An index of economic activity in non-industrial growth industries has shown that central and western Chinese cities are leading the way in attracting new growth. The latest edition of the monthly Mastercard Caixin BBD China New Economy Index (NEI) highlights the central and western cities are becoming magnets for growth, partly supported by increasing visitor arrivals at expanding airports across the region.
It says that the rebound of capital and technology associated sectors has helped boost the NEI to 31.5, indicating that the ‘New Economy’ accounted for 31.5% of overall economic input activities that month, up 2.2 percentage points from June and back to the January to April average level after two lower NEI scores in May and June.
An analysis of net passenger inflows for the second quarter of 2017 versus 2016 showed that while the big cities of Beijing and Guangzhou dominate, emerging second and third tier destinations across central and western China are increasing in economic importance. The methodology of subtracting inbound flows from outbound, leaves a net total indicating where the more prosperous new age economic activity is occurring – the ones “whose prosperous economy keeps attracting people,” notes the report.
The significant finding was that the mid- and western Chinese cities were magnets for growth. “Chengdu and Chongqing headlined the mid- and western cities” with strong net inflows, while eastern seaboard locations such as Shenzhen and Shanghai dropped out of the top 10 this year. The report also notes Harbin, Hangzhou, Guiyang, Xiamen and Haikong as the Chinese cities with the fastest decreases in net inflows. It says “the lukewarm northeastern economy and negative news associated with tourist cities” may have been the main drivers for the population outflows.
The Mastercard sponsored NEI is a joint research partnership between Caixin Insight Group, China’s leading media group dedicated to providing financial and business news, and BBD, a leading Big Data and quantitative business analytics firm specialising in the analysis of the high-growth industries emerging in Mainland China. It is produced in collaboration with the National Development School, Peking University and is becoming a respected indicator that measures the economic development status of China.
Launched in March 2016 and released on a monthly basis, NEI measures the share of nascent industries driven by technology and talent in the Chinese economy. By focusing on these sectors instead of resource- and labour-intensive industries, the NEI helps track the pace of structural transition in the economy. It is part of the Mastercard global insight research resources, and a major initiative by Mastercard to support China’s economic growth under the conditions of the “New Normal”.
The index covers more than 140 industries in 10 major categories of manufacturing and services sectors in China, including energy conservation and environment protection, renewable energy, information technology and service, biological medicine, high-end equipment manufacturing, and financial and legal services. These are analysed under the three first level indicators of labour, capital, and technology, and given a weighting of 40%, 35% and 25% respectively in the NEI.
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