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MasterCard Caixin BBD China New Economy Index September 2016

Oct 3, 2016

In an effort to increase transparency on thestructural changes underway in China’s economy, the MasterCard Caixin BBD ChinaNew Economy Index (NEI) was established. The subject of a year of research, theNEI was first publically released on March 2, 2016 and will be issued at10:00am the 2nd of every month China Standard Time.


In September 2016, the MasterCard Caixin-BBD New Economy Index (NEI) reading came in at 30.1, indicating that the New Economy accounted for 30.1% of overall economic input activity in September.This month’s reading saw a 120 basis points increase from August and returnedto a level seen in April and May (Chart 1). We made adjustments to labor inputsbig data by utilizing new data sources and making subsequent structuralmodifications. These changes are reflected in NEI starting from April 2016 on ward.

Primary Inputs


The NEI includes labor, capital and technology inputs that account for 40%, 35% and25% of the total weight of the index, respectively. Among the primary inputs,the rise in the September NEI reading came primarily from increasing capitalinvestment. Although capital investment fluctuated widely in 1H16, it reboundedthis month to 30.9 (Chart 2). The labor input index has seen a four-monthconsecutive decline since breaking the 30 point barrier, at 31.4, in March. Itstarted to slowly rebound in August, reaching 29.2, higher than most monthslast year. Technology input showed slight decline to 30.5.

Percentage changes in labor, capital and technology inputs were -0.1, 1.7 and 0.4percentage points, respectively. After accounting for the sum of theirweightings, the net result for the NEI was a 1.2 percentage point increase fromthe previous month (Chart 3).

Looking at sub-sectors, the New IT industry contributed 12.6 percentage points to NEI,the largest sector of the New Economy. This was followed by Finance & LegalServices with 4.2 percentage points, which saw a slight decline. The thirdlargest contributor was advanced equipment manufacturing with 3.3 percentagepoints (Chart 4).

New Economy Employment


In September 2016, the average monthly entry level salary of the New Economy roseto RMB 8,632 per month (Chart 5). New Economy wage information is compiled fromonline websites of career platforms and recruitment services including 51joband Zhaopin, as well as other sites that list job demands.

Hiring in the New Economy sectors accounted for 27.8% of total hiring in September,same as the previous month. The compensation share of New Economy sectorsdecreased slightly, from 30.7% to 30.5%. The entry level salary premiums of theNew Economy remained essentially flat in September, as new economy workersearned a 9.4% premium as compared to economy-wide counterparts (Chart 6).

From this month onwards, we will use new data sources to examine several leadingindicators in labor demand, such as 1) the share of demand for workers engagedin production activities to total workforce – a leading indicator for capacity investment;2) the share of demand for sales workers to total workforce – a leadingindicator for inventory depletion; 3) job matching rate – a leading indicatorfor the expansion of existing firms; 4) the share of demand from largeenterprises to total demand – a leading indicator for economic stabilization.


We first analyze the share of demand for sales workers this month. A firm’s decisionto hire more sales staff could reflect the pressure of rising inventory, orimply higher efficiency in job matching. From September 2015 to September 2016,the demand for sales workers in the New Economy sectors increased from 19.6% to24.2%. The demand growth rate was lower among economy-wide counterparts, whichincreased from 18.6% to just 21.8%.

Urban Population Flows


We report domestic traffic between China’s largest train stations as a proxy fornet population movement between China’s urban centers using, the CRC’sofficial ticket purchase website.


China’spopulation flows by railway have fluctuated since April. Average dailypopulation flows this month increased 28% compared with the troughs in July andAugust, and reached a level similar to that in May (Chart 8).

Different airports have exhibited diverse trends, as can be seen in Guangzhou and Hefei.Guangzhou’s NEI ranking this year dropped from the fifth to the seventh;whereas Hefei improved steadily from the eighteenth to the twelfth this month.As for YTD population flows by flights, the average daily population flow inGuangzhou dropped 4.4% between 1Q and 3Q, whereas Hefei increased 17.1% (Chart9). 

City Rankings of the New Economy


Based on overall New Economy rankings, Shanghai, Beijing, Shenzhen, Hangzhou andChongqing placed in the top five (Chart 10). Rankings are based on a movingaverage of the percentile rank of indicators for the city in the past 6 months. 

When looking at the city NEI rankings based on average NEI from March to Septemberof 2016, Shanghai rose to second this month, but still behind Hangzhou (Chart11). Beijing, Shenzhen and Guangzhou rounded out the top five.

The MasterCard Caixin BBD China New EconomyIndex is the fruit of a research partnership between Caixin Insight Group andBBD, in collaboration with the National Development School, Peking University.The subject of a year of research, the NEI was first publically released onMarch 2, 2016 and will be issued the 2nd of every month at 10:00amChina Standard Time.


About Caixin

Caixin Media is chinese leading media group dedicated to providingfinancial and business news through periodicals, online content, mobileapplications, conferences, books and TV/video programs. Caixin Media aims toblaze a trail that helps traditional media prosper in the new media age throughintegrated multimedia platforms. Caixin Insight Group is a high-end financialdata and analysis platform. For more information, please visit


About Master Card

MasterCard (NYSE: MA),, is a technology company in the globalpayments industry. We operate the world’s fastest payments processing network,connecting consumers,financial institutions, merchants, governments andbusinesses in more than 210
countries and territories. MasterCard’s productsand solutions make everyday commerce activities – such as shopping, traveling,running a business and managing finances – easier, more secure and moreefficient 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 quantitativebusiness analytics firm specializing in the analysis of the high-growthindustries emerging in Mainland China. Through dynamic data tracking, creditanalysis, risk pricing and economic index construction, BBD provides itsclients with a wide range of services at both the macro and micro level. Formore information, please visit