1 Yangtze River Infrastructure Development Jon Monroe Consulting

Jon Monroe Consulting2

Yangtze River Overview An Emerging Economic Corridor Jon Monroe Consulting3

4 We believe a river system is more than the sum of it’s ports.

YR as Regional Sections YR Sections Upper ReachesGateway to Western China 7.3% of river Middle ReachesDistribution to all China14.7% of river Lower ReachesShuttle to Yangshan78.0% of river Delta and CoastalGateway to Int’l Markets32.0% of China Jon Monroe Consulting5

6 Yangtze River Upper Reaches Yibin to Yichang 850 Kilometers Middle Reaches Yichang to Nanjing: 1550 Kilometers Lower Reaches Nanjing to Shanghai: 402 km

YR as a Single Entity  Five Year Planning Mechanisms  Port Infrastructure  Road/Rail/Bridge Infrastructure  Hinterland Development  Provincial and City Plans  Urbanization Planning Jon Monroe Consulting7

Sichuan Pop: 84.3 Mil GDP:1.05 trillion RMB City: Chengdu Port: Luzhou, Yibin Chongqing Pop: 30.9 mil GDP: 411 billion RMB City: Municipality Port: Chongqing Jiangxi Pop: 43.4 mil GDP:547 billion RMB City: Nanchang Port:Jiujiang Hunan Pop: mil GDP: billion RMB City: Changsha Port:Yueyang Jiangsu Pop: 71.1 mil GDP: 2.56 trillion RMB City: Nanjing Port: Nanjing, Lianyungang Zhejiang Pop: mil GDP:1.86 trillion RMB City: Hangzhou Port: Ningbo Shanghai Pop: 17 mil GDP: 1.2 trillion RMB City: Municipality Port: Shanghai Anhui Pop: 60.7 mil GDP: 735 billion RMB City: Hefei Port: Tongling, Ma’anshan Hubei Pop: mil GDP: 915 billion RMB City: Wuhan Port: Wuhan, Yichang Yangtze River Basin Seven Provinces: mil Two Municipalities: 48.0 mil

Strategic Yangtze River Cities RegionPrimarySecondary UpperChongqing, ChengduLuzhou, Yibin MiddleWuhanYichang, Jiujiang, Wuhu LowerSuzhou, NanjingNantong Yangtze River DeltaShanghai, NingboLianyungang, Suzhou, Hangzhou, Nanjing Jon Monroe Consulting9 Note: Though the lower reaches runs through the Yangtze River Delta, each is covered separately. The dynamic of the coastal ports is distinct from the activity of the river ports in the lower reaches

Key YR Economic Regions Economic RegionLocationCoverageComments Shanghai Metro CircleYangtze River Delta Shanghai, Jiangsu, Zhejiang Covers all YRD SuXiChang Metro CircleLower Reaches JiangsuSuzhou-Wuxi Nanjing Metro CircleLower Reaches Jiangsu, AnhuiExtends YRD to Anhui Wuhan Metro CircleMiddle Reaches Hubei and beyond Primary Economic Corridor MR Chengdu – ChongqingUpper Reaches Chongqing- Sichuan Primary Economic Corridor UR Xuzhou Metro CircleN. JiangsuJiangsu, Anhui, Henan, Shandong Developing Economic Corridor Hangzhou Metro CircleZhejiang Jon Monroe Consulting10

Jon Monroe Consulting11 Yangtze River Upper Reaches Yibin to Yichang 850 Kilometers Middle Reaches Yichang to Nanjing: 1550 Kilometers Lower Reaches Nanjing to Shanghai: 402 km

Top 10 Yangtze River Ports RkPort %2010 1Suzhou Ports2,448,809 2,723, ,644, % Taicang1,450,495 1,513, ,211, % Zhangjiagang 814, , ,088, % Changshu 305, , ,6901.5% 2Nanjing1,280,265 1,200, ,415, % 3Jiangyin 502, , ,001, % 4Wuhan 473, , , % 5Chongqing 482, , ,0707.4% 6Nantong 443, , , % 7Zhenjiang 292, , , % 8Yangzhou 267, , , % 9Wuhu 164,106 99, , % 10Jiujiang80,927100, , % Others423,899493, , % Total6,981,6107,199, ,177, % Jon Monroe Consulting 12

Yangtze River 12 th 5 Year Plan Summary  Gov’t will spend rmb 36bil/US$ 5.6bil on Yangtze River under 12 th 5 Year Plan (vs rmb 13.2 bill in 11 th plan)  Devlopment of YR Port Clusters  Shift to Regional Cooperation  More investment in Hydroelectric power on river  Continue Dredging and standardization of container vessels  Expand Hinterlands, especially rail Jon Monroe Consulting13

YR Container Port Projections 2008 TEU2009 TEU%2020 TEUCAGR Upper Reaches549,130526, %5,430, % Middle Reaches973,9241,059, %9,300, % Lower Reaches5,458,5565,612, %40,360, % YR Sub Total6,981,6107,198, %55,090, % Coastal Ports42,470,00039,240, %88,900, % Total49,451,61046,438, %143,990, % Jon Monroe Consulting14 By 2020, YR & Delta design capacity will be greater than all of China throughput in projections based upon current port plans for new construction & expansion

Upper Reaches “Go West” Jon Monroe Consulting15

Jon Monroe Consulting Upper Reaches Fact Sheet  Includes the area from Yibin to Yichang  Chongqing can be reached by vessels of 1500 DWT  Expect the draft to increase to allow 2500 DWT vessels to reach Chongqing  Most cities on a hill due to rising waters of River  Major market in the Chongqing-Chengdu corridor reaching more than 100 million people  Transit to Shanghai by barge is 7-9 days  Increased investment in 12 th 5 Year Plan

Jon Monroe Consulting17 Yangtze River: Upper Reaches 850 Kilometers Luzhou to Yichang

Upper Reaches Cities Jon Monroe Consulting 18 Chongqing Chengdu Yibin 3 Gorges Dam Yichang 260km 263km 650km 177km 123km Luzhou 299km

Upper Reaches: Key River Ports Port2008 Ton2009 Ton%2008 TEU2009 TEU% Yibin7.72 mil8.52 mil10.4%N/A Luzhou11.21 mil11.64 mil3.8%66,23760, % Chongqing14.71 mil13.0 mil-11.6%434,797416, % Fuling2.41 mil5.5 mil128%30,08628,000 -7% Wanzhou8.22 mil8.78 mil6.9%18,01021, % Total44.27 mil44.33 mil7.2%549,130526, % Jon Monroe Consulting19 Source: Respective Port Authorities

Jon Monroe Consulting20 Upper Reaches: Infrastructure Challenges Source: Jon Monroe Consulting

Jon Monroe Consulting21 Source: Jon Monroe Consulting 6 to 8 moves per hour vs 32+

Jon Monroe Consulting22 Source: Jon Monroe Consulting

SIPG Chongqing Chayuan Terminal Source: Jon Monroe Consulting Jon Monroe Consulting

Upper Reaches Projections  Companies are relocating westward to the upper reaches of the Yangtze River; Examples: Foxconn, Hewlett Packard, Apple Computer, Amazon, APL and Maersk  Upper reaches container traffic is expected to grow ten times 2009 throughput by 2020  Three port groups driving this growth; Sichuan Port Group, Chongqing Port Group and Shanghai International Port Group  Financial crisis will expedite this movement as companies focus on cost  Most upper reaches container movement is direct to Shanghai via either Waogaoqiao or Yangshan Ports  Upper reaches infrastructure is being rapidly constructed to support port; rail intermodal movement might not be for some time  Chongqing Government will subsidize logistics companies who move into one of the development zones Jon Monroe Consulting24

Middle Reaches “Booming Central China” Jon Monroe Consulting25

Jon Monroe Consulting26 Middle Reaches Fact Sheet  Middle Reaches cover 1,550 km from Yichang to Nanjing  Key cities include Wuhan,Yichang, Jiujiang and Wuhu  Wuhan and Jiujiang have access to the Beijing-Guangzhou Railway  Access to Yangtze River and Railway makes these cities ideal for domestic distribution in China  Yichang will become hub and gateway to/from Sichuan as well as center of power industry  Transit to Shanghai by barge is 3 to 5 days  Middle Reaches Ports grew faster than Upper or Lower Reaches in 2009  Eleven River Ports are located in Middle Reaches  By 2015, the Middle Reaches capacity are expected to grow five time

Jon Monroe Consulting27 Middle Reaches Yichang to Nanjing: 1,550 km

Middle Reaches Key Cities Jon Monroe Consulting 28 Yichang 300km 44km Wuhan Wuhu Hefei Nanchang Jiujiang 142km 415km 469km 240km 133km 376km 3 Gorges Dam To Nanjing Yangtze River

Middle Reaches: Key River Ports Port2008 Ton2009 Ton%2008 TEU2009 TEU% Yichang33.32 mil35.38 mil 6.2%42,49644, % Wuhan55.92 mil54.09 mil-3.3%473,637563,700 19% Jujiang61.82 mil82.84 mil34%80,927100, % Wuhu55.14 mil57.09 mil 3.6%164,10699, % Sub Total mil mil11.2%761,166808, % Others mil mil 3.5%212,000251, % Total mil mil7.3%973,9241,059, % Jon Monroe Consulting29 Source: Respective Port Authorities

Wuhan Port Jon Monroe Consulting30 Yangsi TerminalYangluo Terminal Source: Jon Monroe Consulting

Jon Monroe Consulting31

Middle Reaches Projections  Middle Reaches represents the longest stretch of the river, winding through four provinces; Hubei, Hunan, Jiangxi & Anhui  This includes eleven port cities; Hubei (4), Hunan (1), Jiangxi (1) and Anhui (5)  Middle Reaches is expected to grow five times 2009 by 2015, a CAGR of 32.75%  Four port cities are instrumental to Middle Reaches growth; Yichang, Wuhan, Jiujiang and Wuhu  Two cities are the best positioned strategically to develop the Middle Reaches and Central China; Yichang and Wuhan  Wuhan will dominate Middle Reaches and the rapidly developing supporting rail and road infrastructure will support make Wuhan a major distribution hub for Central China  Expect growth in the middle reaches during the 12 th Five Year Plan (2011 – 2015) Jon Monroe Consulting32

Lower Reaches “Shuttle for Eastern Manufacturing” Jon Monroe Consulting

Lower Reaches Fact Sheet  Lower reaches cover 402 km from Nanjing to Shanghai  The lower reaches has the highest density of river ports with ten ports located on the YR  The lower reaches ports represents 78% of the container throughput of the Yangtze River  In 2008, Taicang Terminal passed Nanjing to become the largest container port on the Yangtze River and lower reaches  The majority of container throughput in most lower reaches ports moves direct to Shanghai terminals supporting Shanghai as a shipping center  Nanjing, Nantong and Taicang have international direct calls to Hong Kong, Taiwan, Japan, Korea and SE Asia  Lower reaches container capacity is expected to triple 2009 throughput by 2015 Jon Monroe Consulting34

Jon Monroe Consulting35 Lower Reaches Nanjing to Shanghai: 402 km

Lower Reaches Key Cities Jon Monroe Consulting36 Nantong Nanjing To Shanghai 52km 90km 192km Zhangjiagang Taicang Suzhou 87km Yangtze River From Wuhu 82km

Lower Reaches: Key River Ports Port2008 Ton2009 Ton%2008 TEU2009 TEU% Suzhou Ports mil 21.02,570,0152,723, Taicang 40.2 mil mil29.01,450,4951,513, Zhangjiagang mil 150 mil , , Changshu mil 44.6 mil , , Nanjing mil mil 9.2 1,280,2651,200, Nantong mil mil , , Sub Total mil mil12.6 4,293,5804,274, Other285.6 mil mil17.0 1,164,9761,338, Total mil mil14.45,458,5565,612, Jon Monroe Consulting37 Source: Respective Port Authorities

Taicang Terminal Jon Monroe Consulting38

Lower Reaches Projections - 1  The lower reaches of the Yangtze River runs through a single province, Jiangsu, encompassing ten river ports  The top four ports along the Yangtze River, by TEU throughput, are Taicang, Nanjing, Zhangjiagang and Jiangyin, all located in the lower reaches  The lower reaches container activity accounted for 78% of total Yangtze River container activity  Suzhou Port as a combined port group, is the largest container and general cargo port along the Yangtze River  In 2008, Taicang surpassed Nanjing to become the largest container port along the Yangtze River Jon Monroe Consulting39

Lower Reaches Projections - 2  In 2009, Zhangjiagang surpassed Nantong to become the largest general cargo port along the Yangtze River  Most of the manufacturing activity in the lower reaches has been contained in South Jiangsu  As manufacturing activity moves north in Jiangsu Province, Nantong becomes a more viable port, putting it in a more strategic position relative to the other Yangtze River ports  The close proximity of the ten lower reaches ports will create a competitive environment due to the overlapping hinterlands  Logistics facilities are moving from Shanghai to lower reaches cities like Nanjing, Suzhou and Kunshan Jon Monroe Consulting40

Yangtze River Delta “ An economic engine….. “ An economic engine…..& Gateway to the World” Jon Monroe Consulting

42 Yangtze River Delta Fact Sheet  The YRD accounts for 21.4% of China’s GDP with only 11.1% of the population and 2.2% of land area  The YRD embraces Shanghai Municipality and 15 cities of Zhejiang and Jiangsu Provinces  YRD cities are promoting regional integration for growth and economic activity  Most of the manufacturing sector along the Yangtze River has settled in this area  Five Metro Circles have been developed to drive YRD cities integration: Shanghai, SuXiChang, Nanjing, Xuzhou and Hangzhou  Rail, road and bridge infrastructure has been completed to support this integration including four major bridges; Donghai, SuTong, Hangzhou Bay and Zhoushan Cross Sea Bridge  Two largest Yangtze River ports, Taicang and Zhangjiagang; and two largest coastal ports in China, Shanghai and Ningbo are all located in YRD

Yangtze River Delta Economic Indicators Indicator YRD GDP (billion RMB)6, , , China GDP (billion RMB)30, , , YRD %21.7%21.4% YRD FDI (billion USD) China FDI (billion USD) YRD %48.9%50.8%47.9% Jon Monroe Consulting 43 Source: China National Statistics Bureau Note: GDP stated in RMB and FDI stated in USD

Jon Monroe Consulting44 Jon Monroe Consulting

Yangtze River Delta: Key Coastal Ports Port2008 Ton2009 Ton%2008 TEU2009 TEU % Shanghai582.0 mil592.0 mil1.7%28.01 mil25.0 mil-10.7% Ningbo mil mil11.0%10.93 mil10.5 mil- 3.9% Sub Total1, mil1, mil 6.0%38.94 mil35.5 mil-11.2% Others mil mil 15.2%3.53 mil4.4 mil25.7% Total mil1, mil 7.6%42.47 mil39.2 mil-7.6% Jon Monroe Consulting45

Jon Monroe Consulting46

Jon Monroe Consulting47 Major City Cluster Yangtze River Delta 130+ million people GDP 3.9 Tril yuan Emerging City Cluster Middle Reaches Yangtze River 58 million people GDP 1 Tril yuan Emerging City Cluster Chongqing-Sichuan 115 million people GDP 1.2 Tril yuan Yangtze River Corridor

Where Are We?  Mfg costs going up in YRD  Focusing on cooperative development among YRD Cities  Approximately 70% of the traffic along Yangtze River moves within YRD  Expect more cooperation between YRD cities and cities in the upper and middle reaches of Yangtze River  More companies will locate in YRD as a base to access central and Western China  Expect larger vessels to call Nanjing and move direct to foreign ports Jon Monroe Consulting48

Summary Jon Monroe Consulting49

Yangtze River Summary  Yangtze River may well become the world’s largest economic corridor by 2020  China’s central planning will encourage western movement and cooperation as well as competition among city’s and ports  The river can be regionalized into four sections: upper, middle, lower and delta & coastal  Rapid urbanization and an improved infrastructure will drive this process  Port development capacity may well exceed demand  By 2020, China will have the most sophisticated manufacturing and transportation infrastructure in the world connecting ports and cities via rapid rail, road and air networks.  This will be supported by a shift from dependence on exports to a more balanced trade flow and a strong domestic economy Jon Monroe Consulting50

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