China Business Forecast Report Q3 2008

Executive Summary

Challenges Mounting For The Government

Chapter: Political Outlook

SWOT analysis

BMi Political Risk Ratings

Domestic Politics

Political Pressure Continues To Build On Government

Pressure on the Chinese government continues to grow as the build up to the Olympics, inflation, the country’s

exchange rate policy and even natural disasters draw increasing criticism.

Table: China Political Overview

Foreign Policy

Beijing-Tokyo: Smoother Ties, But Obstacles Remain

Chinese President Hu Jintao’s visit to Japan on May bodes well for warmer relations between Asia’s two

main powers, which are increasingly bound together by business and trade.

Chapter: Economic Outlook

SWOT analysis

BMi Economic Risk Ratings

Economic activity

is Growth Really a Telling indicator?

Having slowed for the third consecutive quarter in, we are anticipating economic activity to once again

accelerate in the second quarter of the year as the economy shakes off the ill effects of February’s snow storms.

Table: Economic activity

Monetary Policy

Inflationary Headache Continues To Build

China’s inflationary headache continues to build as consumer and producer prices soar.

Table: Monetary Policy

Exchange Rate Policy

Will% appreciation Be Enough?

We are forecasting the yuan to rise by% against the dollar , but growing domestic imbalances -

largely as a result of the country’s undervalued currency - have prompted speculation that a one-off revaluation

may be in the offing.

Table: Exchange Rate Policy

Regional Polic

Xinjiang: Far From Quiet On The Western Front

Since the China Western Development policy was introduced by the State Council in Janua, the sparsely

populated Xinjiang Uighur Autonomous Region (commonly referred to as Xinjiang) in the far Northwest of the

country has risen in prominence.

Chapter: Special Report

Business Outlook For Global Frontier Markets

Growing Fast On The new Frontier

Th states that BMI examines in a new report on our online service may make up only a small slice of the

world economy, but they possess characteristics that will see them gain importance in the eyes of investors and

global businesses over the coming years.

Table: Frontier Markets - Key Data and Projections For To Countries

Frontier investment

Potential and Pitfalls

The spectacular macroeconomic performance of frontier markets in recent years has been matched by mildly

successful efforts to deepen capital markets.

Table: GDP Per Capita, US$ (in Order Of % increase)

Table: Diversity Through Frontier Markets - Correlation Coefficients Janua-Apr

Table: Frontier Market indices

Regional Overview

From hidden Dragons To Final Frontiers

Laos

neighbouring Economies The Key To Growth

Laos’s GDP growth has been boosted in recent years as neighbours China, Thailand and Vietnam compete

for its natural resources.

Table: Yemen Economic activity

Yemen

huge Potential, But Don’t Bank On GCC Membership

Markets do not come much more frontier than Yemen, and, as would be expected, there is huge potential

for development, with the prospect of eventual GCC membership likely to act a key investment pull.

Table: Democratic Republic Of The Congo - Economic activity

Democratic Republic Of The Congo

Mining industry To Drive Growth

The Democratic Republic of the Congo’s mining industry will be a key driver of growth and is likely to attract

significant levels of FDI, with our real GDP forecasts standing at% and% a, respectively.

Cuba

investment Prospects after Fidel

The accession of a new leadership structure in Cuba has sparked excitement that th-year-old trade

embargo with the US may be lifted and Cuba may move toward market liberalisation.

Table: Cuba Macroeconomic Data and Forecasts

Mongolia

Minerals To Drive Economic Boom

Mongolia is in the midst of a massive resource-led economic boom that should lift GDP growth into the

double digits and underpin robust increases in exports and inflows of foreign investment capital over the

long term.

Table: Mongolia - Economic activity

Chapter: Business Environment

SWOT analysis

BMi Business Environment Risk Ratings

Business Environment Outlook

Table: BMi Business and Operational Risk Ratings

institutions

Table: BMi Legal Framework Ratings

infrastructure

Market Orientation

Table: Asia, FDI Inflows

Table: Top Export Destinations

Table: BMi Trade Ratings

Operational Risk

Chapter: Key Sectors

autos

Table: China autos Sector — historical Data and Forecasts

Petrochemical

Table: Chinese Petrochemicals Sector historical Data & Forecasts