EFTA01458558

2 October 2015 Global Economic Perspectives: A hard landing in Chine? relative sizes of industry and services in the 2014 real GDP accounts. This composite index has been stable in recent months (as has GDP growth) but at a historically low level except for the depths of the 2008/09 crisis. 'Figure 6: Composite PM's 'Figure 7: Employment conditions from PMI surveys 61 56 NBS Markit NBS —Markit 59 55 57 54 53 55 52 53 51 51 50 --- 49 49 47 48 45 47 2007 2008 2009 2010 2011 2012 2013 2014 2015 Sant lin r &xi Oftewhe Bina Rensec* 2007 2008 2009 2010 2011 2012 2013 2014 2015 Saurc•s ?Worn Deantne Bin Renort• We follow also the employment conditions in these surveys, reported in Figure 7 above. Not surprisingly, both surveys show employment conditions have been deteriorating since 2011. Interestingly, while the NBS headline indices have been reasonably stable, employment conditions seem to have continued to weaken according to this survey. Tentatively, we suggest this might be evidence that growth in China has continued to be very slightly below potential - even if growth is stable, firms are continuing to reduce employment. We can use these surveys to form a view on growth in Q3 since both surveys correlate quite well with current quarter GDP since 2009 - the NBS better than the Markit survey.' Figures 8 and 9 therefore plot the quarterly average composite indexes against GDP growth. The Q2 observations are identified in red. 'Figure 8: Markit composite PMI vs GDP growth 13 12 11 10 9 7 6 5- 4 45 GDP %Yost: • y = 0.5185x- 18.601 R2 = 0.7579 02 in red • Markit 4.1 Figure 9: NBS composite PM1 vs GDP growth t3 %yrs/ y = 0.9262x - 41.521 = 0.8548 12 11 10 1 8 7 .1 61 5 1 47 49 51 53 55 57 59 61 Sans Maras' Deanne Int b..ae 02 in red Sane. Hew/ and thcaCti< SAM i•••/01 'While composite indexes for these surveys are available since 2006 'Mallon and 2007 INDS, the current version of the Chinese GDP statistics has Qtly been backdated to 2009. Deutsche Bank Securities Inc. • NBS 65 67 69 Page 7 CONFIDENTIAL — PURSUANT TO FED. R. CRIM. P. 6(e) DB-SONY-0118531 CONFIDENTIAL SDNY_GM_00264715 EFTA01458558