China Outlook

McVEAN

Trading Trading & & Investments, Investments, LLC LLC

CHINA OUTLOOK September 10, 2020

Michael Drury Chief Economist McVean Trading and Investments, LLC

Past Performance Is Not Necessarily Indicative Of Future Results.

1

WORLD ECONOMY PYRAMID

MGT

U.S.

MEDICAL FINANCE ADMINISTRATION TECHNOLOGY EDUCATION

EUROPE CAPITAL INTENSIVE MANUFACTURING

CHINA LABOR INTENSIVE MANUFACTURING

COMMODITY PRODUCERS Past Performance Is Not Necessarily Indicative Of Future Results.

2

NOBODY KNOWS NUTIN’

Past Performance Is Not Necessarily Indicative Of Future Results.

3

EVERYBODY AGREES THAT ASIA WILL OUTPERFORM

Source: IMF Past Performance Is Not Necessarily Indicative Of Future Results.

4

KEY GLOBAL GROWTH FACTORS

1.

2.

3.

4.

5.

6.

US Virus – 2nd Wave & Reopening US Money – Round 2 Still Waiting China Money – Ramping Up China-US Tensions – Rising? Resting?

Europe - Stuck in the Middle Commodity Producers & EM? Taking Orders (Literally) From China

Past Performance Is Not Necessarily Indicative Of Future Results.

5

CHINA / US DECOUPLING IS ALREADY UNDERWAY

Source: Flightradar24

Past Performance Is Not Necessarily Indicative Of Future Results.

6

CHINA IS DRIVEN BY DOMESTIC GROWTH 38%

CHINESE EXPORTS VS IMPORTS AS A % OF GDP

33%

28%

23%

18%

13% 1 01 02 03 04 04 05 06 07 07 08 09 10 10 11 12 13 13 14 15 16 16 17 18 19 19 20 -0 p- un- ar- ec- ep- un- ar- ec- ep- un- ar- ec- ep- un- ar- ec- ep- un- ar- ec- ep- un- ar- ec- epar ec e J J J J J J M M M M S M M M D S D S D S D D S D S D S EXPORTS IMPORTS

Past Performance Is Not Necessarily Indicative Of Future Results.

7

CHINA TRADE RECOVERY SUGGEST GLOBAL REBOUND CHINESE EXPORTS VS IMPORTS 6 MO %CH FROM 6 MO YR AGO

66.0%

49.5%

33.0%

16.5%

0.0%

-16.5%

-33.0%

EXPORTS

IMPORTS

Source: Customs General Administration PRC

Past Performance Is Not Necessarily Indicative Of Future Results.

8

CHINESE GLOBAL TRADE SURPLUS

900.0

CHINESE GLOBAL TRADE SURPLUS 3 MO AVG $ BIL - SA BY McVEAN

800.0 700.0 600.0 500.0 400.0 300.0 200.0 100.0 0.0 -100.0

Customs General Administration PRC

Aug-20

Past Performance Is Not Necessarily Indicative Of Future Results.

9

CHINA SOCIAL FINANCING 2250 2000

China Social Financing 12 MO EMA

1750 1500 1250 1000 750 500 250 0 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 0 0 1 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 0 0 00 200 200 200 200 200 200 200 200 200 200 200 200 200 200 200 201 201 201 201 201 201 201 201 201 201 201 201 201 201 201 201 201 201 201 201 202 202 2 / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / 28 /31 /28 /31 /29 /31 /28 /31 /28 /31 /28 /31 /29 /31 /28 /31 /28 /31 /28 /31 /29 /31 /28 /31 /28 /31 /28 /31 /29 /31 /28 /31 /28 /31 /28 /31 /29 /31 / 2 8 2 8 2 8 2 8 2 8 2 8 2 8 2 8 2 8 2 8 2 8 2 8 2 8 2 8 2 8 2 8 2 8 2 8 2 8

Source: The People’s Bank of Past Performance China Is Not Necessarily Indicative Of Future Results.

July-20 10

MANAGING THE FREE FLOATING YUAN

CURRENCY BREAK

SCHUMER

GE T

EU CRISIS

WE

CO E R

RY VE

OOPS

AR EW AD TR

GREAT FINANCIAL CRISIS

TR UM

P

CORRUPTION CAMPAIGN

?? ?

Source: Bloomberg

Past Performance Is Not Necessarily Indicative Of Future Results.

11

CHINA PRODUCTION NEVER SLIPPED BELOW A YEAR AGO

Source: National Bureau of Statistics China Past Performance Is Not Necessarily Indicative Of Future Results.

12

CHINA CAR SALES HAVE REBOUNDED 35

30

MONTHLY CHINA CAR SALES SEASONALLY ADJUSTED BY MCVEAN TRADING

25

20

15

10

5 3 MO AVG

Source: China Automotive Information Network

Past Performance Is Not Necessarily Indicative Of Future Results.

CURRENT MONTH

July-20

13

CHINA AIR TRAVEL HARDEST HIT SECTOR

Source: Flightradar24

Past Performance Is Not Necessarily Indicative Of Future Results.

14

RESTAURANTS HAVE RECOVERED

Past Performance Is Not Necessarily Indicative Of Future Results.

15

SOMETHINGS ARE BEYOND PARTY CONTROL

Source: National Bureau of Statistics China Past Performance Is Not Necessarily Indicative Of Future Results.

16

CHINA NOMINAL GDP GROWTH IN US$ CURRENT QUARTER % CHANGE FROM YEAR AGO

Source: National Bureau of Statistics of China

Q2 20 Past Performance Is Not Necessarily Indicative Of Future Results.

17

IRON ORE

Source: Bloomberg Past Performance Is Not Necessarily Indicative Of Future Results.

18

COPPER

Source: Bloomberg Past Performance Is Not Necessarily Indicative Of Future Results.

19

CRUDE OIL

Souce: Bloomberg Past Performance Is Not Necessarily Indicative Of Future Results.

20