EFTA Document EFTA01454163

SOEs' performance, unleash potential of private companies, better allocate resources as well as boost economic potential growth. According to our calculation, by Feb 2014, 62% of all Chinese listcos' market cap was SOEs either central or local ones, while private-owned only accounted for 38%. Among listed SOEs, 54% operated in monopolized sectors like oil & gas, banking, telecom and transportation, 42% operated in competitive sectors like food & beverage, auto, equipment, etc. Going forward, we expect 1) more monopolized central SOEs, in oil & gas, telecom and transportation, to open up for private capital investment with minority shares; 2) large chunk of local SOE shares in competitive sectors like F&B, apparel, electrics and healthcare will be taken over by private capitals; 3) more local SOEs assets to be listed or injected into listcos. More details of this reform will be elaborated in the upcoming SOE reform plan. Managing a ba€ance between innovation, development a€€d financial risk prevention While encouraging the innovation and modemization in China capital market, the authorities still keep the financial stability as paramount. Risk control, monitoring, reporting and disposal will go side by side with financial market evolvement. And most importantly, the bottom line of "no systemic or regional risk" will be firmly held, as per the Guideline. The policy also requires good management on the relationships of market vs. government, and investors at their own risk vs. investor protection. Investors should have a rational investment principle, awareness of risks, responsible for their actions and self-protection ability. Regulators will provide investors, especially small investors, the rights to know, to participate, to appeal and to supervise. The statement is in line with the "orderly default" concept proposed by regulators in regard of trust market and other shadow banking market risk. Lin Li (Mil Audrey Shi ( Autobahn AL Mobile Autobahn on the move FitistrrrtriRai-'+.'s Inrutin 0 Dick €wro for 111O,0 information Click, copy this link into a browser to access the report: hdpirpull db-gmreseaffiliconYptI797-555851224393.'D9 DataFlash 2014-05- 11 0900b8c090419cd0 pdf. If you have any difficulty accessing the report: please forward this email with the word 'PDF in the subject line to GMResearch.Subscriptionsedb.com. Alter 90 days you can access the report on our web site: hthailom db corn. You have received t€tis mail because you have subscribed to Geography: Asia-Pacific (EM). Discipline: Economics. Type of research: General For changes to your current research subscription, visit httpwrigm.db.comvsm or email GMResearch.Subscriptionsrfiadb.com. Please refer to the applicable legal disclaimers in the full report. CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0112128 CONFIDENTIAL SDNY_GM_00258312 EFTA01454163