Chinese financial media company Caixin, along with the dairy company Yili Group and the big data processor BBD, launched the beta version of a new index that aims to measure the evolving spending habits of affluent Chinese consumers.
The new index, Yili New Economy Consumption Index, tracks two types of evolving trends by Chinese people with regard to the structure and quality of their consumption behavior. In recent years, the Chinese government has been directing the country's economic growth model to be more consumption-driven, rather than credit-fueled, implementing a variety of measures to boost domestic consumption.
The sub-index of consumption structure measures how households with varying income levels allocate their spending across different categories of goods and services over the time. This index takes official data from the National Statistics Bureau.
The sub-index of consumption quality, on the other hand, tracks the changing proportion of spending on premium goods and services by affluent consumers over the time. It takes real-time data, such as the sales, price and inventory of the sampled products and the number and sentiment of reviews on certain types of services, from China's major e-commerce platforms.
Given the fact that a great amount of daily spending by Chinese consumers now takes place on e-commerce platforms, this index possibly offers a more accurate measurement of the state of consumption than the official figures compiled by the National Statistics Bureau.
During the press conference, Caixin also released a report that reveals the consumption quality and structure figures from March to May this year. The proportion of spending on premium goods and services among wealthy people has decreased consecutively since March, indicating that the consumption quality in China has not improved during the period.
However, the Consumer Price Index (CPI)—the official index released by the central government every month—increased to 101.5, in May, from 100.9, in March.
Based on the above two types of sub-index, the new index can also capture the consumption activity in major Chinese cities. The sample report indicated that the upgrade in development of consumption from low-end spending to premium one was evident in Wuhan and Hangzhou (both are second-tier cities) in May.
Notably, it is not the first time for the financial media Caixin to release economic indices. Caixin took over sponsorship from HSBC in 2015 to produce the China Purchasing Manager Index (PMI) with the financial information firm Markit Group. The PMI is an economic indicator that assesses the health of the economy based on monthly surveys of purchasing managers in Chinese companies.