cycle and the upstream sectors such as energy and basic research start to
recover.
Operation of Different Enterprises Based on Employment Data
In 2018Q3, the divergence between state-owned and private enterprises weakened. According to
the National Bureau of Statistics, the growth rate of state-owned enterprises’ profits fell sharply
YoY, but their private counterparts were stabilizing marginally. The new employment of
state-owned enterprises showed a growth trend since July 2017, but started to drop after reaching
the peak in March 2018 (Chart 8). Meanwhile, the job creation by private enterprises began to
rebound. So did the new employment of large and small companies. Resource allocation among
enterprises in difference ownerships shows a cyclical pattern and it’s currently regressing to the
mean.
Chart 9 showed the share of new enterprises in specific areas in October 2016, October 2017, and
October 2018. The share of new enterprises in 2017 top-ranked Engineering and Decoration
declined in this month, while that in IT and culture went down and up. Besides, sub-sector of
Automobile was ranking down in two consecutive years and Environmental Protection sector was
experiencing two years of expanding.
China’s Economy is stabilizing in the bottom in terms of structure adjustment.
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 April 2018 and October 2018. The top
five cities were Beijing, Nanjing, Guangzhou, Shanghai and Shenzhen.
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/.