EFTA Document EFTA01459007

6 December 2015 Update: China Monthly: Rising challenges will trigger more policy easing in 2016 divergence in monetary policy between China and US will likely make financing of external debt increasingly more expensive. According to the BIS data, as of June 2015, China's cross-border borrowings were around USD1.2trn in Q2 2015. Although it is likely the 3Q number would have declined, the overall size of short- term debt remains quite sizeable. Second. China is likely to continue to face the impossible trinity — explicit monetary easing through interest rate/RRR cuts directly conflicts with its FX policy to keep USD/CNY spot stable, while opening up the capital account. In our view, the persistent desire to limit CNY weakness will continue to increase the risk of misalignment in monetary conditions with fundamentals, increasing vulnerability to possible policy mistakes and triggering further capital outflows. We believe the Chinese authorities will have to be more accommodative to a weaker RMB so that they can ease monetary policy more to help the slowing economy. Limn Liu, Hong Kong, ME Perry Koiodjoia Hong Kong Page 6 China: Deutsche Bank forec.5-i . 2014 National Income Nominal GDP (USD bn) Population (m) GDP per capita (USD) Real GDP (YoY%)' Private consumption Government consumption Gross capital formation Export of goods & services Import of goods & services Prices, Money and Banking CPI (YoY%) eop CPI (Yor)61ann avg Broad money (M2) sop Bank credit (YoY%) eop Fiscal Accounts (% of GDP) Budget surplus Government revenue Government expenditure Primary surplus External Accounts (USD Merchandise exports Merchandise imports Trade balance % of GDP Current account balance % of GDP FDI (net) FX reserves (.00 FX rate (eop) USD/CNY Debt Indicators (% of GDP) Government Debt Domestic External Total external debt in USD bn Short-term (% of total) General (VoY%) Fixed asset inv't (nominal) Retail sales (nominal) Industrial production (real) Merch exports (USD nominal) March imports (USD Financial Markets (sop) 1-year deposit rate 10-year yield (%) USD/CNY 10,357 1,369 7.563 7.3 8.5 4.4 7.2 4.7 2.7 1.5 2.0 12.3 13.4 -1.8 22.0 24.1 -1.4 2,342 1.959 383 3.7 321.3 3.1 208.7 3,899 6.1 37.1 36.9 0.2 8.6 896 69.4 15.7 12.0 8.3 6.0 0.5 Current 1.50 3.18 6.40 2015F 2016E 2017F 10,924 11,218 11,887 1.376 1,382 1,388 7,939 8.115 8,562 7.0 6.7 6.7 7.6 7.7 7.9 7.2 7.2 7.2 6.3 6.1 6.1 -1.2 5.0 5.6 -103 7.2 7.5 1.5 1.8 1.9 1.4 1.8 13 13.6 12.7 12.4 14.7 14.0 13.9 -3.2 -3.5 -3.5 22.5 22.5 22.6 25.7 26.0 26.1 -2.7 -3.0 -2.9 2,281 2,372 2,474 1,648 1,739 1,848 633 633 626 5.8 5.6 5.3 360.5 314.1 297.2 3.3 2.8 2.6 205.0 224.4 237.7 3,470 3.500 3,600 6.4 6.7 6.7 39.6 40.0 40.5 39.4 39.8 40.3 0.2 0.2 0.2 15.5 16.0 16.5 1,693 1.795 1,961 70.0 70.0 70.0 10.6 10.5 10.5 10.6 11.4 11.8 6.3 6.2 6.2 -2.6 4.0 4.3 -15.9 5.6 6.2 18Q1F 1802F 1804F 1.50 1.50 1.00 3.00 3.00 2.80 6.40 6.50 6.70 Sate* a 08 0lebefidadva Resaro.Me cnO Saints Non O) Giowa own Cr GOP owponents insyra mast erne GOP oval mu ad ro annyesissay banyan bestanana oileuiscr from wyealan nocaa mead al fracfry tett troaplolarlen and PAK borces Sue Deutsche Bank AG/1-long Kong CONFIDENTIAL — PURSUANT TO FED. R. CRIM. P. 6(e) CONFIDENTIAL SDNY_GM_00265380 DB-SDNY-0119196 EFTA01459007