Macroeconomy Research

July 16, 2018

Charting China Macro Weekly

Activity growth softened; financial conditions remained tight

July 9–13, 2018
Weekly high-frequency data pulse check
Economic activity growth softened last week. IPP daily coal consumption
growth declined to 7.9% YoY from 25.8% YoY; steel capacity utilization rates Eva YI
remained relatively low & steel production growth retreated. On the other Analyst
hand, utilization rates of coal and semi-steel tire plants edged up, while the SAC Reg. No.: S0080515050001
SFC CE Ref: AMH263
transaction volume of construction steel rebounded. Auto sales dropped
eva.yi@cicc.com.cn
notably in the first week of July. Property & land transaction volumes fell.
Wenqi LIU
Food prices picked up; commodity prices retreated except for rebar. Prices Analyst
of non-ferrous metals, coal and industrial products fell, while rebar prices SAC Reg. No.: S0080517080001
picked up. Global oil prices declined further, but BDIY edged up. SFC CE Ref: BIU684
wenqi.liu@cicc.com.cn
Interbank liquidity conditions remained loose. Bond yield curves were Hong LIANG
largely unchanged & bond issuance accelerated somewhat. CNY exchange Analyst
rate weakened. The PBoC withdrew Rmb90bn last week, interbank liquidity SAC Reg. No.: S0080513050005
conditions appeared loose–treasury & corporate bond yields remained SFC CE Ref: AJD293
stable while 7-day repo rates edged up; meanwhile, discounted rates hong.liang@cicc.com.cn
declined further and credit spreads remained elevated. Bond issuance
accelerated somewhat last week, with net issuance of credit bonds
recovering to Rmb60.3bn. CNY depreciated 0.6% against the USD and 0.3%
against the basket, but onshore RMB daily trading volume was stable.
Review of main economic events in the past week
June financial conditions remained contractionary; fiscal spending
accelerated, but 1H18 accumulated fiscal deficits declined YoY. Electricity
consumption growth held up in June; import growth retreated notably &
export growth edged down. CPI remained low while PPI rose further. New
TSF came in lower than expected at Rmb1.18trn. Adjusted TSF growth
dipped to a meager to 6.2% MoM annualized. The Rmb1.84trn of new RMB Related reports
loans is not enough to offset the contraction of the NSA funding channels.
Although fiscal spending growth accelerated in June, 1H18 accumulated Macroeconomy | Fiscal spending accelerated, VAT tax
fiscal deficits declined YoY, suggesting ample room for fiscal expansion. June cuts began to take effect (2018.07.13)
electricity consumption held up at 8%, while growth of residential and Macroeconomy | Financial conditions remain
tertiary-industry power consumption accelerated notably. Export growth contractionary (2018.07.13)
edged down, import growth retreated notably, trade surplus widened,
Macroeconomy | Import growth retreated notably; auto
suggesting softening domestic demand growth. imports disrupted by tariff cuts (2018.07.13)
On the policy front: 1) US released new tariff list on US$200bn of Chinese Macroeconomy | CPI edged up on holiday-effect, PPI rose
1
goods, and China vows to stay on the path of reform and opening up . 2) further (2018.07.10)
China will implement differentiated compensation schemes for shanty town Macroeconomy | FX reserves edged up; underlying FX
2
reconstruction initiatives in different cities . flow remains stable (2018.07.09)

The week ahead: key things to watch

June economic activities data (estimated IP growth 6%, FAI 6%, retail sales
8.7%) and Q2 GDP data (est. 6.8% YoY) on July 16. Volatilities spiked
recently in the financial markets with tightened financial conditions. We will
closely monitor market conditions and watch for signs of potential policy
fine-tuning.
1
http://www.mofcom.gov.cn/article/ae/ai/201807/20180702765543.shtml
2
http://www.xinhuanet.com/fortune/2018-07/12/c_129912551.htm l

Please read carefully the important disclosures at the end of this report

Provided for the exclusive use of Tiger Chen at Boyu Capital on 26-Aug-2018 09:14 AM.
 CICC Research: July 16, 2018

I. Weekly activity tracker

Figure 1: IPP coal consumption growth declined notably Figure 2: Steel capacity utilization edged down
% yoy Coal consumption of 6 largest power plants Blast furnace operating rate (from Mysteel)
%
120
88
100 July 9-13 July 2-6
86
YoY: +7.9% +25.8%
80
84
WoW: -4.6% +9.8%
60
82
40
80
20 78 July 9-13 July 2-6
0 ppt change, YoY: -5.1 ppt -5.5 ppt
76
ppt change, WoW: -0.6 ppt +0.2 ppt
-20 74
-40 Range for 2011-2016 2017 2018ytd 72
2016 2017 2018ytd
-60 70

Source: Wind Info, CICC Research Source: Mysteel, CICC Research

Figure 3: Steel production YoY growth retreated Figure 4: Overall rebar inventory level edged down further

% YoY Crude steel production growth 10 th ton overall rebar inventory

35 1200
June 21-30 June 11-20 July 9-13 July 2-6
30
YoY: +5.7% +7.5%
25 1000 YoY: +20.1% +22.1%
20 WoW: -1.5% +0.4%
WoW: -2.3% -2.8%
15 800
10
5 600
0
-5 400
-10
-15 200
-20 Range for 2011-2016 2017 2018ytd Range for 2011-2016 2017 2018ytd

-25 0

Source: Wind Info, CICC Research Source: Mysteel, CICC Research

Figure 5: Rebar’s gross profit per tonne picked up Figure 6: Construction steel transaction volume rebounded
Rmb/tonne Construction steel spot market transaction volume
th ton (weekly average)
1,900
250
1,700
Cash profit of steel processing, per tonne
1,500
1,300 200
1,100
900 150
700
500
100
300 July 9-13 July 2-6

100 2016 YoY: 2.5% -5.3%

-100 50 2017 WoW: 16.7% -5.9%

-300 2018ytd
-500
0

Source: Wind Info, CICC Research Source: Mysteel, CICC Research

Please read carefully the important disclosures at the end of this report
2

Provided for the exclusive use of Tiger Chen at Boyu Capital on 26-Aug-2018 09:14 AM.
 CICC Research: July 16, 2018

Figure 7: Coal capacity utilization rate continued to pick up Figure 8: Semi-steel tire enterprise capacity utilization rate
edged up

Coking enterprise operating rate Semi-steel tire operating rate*

% %
90 85
July 9-13 July 2-6
ppt change, YoY: +0.1 ppt -2.3 ppt 75
85
ppt change, WoW: +1.6 ppt +0.9 ppt
65
80

2016
55
75 2017
2018ytd
45
70 July 9-13 July 2-6
ppt change, YoY: +10.0 ppt +16.2 ppt
35
65 ppt change, WoW: +0.1 ppt +1.2 ppt
2016 2017 2018ytd
25
60

* adjusted for Lunar New Year

Source: Wind Info, CICC Research Source: Wind Info, CICC Research

Figure 9: Daily average retail sales volume of passenger cars Figure 10: Cement production utilization continued to edge
dropped notably down

Daily average retail sales of passenger cars % Cement enterprise operation rate
No. 80
120000
2016 70
100000 2017
60
2018ytd
80000 50 2016
2017
40
60000 2018ytd
30 July 9-13 July 2-6
40000
ppt change, YoY: +1.8 ppt +3.2 ppt
July 1-7 June 23-30 20
ppt change, WoW: -1.6 ppt -0.3 ppt
20000 YoY: -16.6% 8.5%
10
WoW: -64.7% 113.8%
0 0

Source: Wind Info, CICC Research Source: Zhuo Chuang info, CICC Research

Figure 11: 30-city property transaction volume retreated Figure 12: …property transaction volume YoY growth declined
further… in tier-1 and tie-2 cities
30 medium/large cities property floor space sold 30 medium/large cities property floor space sold (weekly)*
mn sq meter % yoy chg
9 200
July 9-13 July 2-6
8 Tier-3*
YoY:
150
-4.5% +1.3% Tier-2*
7
WoW: -8.1% -22.7% 100 Tier-1*
6
50
5
0
4
-50
3
-100
2

1 2015 2016 2017 2018ytd -150

0
* adjusted for Lunar New Year
Tier-1 cities (4): Beijing, Shanghai, Guangzhou, Shenzhen
Tier-2 cities (13): Tianjin, Hangzhou, Nanjing, Wuhan,Nanchang, Chengdu, Qingdao, Suzhou, Fuzhou, Xiamen, Changsha, Harbin, Changchun
Tier-3 cities (13): Wuxi, Dongguan, Kunming, Shijiazhuang, Huizhou, Baotou, Yangzhou, Anqing, Yueyang, Shaoguan, Nanning, Lanzhou, Jiangyin

Source: Wind Info, CICC Research Source: Wind Info, CICC Research

Please read carefully the important disclosures at the end of this report
3

Provided for the exclusive use of Tiger Chen at Boyu Capital on 26-Aug-2018 09:14 AM.
 CICC Research: July 16, 2018

Figure 13: 100-city land transaction volume dropped Figure 14: …mainly driven by tier-1 & 3 cities
sequentially from July 2 to July 8…
100 medium/large cities land transaction volume 100 medium/large cities land transaction volume(weekly)*
mn sq meter % wow chg
35
July 2-8 June 25-July 1 1000
2015 Tier-3*
30 YoY: -16.1% -16.6%
2016 800 Tier-2*
WoW: -23.4% +12.6%
25 2017 Tier-1*
600
2018ytd
20 400

15 200

10 0

5 -200

0
* adjusted for Lunar New Year
Tier-1 cities (4): Beijing, Shanghai, Guangzhou, Shenzhen
Tier-2 cities (26): Tianjin, Chongqing, Hangzhou, Nanjing, Wuhan, Changsha, Ji'nan, Qingdao, Ningbo, Suzhou, Xiamen, Fuzhou, Nanchang,
Zhengzhou, Hefei, Shenyang, Dalian, Changchun, Harbin, Chengdu, Xi'an, Taiyuan, Shijiazhuang, Zhuhai, Lanzhou, Hohhot

Source: Wind Info, CICC Research Source: Wind Info, CICC Research

II. Weekly price indicators

Figure 15: Food prices picked up sequentially Figure 16: Global oil prices declined in the past week
% Ministry of Agriculture: food price index % USD/bbl
20 8 120
July. 9-13 July. 2-6 July. 9-13 July. 2-6
110
15 6 Brent YoY: +54.0% +60.3%
YoY: +3.8% +2.7% WoW:
100 -2.3% -2.9%
10 WoW: +1.2% -0.1% 4 YoY: +52.6% +62.1%
90 WTI
WoW: -3.8% -0.5%
5 2 80

0 0 70
60
-5 -2
50
-10 -4
40
-15 -6 30 WTI Brent
YoY growth Week on week change, right scale
-20 -8 20

Source: Wind Info, CICC Research Source: Wind Info, CICC Research

Figure 17: Copper price edged down further while rebar price Figure 18: Thermal coal prices edged down in the past week
picked up in the past week
Commodities futures prices Rmb/ton
Rmb/ton Rmb/ton Rmb/ton
1900 July. 2-6
800
57000 July. 9-13
4000 July. 9-13 July. 2-6 Thermal coal YoY: +7.7% +11.9%
Copper YoY: +3.5% +4.8% 54000 1700 WoW: -1.0% +0.3%
3700 WoW: -0.7% 700
-4.4% Coking coal YoY: +30.2% +30.2%
3400 Rebar YoY: +11.1% +11.3% 51000 1500 0 0
WoW:
WoW: +5.4% -0.3%
48000 600
3100 1300
2800 45000
1100 500
2500 42000
2200 900
39000 400
1900
36000 700 Coking coal
1600
300
1300 rebar copper , right scale 33000 500
Thermal coal: 5500K, RHS
1000 30000
300 200

Source: Wind Info, CICC Research Source: Wind Info, CICC Research

Please read carefully the important disclosures at the end of this report
4

Provided for the exclusive use of Tiger Chen at Boyu Capital on 26-Aug-2018 09:14 AM.
 CICC Research: July 16, 2018

Figure 19: Cement prices edged down Figure 20: Urea price edged down

Cement price
% % Rmb/Ton
40 8 4000
July. 2-6 July. 9-13 July. 2-6
35 July. 9-13 7
Potassium Chloride: YoY: +125.0% +125.0%
30 YoY: +26.4% +26.0% 6 3500 0
WoW: 0
25 5 Urea: YoY: +21.3% +22.6%
WoW: -0.2% -0.3% -0.5%
20 4 WoW: -1.0%
3000
15 3
10 2
2500
5 1
0 0
2000
-5 -1
-10 YoY growth -2
-15 -3 1500
Week on week growth, Potassium Chloride Urea
-20 right scale -4
-25 -5 1000

Source: SCI99, CICC Research Source: Wind Info, CICC Research

Figure 21: SBR prices declined while polyethylene edged up Figure 22: BDIY edged up in the past week

Rmb/Ton 3000
15000 40000
July. 9-13 July. 2-6 July. 9-13 July. 2-6
14500
Polyethylene: YoY: +104.1% +103.6% 35000 2500 BDIY YoY: +81.3% +95.7%
14000 +0.6%
WoW: +0.4%
13500 Styrene-butadiene rubber: YoY: +6.2% +5.1% 30000 WoW: +0.6% +17.1%
13000 WoW: -2.6% +4.1% 2000
12500 25000
12000 1500
20000
11500
11000 15000 1000
10500
10000 10000
500
9500 Polyethylene
5000
9000
Styrene-butadiene rubber (SBR), right scale 0
8500 0

Source: SCI99, CICC Research Source: Wind Info, CICC Research

III. Weekly financial market movers

Figure 23: Treasury bond yield curve was largely stable Figure 24: AAA corporate bond yield curve steepened
moderately in the past week…
%, p.a. Treasury yield curve %, p.a. AAA corporate bond yield (July.13, 2018) bps
5.0 4
4.9
4.86
4.5 4.8
0

4.1 4.6

3.995 4.57 -4
3.7 4.4
3.800
4.38
3.3 3.520 4.2
-8
3.320 2018-07-13
3.070 4.14
2.9 4.0
-12
2.5 2018-07-06 3.8
WoW yield change, right scale Bond yield
2.440
2.1 3.6 -16
0 5 10 15 20 25 30 35 1 3 5 10
term to maturity (years) term to maturity (years)

Source: CEIC, CICC Research Source: Wind Info, CICC Research

Please read carefully the important disclosures at the end of this report
5

Provided for the exclusive use of Tiger Chen at Boyu Capital on 26-Aug-2018 09:14 AM.
 CICC Research: July 16, 2018

Figure 25: …so did the AA corporate yield curves Figure 26: Credit yield spreads remained elevated in the past
week

%, p.a. AA corporate bond yield (July.13, 2018) bps AA - AAA corporate bond yield
%
8
1.2
6.0
1.1 1Y 3Y
5.86 4
1.0
5.8
0.9
0
5.57 0.8
5.6 0.7
-4
0.6
5.4 5.34 0.5
-8
0.4
5.2 -12 0.3
5.08
WoW yield change, right scale Bond yield
0.2
5.0 -16
1 3 5 10
term to maturity (years)

Source: Wind Info, CICC Research Source: Wind Info, CICC Research

Figure 27: Credit bond issuance recovered somewhat Figure 28: Interbank CD issuing rates edged up

Credit bond net issuance (by rating) % Interbank negotiable certificates of deposit
Rmb bn
150 6.0
AAA AA+ AA under AA or no rating yield to maturity (AAA+, 3M)
5.5
100 average issuing rate (3M)
5.0

50 4.5

4.0
0 3.70%
3.5
3.36%

-50 3.0
issuing rate yield to maturity
2.5 WoW 9 bp 0 bp
Mtd -44 bp -39 bp
-100 2.0
2018/1/21
2018/1/28

2018/2/11
2018/2/18
2018/2/25

2018/3/11
2018/3/18
2018/3/25

2018/4/15
2018/4/22
2018/4/29

2018/5/13
2018/5/20
2018/5/27

2018/6/10
2018/6/17
2018/6/24

2018/7/15
2018/4/8
2018/2/4

2018/3/4

2018/4/1

2018/5/6

2018/6/3

2018/7/1
2018/7/8

Source: Wind Info, CICC Research Source: Wind Info, CICC Research

Figure 29: Net issuance of interbank CDs was negative in the Figure 30: Discount rates declined in the last week
past week

% Discount rate: 6-month banker's acceptance bill

Rmb bn Rmb bn
500 9500 8
Net issuance amount Closing stocks
400 Changjiang River Delta
July.9-15 Rmb -40 bn Rmb 8,889bn
7
300 July.2-8 9000 Chagne in the last week -20 bp
Rmb 51 bn Rmb 8,929 bn
Mtd -60 bp
200 6
8500
100
5
0
8000
-100 4
3.65%
-200 7500
3
-300 net issuance amount of interbank deposit
outstanding balance, right scale
-400 7000 2

Source: Wind Info, CICC Research Source: CEIC, CICC Research

Please read carefully the important disclosures at the end of this report
6

Provided for the exclusive use of Tiger Chen at Boyu Capital on 26-Aug-2018 09:14 AM.
 CICC Research: July 16, 2018

Figure 31: Interbank liquidity conditions remained relatively accomodative

Representative interest rates for China (as of July 13, 2018)
WMP
7 day 1Y 10Y Yu'eBao
3M 1Y CDB 10Y CDB product
interbank treasury treasury deposit
SHIBOR bond yield bond yield expected
repo yield yield rate
return
Average May-2005 1.10 n.a. 2.18 3.95 4.14 4.93 4.14 n.a.
Average Jan-2009 0.90 1.51 1.10 2.91 3.56 3.96 3.96 n.a.
September 1 2016 2.39 2.79 2.14 2.75 2.30 3.19 2.31 3.93
One year ago 3.11 4.29 3.45 3.57 3.79 4.17 4.11 4.71
One month ago 3.03 4.35 3.30 3.63 3.89 4.39 3.77 4.96
One week ago 2.53 3.74 3.04 3.51 3.37 4.17 3.66 4.91
Today 2.71 3.61 3.07 3.52 3.42 4.11 3.55 4.91

Source: CEIC, Wind Info, CICC Research

Figure 32: Onshore RMB daily trading volume continued to Figure 33: CNY depreciated vs. the USD and the CFETS basket
edge down in the past week last week
USD bn CNY trading volume in the onshore market Dec 31 2014=100 Rmb/US$
50 106 6.2
July.9-13 July.9-13 July.2-6
45 weekly average
Weekly average US$ 27.5 bn CFETS basket CNY index WoW: -0.3% -0.6% 6.3
104
40 WoW change -2.3%
monthly average CNY exchange rate WoW: -0.6% -0.4% 6.4
MoM change, July -4.2%
35 102
6.5
30
100 means 6.6
25
CNY depreciate
20 98 6.7
15
6.8
10 96
6.9
5
94 CFETS basket CNY index
0 7.0
Spot CNY exchange rate, right scale
92 7.1

Source: Bloomberg, CICC Research Source: CEIC, Bloomberg, CICC Research

IV. Monetary and fiscal policy trackers

Figure 34: 7-day interbank repo rate rose by 19 bps in the Figure 35: PBoC withdrew RMB 90bn in the last week
past week, but remained at a low level
%, p.a. Rmb bn PBoC's weekly liquidity injection/withdrawal* Rmb bn
14 2,000
PBoC's net injection
July.9-13 July.2-6
May : 244bn gross
12 7-day interbank repo rate, 1,500 June :
19 bps -106 bps -590bn with-
WoW change
drawal
10 1,000 next
week
8 500
PBoC reverse repo rate, 7-day
0
6 7-day interbank repo rate
-90 -120
-500
4
-1,000
2 withdrawn funds injected net rejection

-1,500
0

* PBoC's monetary policy instruments include reverse repos, MLF, SLF, SLO, PSL, & treasury deposit dispersement

Source: Wind Info, CICC Research Source: Wind Info, CICC Research

Please read carefully the important disclosures at the end of this report
7

Provided for the exclusive use of Tiger Chen at Boyu Capital on 26-Aug-2018 09:14 AM.
 CICC Research: July 16, 2018

Figure 36: CNY fixing rates came in stronger than the Figure 37: Issuance amount of local government bond picked
forecasts up
Rmb/US$ pips
Local government bond net issuance
7.0 300 300
Actual - Estimated, right scale Actual fixing Estimated fixing Apr. 2018 May. 2018 June. 2018
c
July mtd. 2018
Total issuance:302 bn Total issuance:338bn Total issuance:472bn Total issuance: 307bn
6.9 250
200
6.8 200

100 150
6.7
100
6.6 0
50
6.5 0
-100
6.4 -50
New issuance Replacement
-200 -100
6.3 Repayment of maturing bonds Unidentified
-150 Maturity Net issuance
6.2 -300

Source: Bloomberg, Wind Info, CICC Research Source: Wind Info, China Bond, CICC Research

Figure 38: Bond issuance recovered somewhat

Rmb bn Net bond issuance amount

470 Treasury bond Local government bond

Policy bank bond Urban construction bond
420
Corporate bond Stock exchange enterprise bond
370
320
270
220
170
120
70
20
-30
-80
-130
-180
2018/2/18
2018/2/25
2018/3/4
2018/3/11
2018/3/18
2018/3/25
2018/4/1
2018/4/8
2018/4/15
2018/4/22
2018/4/29
2018/5/6
2018/5/13
2018/5/20
2018/5/27
2018/6/3
2018/6/10
2018/6/17
2018/6/24
2018/7/1
2018/7/8
2018/7/15

Source: Wind Info, CICC Research

Please read carefully the important disclosures at the end of this report
8

Provided for the exclusive use of Tiger Chen at Boyu Capital on 26-Aug-2018 09:14 AM.
 CICC Research: July 16, 2018

Figure 39: China’s key economic indicators and forecasts

Monthly
2017/6 2017/7 2017/8 2017/9 2017/10 2017/11 2017/12 2018/1 2018/2 2018/3 2018/4 2018/5 2018/6 2017 2018E 2019E
Economic Growth
GDP Current Rmb bn 20,056 - - 21,160 - - 23,458 - - 19,878 - - 82,712
GDP YoY % 6.9 - - 6.8 - - 6.8 - - 6.8 - - 6.9 6.8 6.7
GDP QoQ (sa) % 1.8 - - 1.8 - - 1.6 - - 1.4 - -
Nominal GDP
Nominal GDP YoY % 11.0 - - 11.2 - - 11.1 - - 10.2 - - 11.2 9.7 9.4
GDP deflator YoY % 3.9 - - 4.1 - - 4.0 - - 3.2 - - 4.1 2.8 2.5
Contribution to GDP Growth
Final Consumption Expenditure YTD ppt. 4.4 - - 4.4 - - 4.1 - - 5.3 - - 4.1
Gross Capital Formation YTD ppt. 2.4 - - 2.4 - - 2.2 - - 2.1 - - 2.2
Net Exports of Goods & Services YTD ppt. 0.1 - - 0.1 - - 0.6 - - -0.6 - - 0.6
Inflation
CPI YoY % 1.5 1.4 1.8 1.6 1.9 1.7 1.8 1.5 2.9 2.1 1.8 1.8 1.9 1.6 2.0 2.2
Food CPI YoY % -1.2 -1.1 -0.2 -1.4 -0.4 -1.1 -0.4 -0.5 4.4 2.1 0.7 0.1 0.3 -1.4
Nonfood CPI YoY % 2.2 2.0 2.3 2.4 2.4 2.5 2.4 2.0 2.5 2.1 2.1 2.2 2.2 2.3
PPI YoY % 5.5 5.5 6.3 6.9 6.9 5.8 4.9 4.3 3.7 3.1 3.4 4.1 4.7 6.3 3.0 1.9
PMI
PMI Index % 51.7 51.4 51.7 52.4 51.6 51.8 51.6 51.3 50.3 51.5 51.4 51.9 51.5
Caixin/Markit PMI Index % 50.4 51.1 51.6 51.0 51.0 50.8 51.5 51.5 51.6 51.0 51.1 51.1 51.0
Industry
Industrial Value-added YoY % 7.6 6.4 6.0 6.6 6.2 6.1 6.2 - - 6.0 7.0 6.8 6.6 6.5 6.3
Industrial Value-added MoM (sa) % 0.76 0.40 0.43 0.56 0.50 0.47 0.52 0.58 0.58 0.35 0.61 0.58
Profits of Industrial Enterprises
Total profits YoY, YTD % 22.0 21.2 21.6 22.8 23.3 21.9 21.0 - 16.1 11.6 15.0 16.5 21.0
Retail Sales
Retail sales YoY % 11.0 10.4 10.1 10.3 10.0 10.2 9.4 - - 10.1 9.4 8.5 10.2 9.8 10.2
Retail sales MoM (sa) % 0.91 0.76 0.82 0.89 0.79 0.76 0.67 0.58 0.65 0.71 0.66 0.29
Investment
FAI YoY, YTD % 8.6 8.3 7.8 7.5 7.3 7.2 7.2 - 7.9 7.5 7.0 6.1 7.3
Manufacturing Investment YoY, YTD % 5.5 4.8 4.5 4.2 4.1 4.1 4.8 - 4.3 3.8 4.8 5.2 4.8
Infrastructure Investment YoY, YTD % 16.8 16.7 16.1 15.9 15.9 15.8 14.9 - 11.3 8.3 7.6 5.0 14.9
Real Estate Development Inv. YoY, YTD % 8.5 7.9 7.9 8.1 7.8 7.5 7.0 - 9.9 10.4 10.3 10.2 7.0
FAI MoM (sa) % 0.60 0.59 0.59 0.58 0.56 0.56 0.53 0.55 0.54 0.53 0.52 0.47
Real Estate
Sales amount of Commodity Buildings YoY, YTD % 21.5 18.9 17.2 14.6 12.6 12.7 13.7 - 15.3 10.4 9.0 11.8 13.7
Sales volume of Commodity Buildings YoY, YTD % 16.1 14.0 12.7 10.3 8.2 7.9 7.7 - 4.1 3.6 1.3 2.9 7.7
Area Newly-started YoY, YTD % 10.6 8.0 7.6 6.8 5.6 6.9 7.0 - 2.9 9.7 7.3 10.8 7.0
Area Under Construction YoY, YTD % 3.4 3.2 3.1 3.1 2.9 3.1 3.0 - 1.5 1.5 1.6 2.0 3.0
External Trade and Investment
Exports YoY % 11.3 7.2 5.6 8.1 6.9 12.3 10.9 11.2 44.5 -2.7 12.6 12.6 11.2 10.8 13.1 9.0
Imports YoY % 17.2 11.0 13.5 18.6 17.2 17.7 4.5 36.9 6.2 14.4 21.5 26.0 14.1 18.7 18.2 7.0
Trade Surplus Current US$ bn 41.3 44.9 40.1 27.4 36.9 38.5 54.1 19.0 32.7 -5.3 28.3 24.9 41.6 423 384 462
FDI Current US$ bn 15 6 9 11 9 19 16 12 9 13 9 9 16 131
Balance of Payment
Current Account Balance US$ bn 52.6 - - 34.3 - - 62.3 - - -28.2 - - -
Capital and Financial Account Balance US$ bn 31.1 - - 44.2 - - 36.5 - - 54.4 - - -
Foreign Exchange Reserves Outstanding US$ bn 3056.8 3080.7 3091.5 3108.5 3109.2 3119.3 3139.9 3161.5 3134.5 3142.8 3124.9 3110.6 3112.1 3,140
Increment US$ bn 3 24 11 17 1 10 21 22 -27 8 -18 -14 2 129
Fiscal
Fiscal Revenue YoY % 9.3 11.4 7.7 13.3 5.7 -0.9 -4.3 - 15.0 8.4 10.1 9.7 3.5 8.1
Fiscal Expenditure YoY % 19.3 5.7 3.2 2.1 -5.9 -8.3 8.0 - 47.7 4.2 7.8 0.5 8.3
Fiscal Surplus/Deficit Current Rmb bn -993.4 296.0 -399.5 -753.2 511.2 -518.0 -1295.1 - -320.2 -794.2 377.7 62.8 -3,076
Monetary
M2 YoY % 9.1 8.9 8.6 9.0 8.9 9.1 8.1 8.6 8.8 8.2 8.3 8.3 8.0 8.2 8.5 8.2
M1 YoY % 15.0 15.3 14.0 14.0 13.0 12.7 11.8 15.0 8.5 7.1 7.2 6.0 6.6 11.8
M0 YoY % 6.6 6.1 6.5 7.2 6.3 5.7 3.4 -13.8 13.5 6.0 4.5 3.6 3.9 3.4
New Deposits Increment Rmb bn 2,640 816 1,360 433 1,060 1,570 -793 3,860 -301 1,510 535 1,300 2,100 13,519
New Loans Increment Rmb bn 1,540 826 1,090 1,270 663 1,120 584 2,900 839 1,120 1,180 1,150 1,840 13,523 1,530 1,610
Total social financing Increment Rmb bn 1,772 1,196 1,489 1,834 1,036 1,613 1,148 3,061 1,167 1,355 1,560 761 1,179 19,443
Change of Fiscal Deposits Increment Rmb bn -617 1,160 -390 -397 1,050 -38 -1,233 981 -529 -480 715 386 -685 568
PBoC's Foreign Exchange Increment Rmb bn -34 -5 -1 1 2 2 -36 4 4 8 7 9 -464
Interest rates and RRR
1-year Deposit Rate End of Period % 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50
1-year Lending Rate End of Period % 4.35 4.35 4.35 4.35 4.35 4.35 4.35 4.35 4.35 4.35 4.35 4.35 4.35 4.35 4.35
RRR End of Period % 17.0 17.0 17.0 17.0 17.0 17.0 17.0 17.0 17.0 17.0 16.0 17.0 18.0 17.0 17.0
Exchange Rates
RMB/US$, PBoC's fixing rate End of Period Rmb/US$ 6.77 6.73 6.60 6.64 6.64 6.60 6.53 6.33 6.33 6.29 6.34 6.41 6.62 6.53
RMB/US$, spot rate End of Period Rmb/US$ 6.78 6.73 6.59 6.65 6.63 6.61 6.51 6.29 6.33 6.28 6.33 6.41 6.62 6.51 6.38
NEER Current 2010=100 115.9 115.9 116.3 117.7 117.9 117.9 117.8 118.6 121.9 122.0 123.1 124.5
REER Current 2010=100 118.9 119.0 119.6 121.2 121.6 121.4 121.6 122.6 127.6 125.9 126.2 127.3

Source: NBS, General Administration of Customs, PBoC, SAFE, MoF, MoC, Markit, CEIC, Wind Info, CICC Research

Please read carefully the important disclosures at the end of this report
9

Provided for the exclusive use of Tiger Chen at Boyu Capital on 26-Aug-2018 09:14 AM.
 CICC Research

Important legal disclosures

General Disclosures
This report has been produced by China International Capital Corporation Hong Kong Securities Limited (CICCHKS). This report is based on information available
to the public that we consider reliable, but CICCHKS and its associated company(ies)(collectively, hereinafter “CICC”) do not represent that it is accurate or
complete. The information and opinions contained herein are for investors’ reference only and do not take into account the particular investment objectives,
financial situation, or needs of any client, and are not an offer to buy or sell or a solicitation of an offer to buy or sell the securities mentioned. Under no
circumstances shall the information contained herein or the opinions expressed herein constitute a personal recommendation to anyone. Investors should make
their own independent evaluation of the information contained in this research report, consider their own individual investment objectives, financial situation and
particular needs. CICC does not provide tax, accounting, or legal advice to our clients, and all investors are advised to consult with their tax, accounting, or legal
advisers regarding any potential investment. Neither CICC nor its related persons shall be liable in any manner whatsoever for any consequences of any reliance
thereon or usage thereof.

The performance information (including any expression of opinion or forecast) herein reflect the most up-to-date opinions, speculations and forecasts at the time
of the report’s production and publication. Such opinions, speculations and forecasts are subject to change and may be amended without any notification. At
different periods, CICC may release reports which are inconsistent with the opinions, speculations and forecasts contained herein.

The analysts named in this report may have from time to time discussed with our clients, including CICC salespeople, traders, and other professionals, or may
discuss in this report, trading strategies that reference catalysts or events that may have a near-term impact on the market price of the equity securities discussed
in this report, which impact may be directionally counter to the analysts' published price target expectations for such stocks. Any such trading strategies are distinct
from and do not affect the analysts' fundamental equity rating for such stocks as described herein.

CICC’s salespeople, traders, and other professionals may provide oral or written market commentary or trading ideas that may be inconsistent with, and reach
different conclusions from, the recommendations and opinions presented in this report. Such ideas or recommendations reflect the different assumptions, views
and analytical methods of the persons who prepared them, and CICC is under no obligation to ensure that such other trading ideas or recommendations are
brought to the attention of any recipient of this report. CICC’s asset management area, proprietary trading desks and other investing businesses may make
investment decisions that are inconsistent with the recommendations or opinions expressed in this report.

Unless stated otherwise, any performance data quoted represents past performance. Past performance is not a indicator of future performance. No representation
or warranty is made that any returns indicated will be achieved. Certain assumptions may have been made in this analysis which have resulted in any returns
detailed herein. Changes to the assumptions may have a material impact on any returns detailed.

To the extent this material is provided to any recipient, this material is provided solely on the basis that the recipient has the capability to independently evaluate
investment risk and is exercising independent judgment in evaluating investment decisions in that its investment decisions will be based on its own independent
assessment of the opportunities and risks presented by a potential investment, market factors and other investment considerations.

This report is distributed in Hong Kong by CICCHKS, which is regulated by the Securities and Futures Commission. Queries concerning CICC Research from
readers in Hong Kong should be directed to our Hong Kong sales representatives. The CE numbers of SFC licensed authors of this report are disclosed by the
authors’ names on the cover page.

This report is distributed in Singapore only to accredited investors and/or institutional investors, as defined in the Securities and Futures Act, by China International
Capital Corporation (Singapore) Pte. Limited (“CICCSG”), which is regulated by the Monetary Authority of Singapore. By virtue of distribution by CICCSG to these
categories of investors in Singapore, disclosure under Section 36 of the Financial Adviser Act (which relates to disclosure of a financial adviser’s interest and/or its
representative’s interest in securities) is not required. Recipients of this report in Singapore should contact CICCSG in respect of any matter arising from or in
connection with this report. This report is not intended for and should not be distributed or passed on, directly or indirectly, to any other person in the jurisdiction
of Singapore.

This report is distributed in the United Kingdom by China International Capital Corporation (UK) Limited (“CICCUK”), which is authorised and regulated by the
Financial Conduct Authority. The investments and services to which this report relates are only available to persons of a kind described in Article 19 (5), 38, 47 and
49 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005. This report is not intended for retail clients. In other EEA countries, the report
is issued to persons regarded as professional investors (or equivalent) in their home jurisdiction.
This report will be made available in other jurisdictions pursuant to the applicable laws and regulations in those particular jurisdictions.

Continued on next page

Provided for the exclusive use of Tiger Chen at Boyu Capital on 26-Aug-2018 09:14 AM.
 CICC Research

Special Disclosures
CICC does and seeks to do business with companies covered in CICC Research. As a result, investors should be aware that CICC and/or its associated persons may
have a conflict of interest that could affect the objectivity of this report.

Disclosures in relation to the Companies contained this report could be found at http://research.cicc.com/disclosure_en, or in the published latest
company-specific research.

Distribution of ratings is available at http://research.cicc.com/en/disclosure/general.xhtml.

Explanation of stock ratings: “BUY” indicates analyst perceives absolute return of 20% or more over the next 6~12 months; “HOLD” between +20% and -10%;
“SELL” -10% and below. Asterisk denotes coverage initiation or resumption.

Explanation of sector ratings: Analyst expects a sector rated “OVERWEIGHT” to outperform the market by 10% or more over the next 6~12 months,
“EQUAL-WEIGHT” to end up between 10% below and 10% above the market, and “UNDERWEIGHT” to fall behind the market by 10% or more, over the next
6~12 months.

Copyright of this report belongs to CICC. Any form of unauthorized distribution, reproduction, publication, release or quotation is prohibited
without CICC’s written permission.
V160908
Editing: Wanbo ZHOU, Stephen FOSTER

Provided for the exclusive use of Tiger Chen at Boyu Capital on 26-Aug-2018 09:14 AM.
 Beijing Shanghai Hong Kong
China International Capital China International Capital China International Capital
Corporation Limited Corporation Limited – Shanghai Branch Corporation (Hong Kong) Limited
28th Floor, China World Office 2 32nd Floor Azia Center 29th Floor, One International Finance Centre
1 Jianguomenwai Avenue 1233 Lujiazui Ring Road 1 Harbour View Street
Beijing 100004, P.R. China Shanghai 200120, P.R. China Central, Hong Kong
Tel: (86-10) 6505-1166 Tel: (86-21) 5879-6226 Tel: (852) 2872-2000
Fax: (86-10) 6505-1156 Fax: (86-21) 5888-8976 Fax: (852) 2872-2100

Shenzhen Singapore United Kingdom

China International Capital China International Capital China International Capital
Corporation Limited – Shenzhen Branch Corporation (Singapore) Pte. Limited Corporation (UK) Limited
#2503, 25th Floor, China Merchants Bank Tower #39-04, 6 Battery Road Level 25, 125 Old Broad Street
7088 Shennan Boulevard, Futian District Singapore 049909 London EC2N 1AR, United Kingdom
Shenzhen 518040, P.R. China Tel: (65) 6572-1999 Tel: (44-20) 7367-5718
Tel: (86-755) 8319-5000 Fax: (65) 6327-1278 Fax: (44-20) 7367-5719
Fax: (86-755) 8319-9229

Beijing Jianguomenwai Avenue Branch Beijing Kexueyuan South Road Branch Shanghai Pudong New District Century Avenue
1st Floor, Capital Tower Room 1311, Block B, Raycom Infotech Park Branch
6A Jianguomenwai Avenue 2 Kexueyuan South Road, Haidian District Unit 4609-14, 46th Floor, Phase II Shanghai IFC, No.8
Beijing 100022, P.R. China Beijing 100022, P.R. China Century Avenue, China (Shanghai) Pilot Free Trade
Tel: (86-10) 8567-9238 Tel: (86-10) 8286-1086 Zone, Shanghai, 200120, P.R. China
Fax: (86-10) 8567-9235 Fax: (86-10) 8286 1106 Tel: (86-21) 5359-9800
Fax: (86-21) 2057-9488

Shanghai Huangpu District Hubin Road Branch Shenzhen Fuhuayilu Branch Hangzhou Jiaogong Road Branch
18th Floor, 3 Corporate Avenue,No.168 Room 201, Annex Building 1st Floor, Euro American Center
Hubin Road, Huangpu District, Shenzhen Duty Free Commercial Tower 18 Jiaogong Road
Shanghai 200021, P.R. China 6 Fuhua 1st Road, Futian District Hangzhou 310012, P.R. China
Tel: (86-21) 6386-1195 Shenzhen 518048, P.R. China Tel: (86-571) 8849-8000
Fax: (86-21) 6386-1180 Tel: (86-755) 8832-2388 Fax: (86-571) 8735-7743
Fax: (86-755) 8254-8243

Nanjing Hanzhong Road Branch Guangzhou Tianhe Road Branch Chengdu Binjiang Road (East) Branch
Section C, 30th Floor, Asia Pacific Tower 40th Floor, Teemtower 1st & 16th Floors, Shangri-La Center
2 Hanzhong Road, Gulou District 208 Tianhe Road Block 9B, Binjiang Road (East)
Nanjing 210005, P.R. China Guangzhou 510620, P.R. China Chengdu 610021, P.R. China
Tel: (86-25) 8316-8988 Tel: (86-20) 8396-3968 Tel: (86-28) 8612-8188
Fax: (86-25) 8316-8397 Fax: (86-20) 8516-8198 Fax: (86-28) 8444-7010

Xiamen Lianyue Road Branch Wuhan Zhongnan Road Branch Qingdao Middle Hongkong Road Branch
4th Floor, Office Building, Paragon Center 4301-B, Poly Plaza 11th Floor, Shangri-La Center
1 Lianyue Road, Siming District 99 Zhongnan Road, Wuchang District Block 9, Hongkong Road (M), South District
Xiamen 361012, P.R. China Wuhan 430070, P.R. China Qingdao 266071, P.R. China
Tel: (86-592) 515-7000 Tel: (86-27) 8334-3099 Tel: (86-532) 6670-6789
Fax: (86-592) 511-5527 Fax: (86-27) 8359-0535 Fax: (86-532) 6887-7018

Chongqing Honghu Road (West) Branch Tianjin Nanjing Road Branch Dalian Gangxing Road Branch
1st & 10th Floors, Ourui Lanjue Center 10th Floor, Tianjin Global Trading Center 16th Floor, Wanda Center
Block 9, Honghu Road (W), New North District 219 Nanjing Road, Heping District 6 Gangxing Road, Zhongshan District
Chongqing 401120, P.R. China Tianjin 300051, P.R. China Dalian 116001, P.R. China
Tel: (86-23) 6307-7088 Tel: (86-22) 2317-6188 Tel: (86-411) 8237-2388
Fax: (86-23) 6739-6636 Fax: (86-22) 2321-5079 Fax: (86-411) 8814-2933

Foshan Jihua 5th Road Branch Yunfu Xinxing Dongdi North Road Branch
12th Floor, Trend International Business Building 2nd Floor, Service Building C1, Wens Science &
2 Jihua 5th Road, Chancheng District Technology Garden, Dongdi North Road
Foshan 528000, P.R. China Xincheng Town, Xinxing County
Tel: (86-757) 8290-3588 Yunfu 527499, P.R. China
Fax: (86-757) 8303-6299 Tel: (86-766) 2985-088
Fax: (86-766) 2985-018
Changsha Chezhan Road (North) Branch
3rd Floor, Annex Building, Securities Tower
459 Chezhan Road (North), Furong District
Changsha 410001, P.R. China
Tel: (86-731) 8878-7088
Fax: (86-731) 8446-2455

Ningbo Yangfan Road Branch Fuzhou Wusi Road Branch Xi’an Yanta Branch
11th Floor, Building Five, 999 Yangfan Road 38th Floor, Henglicheng Office Building 21th Floor, Capitaland West Tower,
Hi-tech Industrial Development Zone No.128 Wusi Road, Gulou District No.64 Second Ring South Road West Section,
Ningbo 315103, P.R. China Fuzhou 350001, P.R. China Yanta District, Xi'an 710065, P.R. China
Tel: (86-574) 8907-7288 Tel: (86-591) 8625 3088 Tel: (+86-29) 8648-6888
Fax: (86-574) 8907-7328 Fax: (86-591) 8625 3050 Fax: (+86-29) 8648-6868

Provided for the exclusive use of Tiger Chen at Boyu Capital on 26-Aug-2018 09:14 AM.