Outlook for China

McVEAN Trading & Investments, LLC

OUTLOOK FOR CHINA February 20, 2017

GIC IN SINGAPORE Michael Drury Chief Economist McVean Trading and Investments, LLC

Past Performance Is Not Necessarily Indicative Of Future Results.

0

US, EUROPE, JAPAN PMI 3 MONTH AVERAGE

60

80.00

55

65.00

50

50.00

45

35.00

40

20.00

35

5.00

30 1/1/2006

-10.00 1/1/2007

1/1/2008

1/1/2009

1/1/2010

1/1/2011 Eurozone

1/1/2012 US

1/1/2013

1/1/2014

JAPAN (RS)

Past Performance Is Not Necessarily Indicative Of Future Results.

1/1/2015

1/1/2016

1/1/2017

Dec-16 1

US, EUROPE, JAPAN, CHINA PMI 3 MONTH AVERAGE

60

80.00

55

65.00

50

50.00

45

35.00

40

20.00

35

5.00

30 1/1/2006

-10.00 1/1/2007

1/1/2008

1/1/2009

1/1/2010 CHINA

1/1/2011

1/1/2012

Eurozone

US

1/1/2013

1/1/2014

JAPAN (RS)

Past Performance Is Not Necessarily Indicative Of Future Results.

1/1/2015

1/1/2016

1/1/2017

Dec-16 2

CHINESE GDP

CURRENT QUARTER % CHANGE FROM YEAR AGO 25.0%

23.0%

21.0%

19.0%

17.0%

15.0%

13.0%

11.0%

9.0%

7.0%

5.0% 3/1/2000

3/1/2002

3/1/2004

3/1/2006

3/1/2008 REAL

3/1/2010

NOMINAL

Past Performance Is Not Necessarily Indicative Of Future Results.

3/1/2012

3/1/2014

3/1/2016

Q4 2016 3

CHINA GDP GROWTH

CURRENT QUARTER %CH FROM YEAR AGO 15.0

15.0

12.5

10.0

10.0

5.0

7.5

0.0

5.0 Mar-02

-5.0 Mar-03

Mar-04

Mar-05

Mar-06

Mar-07

Mar-08

Mar-09

REAL GDP (LHS)

Mar-10

Mar-11

Mar-12

GDP DEFLATOR (RHS)

Past Performance Is Not Necessarily Indicative Of Future Results.

Mar-13

Mar-14

Mar-15

Mar-16 Q3 2016

4

CHINESE NOMINAL GROWTH VS PPI PERCENT CHANGE FROM A YEAR AGO

10.0%

25.0%

8.0%

22.5%

6.0%

20.0%

4.0%

17.5%

2.0%

15.0%

0.0%

12.5%

-2.0%

10.0%

-4.0%

7.5%

-6.0%

5.0%

-8.0% Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16

2.5%

PPI

NOMINAL GDP

Past Performance Is Not Necessarily Indicative Of Future Results.

Q4 16 5

CHINESE NOMINAL GDP BY SECTOR

3 MONTH AVERAGE % CHANGE FROM YEAR AGO

30.0%

25.0%

20.0%

15.0%

10.0%

5.0%

0.0% Jan-99

Jan-01

Jan-03

Jan-05

Jan-07

PRIMARY & SECONDARY

Jan-09

Jan-11 TERTIARY

Past Performance Is Not Necessarily Indicative Of Future Results.

Jan-13

Jan-15

Q4 2016 6

CHINA MARKIT PMI: MANUFACTURING VS SERVICES 55

54

53

52

51

50

49

48

47 4/1/2014

10/1/2014

4/1/2015 MANUFACTURING

10/1/2015 SERVICES

Past Performance Is Not Necessarily Indicative Of Future Results.

4/1/2016

10/1/2016

Dec 16 7

CHINESE RAILROAD FREIGHT VS ELECTRICITY PRODUCTION 3 MONTH AVERAGE % CHANGE FROM YEAR AGO 3 MONTH AVERAGE

30.0%

25.0%

20.0%

15.0%

10.0%

5.0%

0.0%

-5.0%

-10.0%

-15.0%

-20.0%

RAIL

ELECTRICITY PRODUCTION

Past Performance Is Not Necessarily Indicative Of Future Results.

Dec 2016 8

POLICY LEVERS

• 1) Monetary Policy - Lower Interest Rates & Reserve Requirements

• 2) Fiscal Policy – Infrastructure Spending • 3) Regulation – Reform & Open Markets • 4) Exchange Rates – Managing Yuan Past Performance Is Not Necessarily Indicative Of Future Results.

9

CHINESE YUAN IN US DOLLARS 0.17

0.165

0.16

0.155

0.15

0.145

0.14

0.135

0.13

0.125

0.12

Jan 2017 Past Performance Is Not Necessarily Indicative Of Future Results.

10

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

35.0%

30.0%

25.0%

20.0%

15.0%

10.0%

5.0%

0.0% Mar-01

Mar-02

Mar-03

Mar-04

Mar-05

Mar-06

Mar-07

Mar-08

Mar-09

Mar-10

Mar-11

Mar-12

Mar-13

Mar-14

Mar-15

Mar-16

Q4 16 Past Performance Is Not Necessarily Indicative Of Future Results.

11

CRUDE OIL MONTHLY

160

140

120

100

80

60

40

20

Jan 17 Past Performance Is Not Necessarily Indicative Of Future Results.

12

CORN VS COPPER 850

500

450 750 400 650 350

550

300

250

450

200 350 150 250 100

150

50

Corn

Copper

Past Performance Is Not Necessarily Indicative Of Future Results.

Jan-17 13

CHINA FISCAL BALANCE AS A % OF GDP 4 QTR AVERAGE

2.0%

1.0%

0.0%

-1.0%

-2.0%

-3.0%

-4.0%

-5.0% 1/1/2000

1/1/2002

1/1/2004

1/1/2006

1/1/2008

1/1/2010

1/1/2012

1/1/2014

1/1/2016

Q4 2016 Past Performance Is Not Necessarily Indicative Of Future Results.

14

CHINA TOTAL AMOUNT OF SOCIAL FINANCING 12 MONTH AVERAGE

1600

1400

1200

1000

800

600

400

200

0 2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Dec 16 Past Performance Is Not Necessarily Indicative Of Future Results.

15

REAL ESTATE IN CHINA Sales of Commercial Buildings in 2016 For Eastern, Central and Western Regions Floor Space of Commercial Buildings Sold Regions

National Total Eastern Central Western

Share of Production 100.0% 46.3% 29.3% 24.3%

Growth Rate Y/Y (%)

Sales of Commercial Buildings Share of Value Sold

22.5 22.7 28.4 15.6

Growth Rate Y/Y (%)

Price Appreciation

34.8 38.7 38.7 18.3

10.4% 13.0% 8.0% 2.3%

100.0% 64.1% 19.9% 16.1%

Real Estate Investment in 2016 For Eastern, Central and Western Regions

Regions

National Total Eastern Central Western

Investment Share

100.0% 54.8% 22.7% 22.4%

% of Investment in Residential Buildings 67.0% 67.4% 69.6% 63.3%

Growth Rate Y/Y (%)

6.9 5.6 10.7 6.2

Past Performance Is Not Necessarily Indicative Of Future Results.

Residential Buildings 6.4 6.3 9.9 2.9

16

PASSENGER CAR SALES IN CHINA

MILLIONS OF UNITS SEASONALLY ADJUSTED ANNUAL RATE

30.0

28.0

26.0

24.0

22.0

20.0

18.0

16.0

14.0

12.0

10.0 Sep-11

Sep-12

Sep-13

Sep-14 MONTHLY

12 MO EMA

Past Performance Is Not Necessarily Indicative Of Future Results.

Sep-15

Sep-16

Dec-16 17

CHINA EXPORTS VS IMPORTS

3 MONTH AVERAGE %CH FROM 3 MONTH AVERAGE YEAR AGO 66.0%

49.5%

33.0%

16.5%

0.0%

-16.5%

-33.0% Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 EXPORTS

IMPORTS

Past Performance Is Not Necessarily Indicative Of Future Results.

Dec-16 18

CHINESE TRADE SURPLUS

BILLIONS OF DOLLARS SAAR – 3 MONTH AVERAGE 900.0

800.0

700.0

600.0

500.0

400.0

300.0

200.0

100.0

0.0

-100.0

Dec-16 Past Performance Is Not Necessarily Indicative Of Future Results.

19

CHINESE $ IMPORTS VS FX RESERVES BILLIONS OF DOLLARS

2,250

4500

2,050 4000 1,850 3500 1,650 3000 1,450

1,250

2500

1,050 2000 850 1500 650 1000 450

250 Jan-05

500 Jan-06

Jan-07

Jan-08

Jan-09

Jan-10

IMPORTS (6 MO AVG)

Jan-11

Jan-12

Jan-13

Jan-14

Jan-15

Jan-16

CURRENT FX RESERVES

Past Performance Is Not Necessarily Indicative Of Future Results.

20