China’s Pan-Pearl River Delta Regional Cooperation and Development

Edited by Anthony G. O. Yeh and Jiang Xu Hong Kong University Press 14/F Hing Wai Centre 7 Tin Wan Praya Road Aberdeen Hong Kong www.hkupress.org

© Hong Kong University Press 2011

ISBN 978-988-8028-50-4

All rights reserved. No portion of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or any information storage or retrieval system, without permission in writing from the publisher.

British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library.

Printed and bound by Condor Production Company Limited, in Hong Kong, China *VU[LU[Z

List of Figures vii

List of Tables ix

List of Contributors xi

Acknowledgements xvii

1. Regional Cooperation in China’s Transitional Economy 1 Anthony G.O. YEH and Jiang XU

Part I: International Experience and China’s Context 13

2. Strategic Planning and Regional Governance in Europe: Recent 15 Trends in Strategic Planning and Responses to Address Emerging Issues and Problems Louis ALBRECHTS

3. Rebuilding and Renewing America: A Twenty-First Century 43 National Infrastructure Investment Plan for the United States Robert D. YARO

4. Regional Cooperation in China’s Administrative Region Economy: 63 Its Links with Pan-Pearl River Delta Development Junde LIU vi Contents

Part II: Economic Development and Regional Cooperation 79

5. Regionally Coordinated Development and Planning in the Pearl 81 River Delta Baojun YANG and Dongxiao JIN

6. Political Economy of Regional Cooperation in the Pan-Pearl River Delta 103 Jiang XU and Anthony G. O. YEH

7. Establishment and Improvement of Regional Cooperation 125 Mechanisms in the Pan-Pearl River Delta Guanghan CHEN

Part III: Regional Infrastructure Development and Cooperation 137

8. Regional Transportation Development Strategy for the Pan-Pearl 139 River Delta Xiaohong CHEN, Tanfeng LI and Ye LI

9. Infrastructure Development in the Pan-Pearl River Delta: 159 Opportunities and Challenges Yue-man YEUNG and Gordon KEE

10. Government Power and its Impact on Pan-Pearl River Delta Regional 181 Cooperation: Cooperative Networks and Regional Governance De HU and Hailong MA

Part IV: Regional Real Estate Development and Cooperation 191

11. Land Use Structure Optimization and Urban Development in the 193 Pearl River Delta Changchun FENG and Jiajie ZHU

12. Provincial Construction Industry Competitiveness in the Pan-Pearl 215 River Delta Yousong WANG, Pin HOU, Yihong LIN and Yan ZHANG

13. Perspective and Prospects of China’s Pan-Pearl River Delta 231 Anthony G.O. YEH and Jiang XU

Index 235 -PN\YLZ

Figure 1.1 Location and boundary of the Pan-Pearl River Delta 5 Figure 2.1 Possible macro-structure for the overall strategic planning process 22 Figure 2.2 Tentative integration of different concepts of rationality 22 Figure 8.1 Pan-PRD geographical location and administrative region 141 Figure 8.2 Proportion of different economic sectors (2006) 142 Figure 8.3 Port freight volume in major metropolises in China (2006) 144 Figure 8.4 Pan-PRD regional freight proportion in China (1997–2006) 145 Figure 8.5 Distribution of regional expressways in the Pan-PRD (2004) 147 )LJXUH 6WXG\ÀRZRIWUDQVSRUWDWLRQGHYHORSPHQWVWUDWHJ\ 149 Figure 8.7 Pan-PRD expressway network plan 154 )LJXUH 3DQ35'ZDWHUWUDI¿FOD\RXWSODQ  155 Figure 9.1 The Pan-PRD regional highway network plan 165 Figure 9.2 Medium-to-long-term railway network plan 167 Figure 9.3 Major rivers and navigation channels in the Pan-PRD 170 Figure 9.4 Airports in the Pan-PRD (2006) 172 Figure 11.1 Various PRD indices as a proportion of provincial total (2006) 193 Figure 11.2 Population density in PRD cities (2006) (persons/km2) 194 Figure 11.3 PRD spatial distribution of cultivated land and urban land (2005) 196 Figure 11.4 Distribution of industrial land of nine PRD cities (2005) 197 )LJXUH (I¿FLHQF\RIFRQVWUXFWLRQODQG  198 )LJXUH (I¿FLHQF\RILQGXVWULDOODQG   199 Figure 11.7 Evolution of construction land in PRD 200 Figure 11.8 Changes of different types of land use in the PRD (1990–2002) 201 Figure 11.9 Changes of land use (1997–2005) 202 Figure 11.10 Changes of key types of land use (1997–2005) 203 Figure 11.11 Comparison of different land uses (1997–2005) 204 Figure 11.12 Per capita changes of different types of land use (1999–2005) 205 viii Figures

Figure 11.13 Demand and supply analysis of construction land in the PRD 209 Figure 12.1 Competitiveness curve of the construction industry in Pan- 227 PRD provinces ;HISLZ

Table 6.1 Transformation of accumulation regime and spatial policies 109 Table 6.2 Comparison of the major economic indicators of Pan-PRD 113 members (2005) Table 8.1 Overview of regional development (2006) 140 Table 8.2 Concentration of economic activities in the PRD (2006) 143 Table 8.3 Volume and distance of freight movement 146 Table 8.4 Focuses of various governments within the Pan-PRD 151 Table 8.5 Transportation infrastructure layout under the multi-core and 152 multi-layer concept Table 9.1 Major indicators of the Pan-Pearl River Delta (2006) 160 7DEOH 3DVVHQJHUDQGIUHLJKWWUDI¿FLQWKH3DQ35'   162 Table 9.3 Major statistics of transportation infrastructure in the Pan- 163 PRD (2006) Table 11.1 Overview of land use distribution in the PRD (2005) 195 7DEOH /DQGXVHHI¿FLHQF\RIFRQVWUXFWLRQODQGLQWKH35' ± 198 2004) 7DEOH /DQGXVHHI¿FLHQF\RIFRQVWUXFWLRQODQGLQVHOHFWHGGHYHORSHG 199 countries (2004) Table 11.4 Land resource consumption indices in PRD cities (2004) 207 Table 11.5 Land resource consumption indices in the PRD, Hong Kong 207 and Macao (2004) Table 11.6 Comparison of land resource potential in PRD cities (2004; 207 unit: 10,000 hectares) Table 11.7 Carrying capacity of land in PRD cities (2004) 208 Table 12.1 Assessment system of the competitiveness of the construction 218 industry Table 12.2 Original data of assessment indices of construction industry 221 competitiveness x Tables

Table 12.3 Standardization of assessment indices of construction industry 224 competitiveness (2004) Table 12.4 Weight of assessment indices of construction industry 225 competitiveness (2004) Table 12.5 Evaluation and ranking of construction industry 226 competitiveness of the Pan-PRD’s provinces *VU[YPI\[VYZ

(3)9,*/;:3V\PZ

Dr. Albrechts is a professor in the Department of Architecture, Urbanism and Planning of the Catholic University of Leuven, Belgium. His research interests include strategic spatial planning, sustainable development and regional design, and he has published widely on these issues. He is the founder and co-editor of European Planning Studies, a corresponding member of the German Academy for Research and Planning and a member of the Advisory Board of the Global Research Network on Human Settlements.

*/,5.\HUNOHU

Dr. Chen is a professor of economics and director of the Centre for Studies of Hong Kong, Macao and the Pearl River Delta at Sun Yat-sen University in Guangzhou. He holds a PhD in economics from Wuhan University. Dr. Chen is engaged in the teaching of microeconomics, macroeconomics and development economics. His research interests include economic theory and policy.

*/,5?PHVOVUN

Dr. Chen is a professor in the School of Transportation Engineering of Tongji 8QLYHUVLW\ 6KDQJKDL 6KH LV DOVR FKDLU RI WKH 7UDI¿F (QJLQHHULQJ DQG 7UDI¿F (QYLURQPHQW$FDGHPLF&RPPLWWHHRIWKH6KDQJKDL7UDI¿F(QJLQHHULQJ$VVRFLDWLRQ Her research interests include urban transport planning, regional transportation GHYHORSPHQWDQGSROLF\WUDQVSRUWDWLRQQHWZRUNPRGHOOLQJDQGWUDI¿FIRUHFDVWLQJ and the applications of transportation information technology. xii Contributors

-,5.*OHUNJO\U

Dr. Feng is a professor in the Department of Urban and Economic Geography and dean of the College of Urban and Environmental Sciences of Peking University. He is also director of the Center of Real Estate Studies and Appraisals. His research interests include urban and regional planning, land and real estate economics and LQIUDVWUXFWXUHSODQQLQJ+HZDVRQHRIWKH¿UVW scholars in China to conduct research RQODQGHFRQRPLFV'U)HQJZDVDOVRWKH¿UVWWRVXJJHVWDWKHRUHWLFDOPHWKRGIRU integrated appraisal in land economics, which was subsequently adopted by the Chinese government. In recent years, he has studied the relationship between real estate and urban planning and national economic development, Chinese urbanization and urban spatial pattern. He has made policy recommendations on China’s housing V\VWHPUHIRUPWKDWKDYHKDGDVLJQL¿FDQWLPSDFWRQUHDOHVWDWHGHYHORSPHQWDQG investment analysis. Now he is also the chief scientist of the Ministry of Science and Technology Key Technologies R&D Program, ‘Research on rural spatial planning and land use planning in China’.

/6<7PU

Ms. Hou is a technical engineer at the Logistical Department of 75576 Unit, Haikou, Hainan Province. She obtained her master’s degree from the Department of Civil Engineering of the South China University of Technology, Guangzhou. Her research interest is project management.

/<+L

Dr. Hu obtained his doctorate degree from the Department of Urban and Regional Economies of the East China Normal University, Shanghai. He has researched the G\QDPLFVDQGLQÀXHQFHRISXEOLFSRZHULQUHJLRQDOFRRSHUDWLRQIRUPDQ\\HDUVDQG has published many academic articles on these issues.

105+VUN_PHV

Dr. Jin is a senior town planner and professor at the China Academy of Urban Planning and Design, Beijing. He has completed over 60 projects related to regional planning, the strategic planning of urban development and master planning. He KDV SXEOLVKHG JXLGDQFH PDWHULDOV IRU WKH 1DWLRQDO &LW\ 3ODQQLQJ 4XDOL¿FDWLRQ Examination and has contributed his planning expertise to the development of planning theory and practice at Peking University, the Chinese National School of Administration, and the World Bank. Contributors xiii

2,,.VYKVU

0U.HHLVDUHVHDUFKDVVRFLDWHDWWKH+RQJ.RQJ,QVWLWXWHRI$VLD3DFL¿F6WXGLHV and a PhD candidate in the Department of Geography and Resource Management of the Chinese University of Hong Kong. His major research interests include urban and regional development, governance, planning and infrastructure development. He has been a member of the Macao Urban Concept Plan workgroup of the Macao SAR government.

30;HUMLUN

Mr. Li is a PhD candidate in the School of Transportation Engineering of Tongji University, Shanghai. His major is transportation planning and management, and his research focuses on urban and regional transportation planning. He has taken part in several studies on regional transportation planning and highway network planning, including the ‘Regional Transportation Development Strategy Study for the Pan-Pearl River Delta Area’ and the ‘Outline Plan of Highway and Waterway Infrastructure Facilities in the Yangtze River Delta Area’. His doctoral dissertation is entitled ‘Research on Regional Transportation: Economy Interaction Mechanism and Transportation Strategic Planning Methodology’.

30@L

Dr. Li is an associate professor in the School of Transportation Engineering of Tongji University, Shanghai. His research interests include transportation strategy and urban and regional transportation planning. He participates in regional transportation planning for the Pan-Pearl River Delta Area and the Yangtze River Delta Area as a principal investigator. His work, ‘Outline Plan of Highway and Waterway Infrastructure Facilities in the Yangtze River Delta Area’, won third prize at the China Navigation Science Awards.

305@POVUN

Ms. Lin is a lecturer in project management at Jiaying University, Meizhou, Guangdong Province.

30<1\UKL

Dr. Liu is a professor at the East China Normal University, Shanghai. He is also director of the Research Center of Administrative Division in China. His current xiv Contributors studies focus on administration planning; community, city and regional development research; urban planning and decision-making consultation. He has published more than 15 books and over 100 journals related to these studies.

4(/HPSVUN

Mr. Ma serves on the Party School of the CPC Tianjin Municipal Committee, Tianjin. He is also a lecturer in human geography. His major research interest is public management.

>(5.@V\ZVUN

Dr. Wang is a professor at the State Key Laboratory of Subtropical Architecture Science of the South China University of Technology, Guangzhou. He is also director of the Institute of Construction Management and Real Estate, and professor at the School of Architecture. His research interests and practice expertise are in project management, building economics and real estate. He has published over 100 academic papers on related subjects. Dr. Wang has also participated in engineering design and supervision in China.

?<1PHUN

Dr. Xu is an assistant professor in the Department of Geography and Resource Management of the Chinese University of Hong Kong. She is a specialist in urban and regional issues, and is currently leading research projects in intercity competition and cooperation and urban and regional governance in China. Dr. Xu has published widely on urban and regional development in leading international journals, and is co-author (with F. Wu and Anthony G. O. Yeh) of the award-winning book entitled Urban Development in Post Reform China: State, Market and Space (2007). She was the recipient of the 2008 Research Output Prize of the University of Hong Kong.

@(5.)HVQ\U

Mr. Yang is deputy director of the China Academy of Urban Planning and Design, Beijing. He is also executive director of the Urban Planning Society of China and WKH&KLQD/DQG6FLHQFH6RFLHW\+LV¿HOGVRIUHVHDUFKLQFOXGHUHJLRQDOHFRQRP\ urban and regional planning, urban design and real estate. Recently, he has carried out research on urban cooperation. Contributors xv

@(969VILY[+

Mr. Yaro is president of the Regional Plan Association, America’s oldest independent metropolitan policy, research and advocacy group. He is also a professor of practice in city and regional planning at the University of Pennsylvania. He has taught at Harvard University and the University of Massachusetts. He co-chairs the Empire State Transportation Alliance and the Friends of Moynihan Station, and is vice president of the Forum for Urban Design. He serves on Mayor Bloomberg’s Sustainability Advisory Board, which helped prepare PlaNYC 2030, New York City’s new long-range sustainability plan.

@,/(U[OVU`.6

Dr. Yeh is an academician of the Chinese Academy of Sciences. He is also chair professor and head of the Department of Urban Planning and Design, and director of the Centre of Urban Studies and Urban Planning at the University of Hong Kong. His main areas of specialization are urban development and planning in Hong Kong and China, and the application of GIS in urban and regional planning. At present, he is secretary-general of the Asian Planning Schools Association and the Asia GIS Association. He is on the editorial boards of several key international and Chinese journals, and has published over 30 books and monographs and over 180 academic journal papers and book chapters. He received the 2008 UN-HABITAT Lecture Award for his outstanding and sustained contribution to research, thinking and SUDFWLFHLQWKH¿HOGRIKXPDQVHWWOHPHQWV

@,<5.@\LTHU

Dr. Yeung is emeritus professor in the Department of Geography and Resource Management of the Chinese University of Hong Kong. He is also former director RIWKH+RQJ.RQJ,QVWLWXWHRI$VLD3DFL¿F6WXGLHVDQGKHDGRI6KDZ&ROOHJHDWWKH Chinese University of Hong Kong. Dr. Yeung is chairman of the Pan-Pearl River Delta Panel of the Central Policy Unit, research consultant for the Central Policy Unit and former member of the Commission on Strategic Development. His research interests focus on Asian cities, globalization, low-cost housing and China’s open door policy. He has published 46 books and over 140 articles and book chapters on these subjects.

A/(5.@HU

'U=KDQJLVDQDWLRQDOUHJLVWHUHG¿UVWFODVVVWUXFWXUDOHQJLQHHU6KHLVDQDVVRFLDWH professor in the Department of Civil Engineering of the South China University xvi Contributors of Technology, Guangzhou. Her research interests include building structure and project management.

A/<1PHQPL

Mr. Zhu is a planner at the China Academy of Urban Planning and Design, Beijing. +LV¿HOGVRIUHVHDUFKLQFOXGHXUEDQDQGUHJLRQDOGHYHORSPHQWODQGXVHDQGKRXVLQJ policies.  9LNPVUHS*VVWLYH[PVUPU*OPUH»Z ;YHUZP[PVUHS,JVUVT`

$QWKRQ\*2

7KLV ERRN KDV LWV RULJLQV LQ WKH &RQIHUHQFH RQ 5HJLRQDO &RRSHUDWLRQ DQG ,QIUDVWUXFWXUH &RQVWUXFWLRQ KHOG DW WKH 8QLYHUVLW\ RI +RQJ .RQJ LQ -XQH  ,Q D WLPH RI LQFUHDVLQJ JOREDO FRPSHWLWLRQ DQG ULVLQJ XUEDQ HQWUHSUHQHXULDOLVP UHJLRQDO FRRSHUDWLRQ SURYLGHV RSSRUWXQLWLHV WR RYHUFRPH WKH QHJDWLYH HIIHFWV RI SROLWLFDOIUDJPHQWDWLRQLQUHJLRQDODQGPHJDFLW\GHYHORSPHQWµ5HJLRQIHYHU¶LV JHQHUDWLQJFRQVLGHUDEOHH[FLWHPHQWDVZLWQHVVHGE\WKHLQFUHDVHGUHVHDUFKLQWHUHVW LQ WKH WKHRUHWLFDO DQG PHWKRGRORJLFDO LVVXHV VXUURXQGLQJ UHJLRQDO FRRSHUDWLRQ DQGJRYHUQDQFH$OWKRXJKUHJLRQDOFRRSHUDWLRQKDVDOVREHFRPHDQLPSRUWDQW GHYHORSPHQWLVVXHLQ&KLQDZLWKLQFUHDVHGGLVFXVVLRQIRFXVLQJRQVXFKUHJLRQV DVWKH*UHDWHU3HDUO5LYHU'HOWD 35' 3DQ35'DQG

9LNPVUHS*VVWLYH[PVUPU[OL,YHVM.SVIHSPaH[PVU

7KHDFFHOHUDWHGSDFHRIJOREDOL]DWLRQLQWKHSDVWIHZGHFDGHVKDVJHQHUDWHGDQHZ UHJLPHRIDFFXPXODWLRQDQGUHJXODWLRQZKLFKKDVOHGWRDSURFHVVRIµUHVWUXFWXULQJ UHVFDOLQJDQGUHRUGHULQJ¶LQDGYDQFHGFDSLWDOLVWVRFLHWLHV -HVVRS $QLPSRUWDQW FRQVHTXHQFHRIJOREDOUHVWUXFWXULQJKDVEHHQWKHHPHUJHQFHRIQHROLEHUDOSUDFWLFH ZKLFKIDYRXUVµVWURQJLQGLYLGXDOSULYDWHSURSHUW\ULJKWVWKHUXOHRIODZDQGWKH LQVWLWXWLRQV RI IUHHO\ IXQFWLRQLQJ PDUNHWV DQG IUHH WUDGH¶ +DUYH\   $V QHROLEHUDOLVPUDWLRQDOL]HVDQGSURPRWHVDµJURZWK¿UVW¶DSSURDFKLQZKLFKFLWLHV UHSUHVHQWNH\UHJXODWRU\DUHQDVEURDGSROLWLFDOWUDQVLWLRQVKDYHRFFXUUHGLQFOXGLQJ  $QWKRQ\*2

D VKLIW IURP PXQLFLSDO PDQDJHULDOLVP WR XUEDQ HQWUHSUHQHXULDOLVP DQG IURP WKH µPDQDJHULDOFLW\¶WRWKHµHQWUHSUHQHXULDOFLW\¶ +DUYH\+DOODQG+XEEDUG  &DSLWDOLVWFLWLHVDQGUHJLRQVDUHEHLQJUXQLQDPRUHEXVLQHVVOLNHPDQQHUPRELOL]LQJ GLYHUVHSROLWLFDOVWUDWHJLHVWRHQKDQFHWKHLUDWWUDFWLYHQHVVWRIRRWORRVHJOREDOFDSLWDO 7KLVHQWUHSUHQHXULDOVWDQFHRISURPRWLQJORFDOHFRQRPLFGHYHORSPHQWE\DGRSWLQJ ULVNWDNLQJ DQG SUR¿WPRWLYDWHG DSSURDFKHV KDV JLYHQ ULVH WR LQWHQVH LQWHUXUEDQ FRPSHWLWLRQ ;X DQG

5L^YLNPVUHSPaH[PVUHUK[OLLTLYNLUJLVM[OL7HU7LHYS9P]LY+LS[H

7KHSURFHVVRIQHROLEHUDOUHVWUXFWXULQJKDVQRWRQO\SUHYDLOHGLQGHYHORSHGFDSLWDOLVW HFRQRPLHVEXWLVLQFUHDVLQJO\DIIHFWLQJXUEDQSROLFLHVDQGSUDFWLFHVLQGHYHORSLQJ FRXQWULHV6LQFHWKHODWHVZKHQ&KLQDLQWURGXFHGWKHPDUNHWPHFKDQLVPDQG RSHQHGLWVGRRUWRWKHRXWVLGHZRUOGWKHFRXQWU\KDVEHFRPHLQFUHDVLQJO\LQWHJUDWHG LQWRWKHJOREDOPDUNHW7KHLPSOHPHQWDWLRQRIDVHULHVRILQVWLWXWLRQDOUHIRUPVKDV VLJQL¿FDQWO\FKDQJHGLWVHFRQRPLFDQGSROLWLFDOVWUXFWXUHGHFHQWUDOL]LQJSRZHUIURP WKHFHQWUDOJRYHUQPHQWWRORFDOJRYHUQPHQWVDQGIURPWKHVWDWHWRWKHPDUNHW %RLVRW DQG&KLOG )LVFDODQGODQGDQGKRXVLQJUHIRUPVKDYHWDNHQRQWKHJUHDWHVW LPSRUWDQFH LQ WKLV SURFHVV7KH IRUPHU KDV UHGH¿QHG WKH ¿QDQFLDO UHVSRQVLELOLW\ RIWKHFHQWUDODQGORFDOJRYHUQPHQWV =KDQJ ZKHUHDVWKHODWWHUKDYHPHDQW JUHDWHUIUHHGRPIRUORFDOLQLWLDWLYHVDVORFDOJRYHUQPHQWVDUHDEOHWRIUHHO\GLVSRVH RIWKHODQGZLWKLQWKHLUMXULVGLFWLRQV :DQJ $VDFRQVHTXHQFHHPSRZHUHG ORFDO JRYHUQPHQWV QRZ KDYH VXEVWDQWLDO GLVFUHWLRQ LQ FROOHFWLQJ IXQGV DQG LQ GHYHORSLQJ WKH ORFDO HFRQRP\ 1HROLEHUDO SUDFWLFHV LQ &KLQD KDYH DOVR FUHDWHG QHZLQFHQWLYHVDWWKHVXEQDWLRQDOOHYHOWRLQFUHDVHHI¿FLHQF\DQGSURGXFWLRQDQG KDYH WUDQVIHUUHG GHYHORSPHQW SUHVVXUH IURP WKH FHQWUDO VWDWH WR WKH ORZHU OHYHOV RI WKH VWDWH DSSDUDWXV :X  $W WKH VDPH WLPH KRZHYHU WKH ULVH RI µORFDO HQWUHSUHQHXULDOLVP¶ DQG LQWHQVH LQWHUXUEDQ FRPSHWLWLRQ KDYH DOVR OHG WR VHULRXV WHUULWRULDO SUREOHPV LQFOXGLQJ WKH GXSOLFDWLRQ RI LQIUDVWUXFWXUH SURMHFWV PDUNHW VHSDUDWLRQDQGWKHLQHIIHFWLYHXWLOL]DWLRQRIOLPLWHGODQGUHVRXUFHVWROXUHLQYHVWPHQW /LX=KDQJDQG=KDR 7KHQHJDWLYHHIIHFWVRISROLWLFDOIUDJPHQWDWLRQ DUHPRUHDSSDUHQWLQ&KLQDWKDQLQWKH:HVWDVORFDOJRYHUQPHQWVLQWKHIRUPHU DUHµXQLTXH¶PDUNHWSOD\HUVWKDWDUHVWLOOµVXEMHFWWRVRIWEXGJHWFRQVWUDLQWV¶ ;X DQG

µD PHDQV WR VHUYH FRQVROLGDWHG SRZHU RU IXO¿O FHQWUDO SODQQLQJ WDUJHWV ZLWKLQ D FHQWUDOO\DQGKLHUDUFKLFDOO\FRQ¿JXUHGVRFLRHFRQRPLFLQVWLWXWLRQ¶7KHQHZZDYH RI UHJLRQDO FRRSHUDWLRQ WKDW KDV HPHUJHG VLQFH WKH HFRQRPLF UHIRUPV RI  KDVEHHQPXFKPRUHPDUNHWRULHQWHGEXWLWZDVQRWXQWLOWKHPLGVWKDWWKH µWKLUGZDYH¶RIUHJLRQDOL]DWLRQVWDUWHGWRDLPIRUFRPSHWLWLYHXUEDQDQGUHJLRQDO JURZWK =KDQJDQG:X $VWKHFRPSHWLWLRQIRUH[WHUQDOFDSLWDODPRQJORFDO JRYHUQPHQWVKDVLQWHQVL¿HGWKHSUREOHPVFDXVHGE\DGPLQLVWUDWLYHIUDJPHQWDWLRQ KDYHVHULRXVO\KLQGHUHGWKHIXUWKHUGHYHORSPHQWRIXUEDQDQGUHJLRQDOHFRQRPLHV 1HZUHJLRQDORUJDQL]DWLRQVKDYHEHHQHVWDEOLVKHGDQGVWUDWHJLFSODQQLQJHIIRUWV KDYHEHHQGHYRWHGWRUHPRYLQJWKHµLQYLVLEOHZDOO¶EHWZHHQGLIIHUHQWMXULVGLFWLRQV 8QGHU WKHVH FRQGLWLRQV 3DQ3HDUO 5LYHU 'HOWD 3DQ35'  FRRSHUDWLRQ ZDV SURSRVHGIRUWZRUHDVRQV)LUVWWKH35'KDVUHFHQWO\VKRZQVLJQVRIDGHYHORSPHQW ERWWOHQHFNUHVXOWLQJIURPLQFUHDVHGODQGDQGODERXUFRVWVDQGDODFNRIGHYHORSDEOH ODQG

)LJXUH/RFDWLRQDQGERXQGDU\RIWKH3DQ3HDUO5LYHU'HOWD

 7KHMXULVGLFWLRQDOVHWWLQJRIWKH3DQ35'UHJLRQLVTXLWHFRPSOH[UHODWLYHWR LWV:HVWHUQFRXQWHUSDUWVLQWZRPDMRUZD\V)LUVWWKHUHDUHVLJQL¿FDQWGLIIHUHQFHV LQHFRQRPLFSHUIRUPDQFHDPRQJWKHSURYLQFHVLQYROYHG7KHSHUFDSLWD*'3RI *XDQJGRQJWKHZHDOWKLHVWSURYLQFHLVWZLFHWKDWRI*XL]KRXWKHSRRUHVW/HLHWDO  FDWHJRUL]HWKH3DQ35'¶VQLQHSURYLQFHVDQGWZRUHJLRQVLQWRIRXUGLIIHUHQW GHYHORSPHQWOHYHOV7KHLQVWLWXWLRQRIµRQHFRXQWU\WZRV\VWHPV¶IRU+RQJ.RQJ DQG0DFDRKDVIXUWKHUFRPSOLFDWHGWKHVLWXDWLRQ6HFRQGUHJLRQDOFRRSHUDWLRQLQ WKH35'KDVEHHQVXEMHFWWRPXOWLIDFHWHGSROLWLFDOLQÀXHQFHV'LIIHUHQWIURPWKH QHROLEHUDOSURFHVVLQWKH:HVWWKH&KLQHVHVWDWHFRQWLQXHVWRSOD\DVLJQL¿FDQWUROH LQ UHVRXUFH DOORFDWLRQ DQG HFRQRPLF GHYHORSPHQW =KDQJ  $OWKRXJK ORFDO JRYHUQPHQWVKDYHJDLQHGDJUHDWGHDORISRZHULQWHUPVRIXUEDQGHYHORSPHQWWKH\ DUHVWLOOVXEMHFWWRWKHGLUHFWLQWHUYHQWLRQRIWKHSURYLQFLDODQGFHQWUDOJRYHUQPHQWV 0D;XDQG

35'FDVH"  :KDWUROHGRGLIIHUHQWOHYHOVRIWKHVWDWHSOD\LQUHJLRQDOFRRSHUDWLRQ" :KLFK SURMHFWV DQG VWUDWHJLHV SURPRWH HFRQRPLF LQWHJUDWLRQ"   :KDW PDMRU SUREOHPVKDVWKH3DQ35'IDFHGGXULQJWKHUHJLRQDOFRRSHUDWLRQSURFHVV"+RZFDQ WKHVHSUREOHPVEHVROYHGWRDFKLHYHPRUHVXFFHVVIXOFRRSHUDWLRQ"7KHVHTXHVWLRQV ZLOOEHLQYHVWLJDWHGLQWKLVERRN

6]LY]PL^VM[OL)VVR

7KLVERRNH[SORUHVWKHH[SHULHQFHVRIDQGEURDGTXHVWLRQVUHODWHGWRJRYHUQDQFH DQGSODQQLQJLQIUDVWUXFWXUHFRQVWUXFWLRQDQGUHDOHVWDWHGHYHORSPHQWLQWKH3DQ 35'UHJLRQ,WVDLPLVWRGLVFRYHUPDMRUFRQFHUQVDQGHPHUJLQJWUHQGVDQGLGHQWLI\ ZKDWFDQEHOHDUQHGIURPFXUUHQWSUDFWLFH6XFKWKRURXJKDQDO\VLVDQGH[DPLQDWLRQ RIWKLVLPSRUWDQWÀRXULVKLQJDQGPXOWLGLPHQVLRQDOUHJLRQDOSURMHFWZLOOSURYLGH LQVLJKWVERWKIRUWKHIXUWKHUGHYHORSPHQWRIWKH3DQ35'LWVHOIDQGWKDWRIVLPLODU UHJLRQVLQRWKHUSDUWVRIWKHZRUOG7KHERRN¶VFKDSWHUVDUHJURXSHGLQWRIRXUPDMRU LQWHUUHODWHGVHFWLRQVDVIROORZV

6]LYZLHZL_WLYPLUJLHUK[OL*OPULZLJVU[L_[

,PPHGLDWHO\ IROORZLQJ WKLV LQWURGXFWRU\ FKDSWHU /RXLV $OEUHFKWV SURYLGHV DQ RYHUYLHZRIWKHSURFHVVHVDQGUHFHQWWUHQGVRIVWUDWHJLFSODQQLQJLQ(XURSH &KDSWHU   +H UHH[DPLQHV WUDGLWLRQDO ODQGXVH SODQQLQJ DQG DUJXHV WKDW LW KDV EHFRPH LQFUHDVLQJO\LQDGHTXDWHIRUWDFNOLQJRUPDQDJLQJWKHSUREOHPVDQGFKDOOHQJHVWKDW (XURSHIDFHV$µPRUHVWUDWHJLFLPSOHPHQWDWLRQOHGDQGGHYHORSPHQWOHG¶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µSURYLGH D NH\ WR DQ DFWLRQRULHQWHGDSSURDFK¶  ,Q &KDSWHU  5REHUW

PDQQHU*RYHUQPHQWVDWGLIIHUHQWOHYHOVFDQSOD\DQLPSRUWDQWUROHLQGLUHFWLQJWKH SODQWRPHHWWKHµWULSOHERWWRPOLQH¶6HUYLQJDVDSUHOLPLQDU\UHSRUWLQWHQGHGWR SURPSWIXUWKHUGHEDWHDQGUHVHDUFKWKLVFKDSWHUDOVRLQFOXGHVDGLVFXVVLRQRIWKH H[LVWLQJSUREOHPVDQGSODQQLQJIRFLRIWKHWKUHHPDMRUFRPSRQHQWVRIWKHQDWLRQDO LQIUDVWUXFWXUHLQYHVWPHQWSODQLHZDWHUHQHUJ\DQGWUDQVSRUW  *LYHQ WKHLU GLIIHUHQW HFRQRPLF DQG SROLWLFDO FRQWH[WV WKH DSSOLFDWLRQ RI WKH :HVWHUQ H[SHULHQFH WR &KLQD UHTXLUHV FDUHIXO UHH[DPLQDWLRQ $ V\VWHPDWLF H[SORUDWLRQRIWKHGLVWLQFWLYHFKDUDFWHULVWLFVRI&KLQD¶VUHJLRQDOGHYHORSPHQWZRXOG SURYLGH D YDOXDEOH IRXQGDWLRQ IRU VXFK D UHH[DPLQDWLRQ DQ DWWHPSW WKDW -XQGH /LX PDNHV LQ &KDSWHU  +H UHYHDOV DQ LPSRUWDQW FRQWH[WXDO IHDWXUH RI UHJLRQDO FRRSHUDWLRQLQ&KLQD¶VWUDQVLWLRQDOHFRQRP\DQGRQHWKDWUHSUHVHQWVDVLJQL¿FDQW GHSDUWXUHIURPWKH(XURSHDQDQG1RUWK$PHULFDQH[SHULHQFHV²WKH$GPLQLVWUDWLYH 5HJLRQ(FRQRP\ $5( *LYHQWKHµLQYLVLEOHZDOO¶EHWZHHQDGPLQLVWUDWLYHUHJLRQV ZKLFKKDVDSSDUHQWO\EHFRPHDEDUULHUWRUHJLRQDOFRRSHUDWLRQDQGGHYHORSPHQWLQ &KLQD/LXDUJXHVIRUDQLQYHVWLJDWLRQRIDµ*UHDWHU5HJLRQ¶FRRSHUDWLYHIUDPHZRUN ZLWKLQWKH$5(FRQWH[W+HFRQFOXGHVZLWKWKH3DQ35'FDVHVXJJHVWLQJWKDWWHQ NH\UHODWLRQVKLSVOLHDWWKHKHDUWRIFRRSHUDWLRQDQGGHYHORSPHQWLQWKH3DQ35'

,JVUVTPJKL]LSVWTLU[HUKYLNPVUHSJVVWLYH[PVU

%DRMXQ

WKHFXUUHQWSUROLIHUDWLRQRIUHJLRQDOFRRSHUDWLRQSURMHFWV;XDQG

9LNPVUHSPUMYHZ[Y\J[\YLKL]LSVWTLU[HUKJVVWLYH[PVU

2QHRIWKHIXQGDPHQWDOVRIHIIHFWLYHUHJLRQDOFRRSHUDWLRQLVDQHI¿FLHQWUHJLRQDO WUDQVSRUW QHWZRUN *LYHQ WKH FORVH UHODWLRQVKLS EHWZHHQ WUDQVSRUW DQG UHJLRQDO VRFLRHFRQRPLFGHYHORSPHQWWKH3DQ35'KDVFRPPLVVLRQHGDUHJLRQDOWUDQVSRUW GHYHORSPHQWVWUDWHJ\WRIDFLOLWDWHFRRSHUDWLRQDPRQJLWVFRQVWLWXHQWMXULVGLFWLRQV ;LDRKRQJ&KHQ7DQIHQJ/LDQG



9LNPVUHSYLHSLZ[H[LKL]LSVWTLU[HUKJVVWLYH[PVU

2QH RI WKH PDMRU SUREOHPV UHVXOWLQJ IURP &KLQD¶V SROLWLFDO IUDJPHQWDWLRQ LV WKH H[FHVVLYHXVHRIVFDUFHUHVRXUFHV HJODQG ,Q&KDSWHU&KDQJFKXQ)HQJDQG -LDMLH=KXDGRSWDUHJLRQDOSHUVSHFWLYHWRGLVFXVVKRZWRRSWLPL]HWKHUHODWLRQVKLS EHWZHHQ ODQGXVH VWUXFWXUHV DQG XUEDQ GHYHORSPHQW 'XULQJ SHULRGV RI UDSLG HFRQRPLF WUDQVIRUPDWLRQ WKH RSWLPL]DWLRQ RI ODQGXVH VWUXFWXUHV FDQ KHOS WR DFKLHYHVXVWDLQDEOHGHYHORSPHQWDVLWHQKDQFHVODQGXVHHI¿FLHQF\PDLQWDLQVODQG SURGXFWLRQDQGVWULNHVDEDODQFHIRUWKHHFRV\VWHP)HQJDQG=KXXVHWKH35'DVD FDVHVWXG\WRDQDO\]HFXUUHQWODQGXVHVWUXFWXUHVDQGHI¿FLHQF\DVZHOODVFKDQJHV LQWKHVSDWLDOGLVWULEXWLRQRIGLIIHUHQWODQGXVHVVLQFHWKHV7KH\LGHQWLI\WKH NH\ SUREOHPV LQ WKH 35'¶V FXUUHQW ODQGXVH SDWWHUQV DQG FRQFOXGH ZLWK SROLF\ UHFRPPHQGDWLRQVIRURSWLPL]LQJODQGXVHVWUXFWXUHV  ,QDGGLWLRQWRLQIUDVWUXFWXUHFRQVWUXFWLRQFRRSHUDWLRQLQLQGXVWULDOGHYHORSPHQW LV DQRWKHU LPSRUWDQW DVSHFW RI UHJLRQDO HFRQRPLF GHYHORSPHQW$V DQ HIIHFWLYH PHDQV RI FDSLWDO DFFXPXODWLRQ WKDW EULQJV DERXW YLVLEOH SK\VLFDO LPSURYHPHQWV DQG UDSLG HFRQRPLF JURZWK UHDO HVWDWH GHYHORSPHQW LQ WKH UHJLRQDO FRQWH[W KDV SURYRNHG LQFUHDVHG VFKRODUO\ LQWHUHVW 7KH VWXG\ FRQGXFWHG E\

GHYHORSPHQWRIWKHFRQVWUXFWLRQLQGXVWU\LQWKH3DQ35'7KHVHDXWKRUVHPSOR\ DQDVVHVVPHQWV\VWHPFRYHULQJUHVRXUFHVSURFHVVHVHI¿FLHQF\DQGHQYLURQPHQWDO IDFWRUVWRHYDOXDWHDQGUDQNWKHFRPSHWLWLYHQHVVRIWKHFRQVWUXFWLRQLQGXVWU\LQWKH QLQHPDLQODQGSURYLQFHVRIWKH3DQ35'7KHLUPRGHODGRSWVWKHPHDQVTXDUHG GHYLDWLRQ ZHLJKWHG GHFLVLRQ DSSURDFK DQG WKH (XFOLGHDQ JHRPHWULF GLVWDQFH PHWKRG7KHUHVXOWVSUHVHQWHGLQWKLVFKDSWHUVKRZWKDWWKHRYHUDOOFRPSHWLWLYHQHVV RIWKHFRQVWUXFWLRQLQGXVWU\LVUHODWLYHO\KLJKHULQ*XDQJGRQJ+DLQDQDQG+XQDQ SURYLQFHVDQGUHODWLYHO\ORZHULQ*XDQJ[L6LFKXDQ-LDQJ[LDQG*XL]KRXSURYLQFHV %DVHG RQ WKHLU GHWDLOHG HYDOXDWLRQ RI WKH LQGXVWU\¶V FRPSHWLWLYHQHVV LQ WHUPV RI UHVRXUFHVSURFHVVHI¿FLHQF\DQGWKHHQYLURQPHQW:DQJDQGKLVFROOHDJXHVSURYLGH VXJJHVWLRQVIRUHQKDQFLQJWKDWFRPSHWLWLYHQHVVDWWKHUHJLRQDOOHYHO  $VUHJLRQDOFRRSHUDWLRQLVEHFRPLQJLQFUHDVLQJO\SUHYDOHQWZRUOGZLGHPRVW QRWDEO\LQGHYHORSLQJFRXQWULHVWKHHPHUJHQFHRI3DQ35'UHJLRQDOFRRSHUDWLRQ SURYLGHV VFKRODUV ZLWK DQ H[FHOOHQW RSSRUWXQLW\ WR LQYHVWLJDWH WKH SHUIRUPDQFH RIODUJHVFDOHVXFKFRRSHUDWLRQLQWKHFRQWH[WRIJOREDOL]DWLRQ7KH¿QGLQJVDQG GLVFXVVLRQSUHVHQWHGLQWKLVERRNZLOODOVRDGGDQRWKHUGLPHQVLRQWRWKHRQJRLQJ GHEDWHRQDQGLQTXLU\LQWRUHJLRQDOL]DWLRQLQWKH&KLQHVHFRQWH[W

(JRUV^SLKNLTLU[Z

7KHUHVHDUFKSUHVHQWHGLQWKLVFKDSWHULVVXSSRUWHGE\WKH0UV/L.D6KLQJ)XQG DQG6WUDWHJLF5HVHDUFK7KHPHLQ&RQWHPSRUDU\&KLQD6WXGLHVRIWKH8QLYHUVLW\RI +RQJ.RQJWKH*HQHUDO5HVHDUFK)XQGRIWKH5HVHDUFK*UDQWV&RXQFLORI+.6$5 3URMHFW FRGH &8+.  DQG WKH 6RXWK &KLQD 3URJUDPPH RI +RQJ .RQJ ,QVWLWXWHRI$VLD3DFL¿F6WXGLHV 3URMHFWFRGH 

9LMLYLUJLZ

$NDR1$6WUDWHJ\IRU$3(&$-DSDQHVH9LHZ-DSDQ5HYLHZRI,QWHUQDWLRQDO $IIDLUV   %DODVVD%7KH7KHRU\RI(FRQRPLF,QWHJUDWLRQ+RPHZRRG,/5LFKDUG' ,UZLQ %HUU\%-/(&&RQNOLQJDQG'05D\7KH*OREDO(FRQRP\5HVRXUFH 8VH /RFDWLRQDO &KRLFH DQG ,QWHUQDWLRQDO 7UDGH (QJOHZRRG &OLIIV 1- 3UHQWLFH+DOO %RLVRW 0 DQG - &KLOG  )URP )LHIV WR &ODQV DQG 1HWZRUN &DSLWDOLVP ([SODLQLQJ &KLQD¶V (PHUJLQJ (FRQRP\ $GPLQLVWUDWLYH 6FLHQFH 4XDUWHUO\   ± )ORUHVWDQR363DVWDQG3UHVHQW8WLOL]DWLRQRI,QVWDWH&RPSDFWVLQWKH8QLWHG 6WDWHV3XEOLXV  ± 5HJLRQDO&RRSHUDWLRQLQ&KLQD¶V7UDQVLWLRQDO(FRQRP\ 

+DOO7DQG3+XEEDUG7KH(QWUHSUHQHXULDO&LW\1HZ8UEDQ3ROLWLFV1HZ 8UEDQ*HRJUDSKLHV"3URJUHVVLQ+XPDQ*HRJUDSK\  ± +DUYH\'7KH&RQGLWLRQRI3RVWPRGHUQLW\$Q(QTXLU\LQWRWKH2ULJLQVRI &XOWXUDO&KDQJH2[IRUG%ODFNZHOO ²²²$%ULHI+LVWRU\RI1HROLEHUDOLVP1HZ

=KDQJ - ; DQG ) :X  &KLQD¶V &KDQJLQJ (FRQRPLF *RYHUQDQFH $GPLQLVWUDWLYH$QQH[DWLRQDQGWKH5HRUJDQL]DWLRQRI/RFDO*RYHUQPHQWVLQ WKH

DFWLRQRULHQWHGIUDPHZRUN $VVRFLDWLRQ RI 6RXWKHDVW $VLDQ 1DWLRQV DFWRUVLQVSDWLDOSODQQLQJ $6($1  7DEOH  DGPLQLVWUDWLYHFDSLWDO DYLDWLRQ DGPLQLVWUDWLYHHFRQRPLFUHJLRQ FLYLOUHIRUP DGPLQLVWUDWLYHIUDJPHQWDWLRQ µRSHQVNLHVDJUHHPHQW¶ DGPLQLVWUDWLYHSODQQLQJ DGPLQLVWUDWLYHSRZHU %HLMLQJ GLYLVLRQRI %HLMLQJ+DQJ]KRX*UDQG&DQDO LQWHUIHUHQFHE\± %HLMLQJ7LDQMLQ+HEHLUHJLRQ $GPLQLVWUDWLYH 5HJLRQ (FRQRP\ $5(   %HLMLQJ7LDQMLQ7DQJVKDQ5HJLRQ %77  ± EHQH¿WRULHQWHGIUDPHZRUN DJUHHPHQWV %RKDL6HD5LP &(3$ ERUGHUV UHJLRQDO FRRSHUDWLRQ IUDPHZRUN    FDSLWDODFFXPXODWLRQ VHFWRU±±± UHJLPHWUDQVIRUPDWLRQ± DJULFXOWXUDO ODQG    )LJ   FDUERQHPLVVLRQV ± &KHQJGX&KRQJTLQJ$UHD DJULFXOWXUHUHJLRQDOFRRSHUDWLRQDJUHHPHQWRQ FHQWUDOFLW\HFRQRPLFUHJLRQ  FHQWUDOJRYHUQPHQWVXSSRUWRI $LUEXV FRPSDQ\   DLUIUHLJKW &HQWUDO 3DUW\ &RPPLWWHH¶V 'HFLVLRQ RQ DLUSRUWV± (FRQRPLF6\VWHP5HIRUP $PHULFDVHH8QLWHG6WDWHV &(3$VHH0DLQODQGDQG+RQJ.RQJ&ORVHU $PHULFDSURMHFW (FRQRPLF3DUWQHUVKLS$JUHHPHQW $UP\&RUSVRI(QJLQHHUV 86$  &KLQD $6($1&KLQD)UHH7UDGH$UHD *'3H[SHQGLWXUHRQLQIUDVWUXFWXUH $VLD3DFL¿F(FRQRPLF&RRSHUDWLRQ $3(&  µRSHQLQJXS¶DQGLQVWLWXWLRQDOUHIRUP  SRVWUHIRUPUHJLPH DVVHVVPHQWV\VWHPV UHJLRQDOFRRSHUDWLRQLQ± IRUFRPSHWLWLYHQHVVLQFRQVWUXFWLRQLQGXVWU\ UHJLRQDOGHYHORSPHQWLQ±± ±  ,QGH[

UHODWLRQVKLSZLWK+RQJ.RQJDQG0DFDR FRRUGLQDWLRQGHYHORSPHQWUHJXODWLRQVRQ ± FURVVERXQGDU\FRRSHUDWLRQ VRFLRHFRQRPLFUHVWUXFWXULQJ FURVVUHJLRQDOFRRSHUDWLRQ VWXGLHVRIFRPSHWLWLYHQHVVLQ &KRQJTLQJ 'DOLDQ± FLWL]HQVHPSRZHUPHQWRI 'HODQR)UHGHULFN FLW\FOXVWHUV VHHDOVR3HDUO5LYHU'HOWD8UEDQ 'HQJ;LDRSLQJ &OXVWHU &RRUGLQDWHG 'HYHORSPHQW 'HQPDUNODQGHI¿FLHQF\LQ 7DEOH 3ODQ  GHYHORSPHQW VHHDOVRFRRUGLQDWHGGHYHORSPHQW GHYHORSPHQW± HFRQRPLF GHYHORSPHQW UHJLRQDO &OHDQ:DWHU$FW 86$  GHYHORSPHQW FOLPDWHFKDQJH PRGHOV FRPPHUFH UHJLRQDO FRRSHUDWLRQ DJUHHPHQW REMHFWLYHV± RQDGPLQLVWUDWLRQRI GHYHORSPHQWSODQV VHHDOVR3DQ35'5HJLRQ FRPSHQVDWLRQ &RPSUHKHQVLYH 7UDQVSRUW 3ODQ 3HDUO FRPSHWLWLRQ DQG FRPSHWLWLYHQHVV VHH DOVR 5LYHU'HOWD8UEDQ&OXVWHU&RRUGLQDWHG PDUNHWFRPSHWLWLRQ ± 'HYHORSPHQW3ODQ  DPRQJFLWLHV GLDPRQGWKHRU\ DVVHVVPHQWPRGHOIRU± GLVFUHWLRQDU\SODQQLQJV\VWHPV JOREDO 'RQJJXDQ LQFRQVWUXFWLRQLQGXVWU\± GXDOWUDFNVRFLDOPDQDJHPHQWUHJLPH LQWHUUHJLRQDO± µGXNHGRPHFRQRP\¶VHHµHFRQRPLFGXNHGRPV¶ &RQIHUHQFH RQ 5HJLRQDO &RRSHUDWLRQ DQG GXSOLFDWLRQRILQIUDVWUXFWXUH ,QIUDVWUXFWXUH&RQVWUXFWLRQ[YLL FRQÀLFWUHVROXWLRQ HFRORJLFDOV\VWHPVUHJLRQDO± FRQVWUXFWLRQLQGXVWU\FRPSHWLWLYHQHVVLQ HFRQRPLFFRRSHUDWLRQ ± JRYHUQPHQWUROHLQ FRQVWUXFWLRQODQG± )LJ  UHJLRQDOPHPRUDQGXPRQ  µHFRQRPLFFRRUGLQDWLRQUHJLRQV¶ (&5V  GHPDQGIRU± HFRQRPLFGHYHORSPHQWGLVSDULW\LQ± ODQG XVH HI¿FLHQF\ RI     7DEOH H[SRUWRULHQWHG UHVHUYHG µHFRQRPLFGXNHGRPV¶ XVHSHUFDSLWD± HFRQRPLFJURZWK± FRQVWUXFWLRQSURFHGXUHV HFRQRPLFLQGLYLGXDOLW\ FRQVXPSWLRQSODQV (FRQRPLF-RLQW&RQIHUHQFH FRRSHUDWLYHIUDPHZRUNV HFRQRPLFSROLF\UHJLRQDO DFWLRQRULHQWHG HFRQRPLFUHIRUP± EHQH¿WRULHQWHG HFRQRPLFUHJLRQV FURVVUHJLRQDO± DGPLQLVWUDWLYH PHJDUHJLRQV± FHQWUDOFLW\ RSHUDWLRQRULHQWHG PDUNHWGULYHQ 3DQ35'±± HFRQRPLFUHVWUXFWXULQJVHHHFRQRPLFUHIRUP UHJLRQDO± HI¿FLHQF\FRPSHWLWLYHQHVV 7DEOH  &RRUGLQDWLRQ &RQIHUHQFH RI WKH 6HFUHWDU\  *HQHUDO (LVHQKRZHU'ZLJKW ,QGH[ 

HOHFWULFLW\JHQHUDWLRQ )RVKDQ HPSRZHUPHQW IRXUWUDFNDSSURDFK ORFDOJRYHUQPHQW± )UDPHZRUN$JUHHPHQWRQ5HJLRQDO&RRSHUDWLRQ RIFLWL]HQV LQWKH3DQ35' )$  HQHUJ\ )UDQFH SODQQLQJ UHSRUW RQ UHJLRQDO FRRSHUDWLRQ IUDPHZRUNSODQV± RQ IUDPHZRUNV VHH FRRSHUDWLYH IUDPHZRUNV UHQHZDEOH OHJDOIUDPHZRUNV VHFXULW\ IUHHWUDGH]RQHV VXSSO\± IUHLJKW WUDI¿F ±  7DEOH    (QHUJ\,QGHSHQGHQFHDQG6HFXULW\$FW  86$  JURZWKUDWH HQYLURQPHQW FRQÀLFW EHWZHHQ GHYHORSPHQW )XMLDQ DQG±  FRPSHWLWLYHQHVV LQ FRQVWUXFWLRQ HQYLURQPHQWDO FRPSHWLWLYHQHVV  7DEOH LQGXVWU\   HQYLURQPHQWDOSURWHFWLRQ *DOODWLQ$OEHUW DJUHHPHQWRQUHJLRQDOFRRSHUDWLRQRQ *DOODWLQ3ODQWKH± UHJLRQDOFRRSHUDWLRQRQ JDVROLQHUHDFWLRQWRKLJKSULFHRI (QYLURQPHQWDO 3URWHFWLRQ $JHQF\ (3$  *'3VHHJURVVGRPHVWLFSURGXFW 86$  JOREDOFRPSHWLWLYHQHVV HQYLVLRQLQJ±± JOREDOL]DWLRQ 7DEOH (XFOLGHDQJHRPHWULFGLVWDQFHPHWKRG JRYHUQDQFH VHHDOVRPXOWLOHYHOJRYHUQDQFH  UHJLRQDOJRYHUQDQFH ± (XURSH JRYHUQPHQW VHH DOVR FHQWUDO JRYHUQPHQW VSDWLDOSODQQLQJLQ±± ORFDOJRYHUQPHQWV VWUDWHJLFSODQQLQJLQ± LQWHUDFWLRQEHWZHHQOHYHOVRI (XURSHDQ 6SDWLDO 'HYHORSPHQW 3HUVSHFWLYH UHJXODWLRQZHDNQHVVRI ('63  UROHLQUHJLRQDOHFRQRPLFFRRSHUDWLRQ (XURSHDQ8QLRQ (8 ± JRYHUQPHQWSRZHU &RPSHQGLXP RI 3ODQQLQJ 6\VWHP DQG LPSDFWRQUHJLRQDOFRRSHUDWLRQ± 3ROLFLHV *RYHUQRU DQG 0D\RU &RQIHUHQFH RI WKH ODQGXVHSODQQLQJLQ± 6KDQJKDL(FRQRPLF5HJLRQ HYDOXDWLRQV\VWHPVVHHDVVHVVPHQWV\VWHPV µJUHDWDGPLQLVWUDWLYHUHJLRQV¶ *$5V  H[SRUWRULHQWHGHFRQRPLFGHYHORSPHQW *UHDWHU3HDUO5LYHU'HOWD H[SUHVVZD\V *UHHFH QHWZRUNV )LJ ± JUHHQKRXVHJDVHPLVVLRQV JURVVGRPHVWLFSURGXFW *'3  )DFXOW\ RI 7UDQVSRUW (QJLQHHULQJ 7RQJML 7DEOH  8QLYHUVLW\ )7(  (XURSHDQ8QLRQJURZWKRI )HGHUDO$YLDWLRQ$GPLQLVWUDWLRQ 86$  H[SHQGLWXUHRQLQIUDVWUXFWXUH )HGHUDO+RPH/RDQ0RUWJDJH$JHQF\ 86$  IRUHLJQWUDGHDVSHUFHQWDJHRI  SHUFDSLWD )RRGDQG'UXJ$GPLQLVWUDWLRQ 86$  *XDQJGRQJ IRUHLJQGLUHFWLQYHVWPHQW )',  FRPSHWLWLYHQHVVLQFRQVWUXFWLRQLQGXVWU\ IRUHLJQWUDGH  UHJLRQDOPHPRUDQGXPRQ  ,QGH[

FRRSHUDWLRQZLWK+RQJ.RQJDQG0DFDR +RQJ.RQJ,QWHUQDWLRQDO$LUSRUW ±± +RQJ.RQJ=KXKDL0DFDR%ULGJH HFRQRP\±  *XDQJGRQJ&RQVWUXFWLRQ%XUHDX±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± UHJLRQDOFRPSHWLWLYHQHVVDQG± FRPSHWLWLYHQHVVLQFRQVWUXFWLRQLQGXVWU\ LQGXVWULDOL]DWLRQ  LQGXVWU\UHJLRQDOFRRSHUDWLRQDJUHHPHQWRQ  +DLNRX LQIRUPDWLRQ LQGXVWU\ UHJLRQDO FRRSHUDWLRQ +DLQDQ DJUHHPHQWRQ FRPSHWLWLYHQHVVLQFRQVWUXFWLRQLQGXVWU\ LQIUDVWUXFWXUH VHHDOVRWUDQVSRUWDWLRQ  GXSOLFDWLRQRI KLJKZD\V )LJ LQIUDVWUXFWXUHGHYHORSPHQW LQWHUSURYLQFLDOSODQQLQJDQGFRQVWUXFWLRQ LQ3DQ35'± PHPRUDQGXPRQ LQ<5' UHJLRQDO LQIUDVWUXFWXUH RXWOLQH SODQ RQ XQFRRUGLQDWHG±  LQIUDVWUXFWXUHLQYHVWPHQW +ROODQG ODQG XVH HI¿FLHQF\ LQ  7DEOH LQ8QLWHG6WDWHV±±±  ,QODQG:DWHUZD\V&RPPLVVLRQ 86$  +RPHVWHDG$FW 86$  LQQRYDWLRQ +RQJ.RQJ VRFLRVSDWLDO FRRSHUDWLRQZLWK*XDQJGRQJDQG0DFDR LQVWLWXWLRQDOEDUULHUV ±± LQVWLWXWLRQDOHFRQRPLFV HFRQRP\ LQVWLWXWLRQDOÀH[LELOLW\ ODQGFRQVXPSWLRQ 7DEOH LQVWLWXWLRQDOL]DWLRQ RI FRQFHSWV DQG GLVFRXUVHV 0DLQODQG&KLQDUHODWLRQVKLSZLWK±   LQWHOOHFWXDO SURSHUW\ UHJLRQDO FRRSHUDWLRQ 35'UHODWLRQVKLSZLWK DJUHHPHQWRQ 6KHQ]KHQUHODWLRQVKLSZLWK LQWHUHVWVEDODQFHRI +RQJ.RQJDQG0DFDR$IIDLUV2I¿FHRIWKH ,QWHUJRYHUQPHQWDO3DQHORQ&OLPDWH&KDQJH 6WDWH&RXQFLO ,3&&  ,QGH[ 

LQWHUMXULVGLFWLRQDOFRRSHUDWLRQ 0DFDR LQWHUUHJLRQDOFRRSHUDWLRQDQGGHYHORSPHQW FRRSHUDWLRQ ZLWK *XDQJGRQJ DQG +RQJ ,QWHUVWDWH+LJKZD\6\VWHP 86$  .RQJ±± ± HFRQRP\ LQYHVWPHQW LQIUDVWUXFWXUH LQ 8QLWHG 6WDWHV ODQGFRQVXPSWLRQ 7DEOH ±±± 0DLQODQG&KLQDUHODWLRQVKLSZLWK± LQYHVWPHQW SURPRWLRQ DJHQFLHV GHFODUDWLRQ  RIUHJLRQDOFRRSHUDWLRQRIFLW\ 35'UHODWLRQVKLSZLWK µLQYLVLEOHZDOOV¶ =KXKDLUHODWLRQVKLSZLWK ,UHODQGVHH5HSXEOLFRI,UHODQG 0DLQODQG DQG +RQJ .RQJ &ORVHU (FRQRPLF ,WDO\ 3DUWQHUVKLS$JUHHPHQW &(3$   -DSDQODQGXVHHI¿FLHQF\LQ 7DEOH PDUNHWFRPSHWLWLRQ -HIIHUVRQ7KRPDV PDUNHWGULYHQHFRQRPLFUHJLRQ -LDQJPHQ PDUNHWRULHQWHGHFRQRP\ -LDQJ[L PDUNHWV\VWHPPDOIXQFWLRQLQJRI FRPSHWLWLYHQHVVLQFRQVWUXFWLRQLQGXVWU\ PDUNHWV  IRUPDWLRQ MXULVGLFWLRQDOIUDJPHQWDWLRQ RSHQQHVV UHJLRQDOIUDPHZRUN± ODERXUGLYLVLRQRI VHSDUDWLRQRI ODERXUWHFKQLFDOODFNRI XQL¿FDWLRQRIQDWLRQDO ODQGH[FKDQJH PDUNHWGULYHQHFRQRPLFUHJLRQ /DQG2UGLQDQFH 86$  PDUNHWRULHQWHGHFRQRP\ ODQGUHVHUYHV PHDQVTXDUHG GHYLDWLRQ ZHLJKWHG GHFLVLRQ ODQGXVH DSSURDFK FRQVXPSWLRQ PHJDFLWLHV GHPDQGIRU± +RQJ.RQJDQG0DFDRDV GLVWULEXWLRQ± PHJDUHJLRQV± HI¿FLHQF\± FRRSHUDWLYHIUDPHZRUNIRU± IXQFWLRQVFKDQJHVLQ± PHJD]RQH SODQQLQJ± 0HNRQJ5LYHUVXEUHJLRQ SRWHQWLDOFDUU\LQJFDSDFLW\ PHWURSROLWDQUHJLRQV /DRV 0LGGOHDQG6RXWK&KLQD(FRQRPLF$OOLDQFH OHJDOIUDPHZRUNV±  OHJLVODWLRQ VHHDOVRQDPHVRILQGLYLGXDOODZV PLJUDQWODERXU DEVHQFHRIVWDWH PLJUDQWVDQGPLJUDWLRQ /LQFROQ$EUDKDP PLQLQJ /LQ6KXVHQ 0LQLVWU\RI&RPPHUFH /LX3URIHVVRU-XQGH 0LQLVWU\RI&RPPXQLFDWLRQV 02&  ORFDOJRYHUQPHQWV± 0LQLVWU\RI&RQVWUXFWLRQ GHOHJDWLRQRIDXWKRULW\WR 0LQLVWU\ RI +RXVLQJ DQG 8UEDQ5XUDO HPSRZHUPHQWRI± 'HYHORSPHQW SRZHURI± 0LQLVWU\RI7UDQVSRUWDWLRQ UROHRI PLQRULW\JURXSV ORFDOSURWHFWLRQLVP PRQLWRULQJV\VWHPV   ,QGH[

PRQRFHQWULFFLWLHV 2FFXSDWLRQDO6DIHW\DQG+HDOWK$GPLQLVWUDWLRQ 0RUULOO/DQG*UDQW&ROOHJHV$FW 86$  86$  PXOWLOHYHOJRYHUQDQFH± µRQHFRXQWU\WZRV\VWHPV¶ PXOWLVWDWHSDUWQHUVKLSV  PXQLFLSDOJRYHUQPHQWVVHHORFDOJRYHUQPHQWV RSHUDWLRQRULHQWHGIUDPHZRUN 0\DQPDU 3DFL¿F5DLOZD\$FW 86$  1DQMLQJ 3DQ$VLDQ5DLOZD\ 1DWLRQDO$FDGHP\RI$GPLQLVWUDWLRQ 86$  3DQ%HLEX*XOI5HJLRQDO&RRSHUDWLRQ  3DQ3HDUO5LYHU'HOWD 3DQ35'  QDWLRQDOGHYHORSPHQW 86$ UROHRIIHGHUDO FHQWUDOJRYHUQPHQWVXSSRUWIRU JRYHUQPHQWLQ±  1DWLRQDO'HYHORSPHQWDQG5HIRUP&RPPLVVLRQ FKDOOHQJHVWRFRRSHUDWLRQ±± 1'5&  FRRSHUDWLYHIUDPHZRUNIRU±± µQDWLRQDOGLDPRQGWKHRU\¶ ± 1DWLRQDO)LYH

3DQ35'5HJLRQDO&RRSHUDWLRQDQG3ODQQLQJ SRUWV 3ULQFLSOHV 3RUWXJDO 3DQ35' 5HJLRQDO (FRQRPLF &RRSHUDWLRQ SRZHUVXSSO\VHHHQHUJ\ DQG7UDGH)DLU 35'VHH3HDUO5LYHU'HOWD 3DQ35' 5HJLRQDO 7DONV RQ (FRQRPLF DQG 35'&LW\&OXVWHU'HYHORSPHQW3ODQ 7UDGH&RRSHUDWLRQ 35' &LW\ *URXS 3ODQ 0DQDJHPHQW 2I¿FH 3DQ35'5HJLRQDO7UDQVSRUW +LJKZD\VDQG ± :DWHUZD\V  ,QIUDVWUXFWXUH 2XWOLQH 35'(FRQRPLF5HJLRQ 3ODQ SURFHVV FRPSHWLWLYHQHVV  7DEOH   3DQ35'7RXULVP$VVRFLDWLRQ ± SDUWQHUVKLSVPXOWLVWDWH SUR¿WVSXUVXLWRI SDVVHQJHUWUDI¿F SURWHFWLRQLVPVHHORFDOSURWHFWLRQLVP 3HDUO5LYHU'HOWD 35'  SURYLQFHV  GLVSDULWLHVEHWZHHQ HFRQRP\ 7DEOH UHODWLRQVKLSEHWZHHQ LQGXVWULDOVWUXFWXUH± 3XGRQJ ODQG FRQVXPSWLRQ  7DEOH  DQG  µUDGLDWLRQHIIHFW¶ 3DQ35'UHODWLRQVKLSZLWK UDLOZD\V± 3HDUO 5LYHU       UDWLRQDOLW\LQWHJUDWLRQRIFRQFHSWVRI  )LJ 3HDUO 5LYHU %DVLQ     UHDOHVWDWHGHYHORSPHQW  UHDOHVWDWHPDUNHW± µSROLF\]RQHV¶ UHIRUPFRQVROLGDWLRQDSSURDFK XQLTXHFKDUDFWHULVWLFVRI±± UHIRUPV VHHDOVRHFRQRPLFUHIRUP 3HDUO5LYHU'HOWD8UEDQ&OXVWHU&RRUGLQDWHG V\VWHPDWLF± 'HYHORSPHQW3ODQ 8&&'3 ± UHJLRQDODGPLQLVWUDWLRQV ± UHJLRQDOFRPSHWLWLYHQHVV SHUIRUPDQFHPHDVXUHPHQW UHJLRQDOFRRSHUDWLRQ±±±± SHUVRQDO DJHQGDV RI ORFDO JRYHUQPHQW  RI¿FLDOV± DJUHHPHQWV     ± SHWUROVHHJDVROLQH ±± SODQQLQJ VHHDOVRODQGXVHSODQQLQJVSDWLDO DSSURDFKHVWRUHJLRQDOL]DWLRQ± SODQQLQJVWUDWHJLFSODQQLQJ DVGHYHORSPHQWLVVXHLQ&KLQD UHSRUWV FKDOOHQJHVWR±±± SODQVVHHGHYHORSPHQWSODQV IUDPHZRUNV±± SOXUDOLVWGHPRFUDF\± LPSDFWRIJRYHUQPHQWSRZHURQ± SROLF\ LQ&KLQD± 3ROLWEXUR LQÀXHQFHRI$5(VRQ± µSROLWLFDOGXNHGRP¶ REVWDFOHVWR± SROLWLFDOIUDJPHQWDWLRQ UHJLRQDOFRRUGLQDWLRQ SRSXODWLRQ  7DEOH      UHJLRQDOGHYHORSPHQW±±± )LJ   SRSXODWLRQJURZWKLQ8QLWHG6WDWHV GHPDQGIRUWUDQVSRUWDWLRQDQG± 3RUWHU 0LFKDHO WKHRU\ RQ LQWHUQDWLRQDO XQEDODQFHG FRPSHWLWLYHQHVV UHJLRQDOHFRORJLFDOV\VWHP  ,QGH[

UHJLRQDO JRYHUQDQFH      6LQJDSRUH ± ODQGXVHHI¿FLHQF\LQ 7DEOH 5HJLRQDO3ODQ$VVRFLDWLRQ 86$  µ6PDUW*ULG¶ UHJLRQDOL]DWLRQVHHUHJLRQDOFRRSHUDWLRQ VPXJJOLQJ UHJLRQDO FRRSHUDWLRQ DJUHHPHQW UHJLRQDOSURMHFWVIRUPDWLRQRI DJDLQVW µ5HJLRQDO6WUDWHJLF7UDQVSRUWDWLRQ'HYHORSPHQW µVRFLDORYHUKHDGFDSLWDO¶ 6WXG\IRUWKH3DQ35'¶ VRFLDOVWUDWL¿FDWLRQ UHJLRQDOWUDQVSRUWDWLRQGHYHORSPHQWVWUDWHJ\ VRFLRVSDWLDOLQQRYDWLRQ  VRODUHQHUJ\ UHJXODWLRQJRYHUQPHQWZHDNQHVVRI 6RXWK&KLQD(FRQRPLF&RRUGLQDWLYH5HJLRQ UHJXODWLRQV 6&(&5  UHJXODWRU\SODQV VSDWLDOFRQWURO UHODWLRQVKLSVKDQGOLQJRI± VSDWLDOGHYHORSPHQW UHQHZDEOHHQHUJ\ PRGHOVRI 5HSXEOLFRI,UHODQG UHJXODWLRQVRQ UHVRXUFHFRPSHWLWLYHQHVV 7DEOH  VWUDWHJ\ UHVRXUFHV VHHDOVRKXPDQUHVRXUFHVQDWXUDO VWUXFWXUHDQGOD\RXW± UHVRXUFHV VSDWLDOQHWZRUNV UHJLRQDO VSDWLDOSODQQLQJVWUDWHJLF±± ULYHUQDYLJDWLRQFKDQQHOV± )LJ DFWRUVLQ 5RRVHYHOW)UDQNOLQ IRXUWUDFNDSSURDFKWR± 5RRVHYHOW7KHRGRUH WUDQVIRUPDWLYH SUDFWLFHV HPEHGGHG LQ UXUDODUHDV ± SODQQLQJLQ 6SHFLDO$GPLQLVWUDWLYH5HJLRQ 6$5  XUEDQDUHDVUHODWLRQVKLSZLWK VSHFLDO HFRQRPLF ]RQHV VHH DOVR QDPHV RI UXUDOSURMHFWV± LQGLYLGXDO]RQHV  VWDQGDUGV 6FDQGLQDYLD 6WDWH&RXQFLO VFLHQFH DJUHHPHQW RQ UHJLRQDO FRRSHUDWLRQ VWDWHLQWHUYHQWLRQ LQ VWUDWHJLFSODQQLQJ VHHDOVRVSDWLDOSODQQLQJ 6KDQJKDL WUDQVSRUWDWLRQ 6KDQJKDL(FRQRPLF5HJLRQ GHYHORSPHQWVWUDWHJLHVDQG± 6KDQJKDL (FRQRPLF 5HJLRQ 3ODQQLQJ 2I¿FH LQ(XURSH± 6(532  LQ8QLWHG6WDWHV 6KDQJKDL(FRQRPLF=RQH PDFURVWUXFWXUHIRUSURFHVV )LJ 6KDQJKDL (FRQRPLF =RQH 3ODQQLQJ 2I¿FH 6WUDWHJLF 3ODQQLQJ 6WXG\ RQ &RRSHUDWLRQ 6(=32  RQ 6SDWLDO 'HYHORSPHQW EHWZHHQ 6KDQJKDL-LDQJVKX=KHMLDQJ (FRQRPLF *XDQJGRQJ+RQJ.RQJDQG0DFDX &RRSHUDWLRQ DQG 'HYHORSPHQW  &RQIHUHQFH VWUDWHJLFSURMHFWV± 6KHQ]KHQ VWUDWHJLFVSDWLDOSODQQLQJ +RQJ.RQJUHODWLRQVKLSZLWK VXVWDLQDELOLW\± 6KHQ]KHQ,QWHUQDWLRQDO$LUSRUW  6KHQ]KHQ6SHFLDO(FRQRPLF=RQH VXVWDLQDEOHGHYHORSPHQW 6LFKXDQ FLW\FOXVWHUGHYHORSPHQWSODQDQG FRPSHWLWLYHQHVVLQFRQVWUXFWLRQLQGXVWU\ 6ZHGHQ  6ZHGHQ ODQG XVH HI¿FLHQF\ LQ  7DEOH  ,QGH[ 

WHFKQRORJ\ :DQJ

9LHWQDP