Figure 14' China's overall debt level is rising dramatically, particularly corporate debt. which stands at 150% of GOP 250% 200% ISO% 100% 50% CISS Jaren Jene.19 MCcposorate debt nlvtal Gun vain 1.04V 1 10 Am II .6042 Jaui3 tedetteteic bans 90.4 Saar Zweargewbret. (EC Mess Swam. Figure 18: Rising risk of loss-making enterprises and possible defau€t ii credit growth slows further 20% 18%- • 16% - Id% - 12% 10% - 6% 4% - 2% - 0% ..lareettt Jan60 An.I* Jan.I1 jao.12 Jan13 stb of Loss Listing Enterptse %M total Lai9e MMerbun Anew %kr Icons gtowth IOH61 sera. Damao 1st CPC Aresto Awe's, 35% 30% 25% 20% 15% 10% 5% 0% r Figure 16: SOEs' RoA has not picked up, despite rising debt level 60% % 5 0% 4 0% 3.0% • 2.0% 1.0% • 00% 2004 20* 20:0 2007 2008 2009 2010 2011 2012 2013 Whin. 50t-,: nintlni On ilSin !Figure 15-. China's corporate debt has been rising faster than that of the US over the past few years 160% 140% 110% 100% HMS 60% 40% 20% 0% 2000 2009 2010 1011 2011 2013 M4-414Ctelt debt as a % cd GUI' UN time lee afthlee Ka 404 itOgiawip Meer(' Figure i9: Industrial profitability is at risk of declining as IP slows YbY% 3MMA YoY% 3MMA 100% 80% 60% 40% 20% 0% 20% 3 40% Jan-06 Jan Jan-10 Jan-12 ipakisti440413, ems estustoal Fre:op-no Noll ak401. 3isma &no% — CDC ettorav finew•IP r fact, Figure 17: In net profit margin has been low despite easy funding compared with private enterprises in China 9.0% 1 8.0% I 7.0% CO SO% 4 4.0%i 3.0% 1 2.0% 1 1.0%a of, 0.02. t i annualised Mont aaacrt• Rare CMC Sarthew snows 1.11 Caws Akar. &rot 1,,-" IP CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0055493 CONFIDENTIAL SDNY_GM_00201677 EFTA01364937