1. CHINA’S ECONOMY: ENTERING TROUBLED WATERS? Oscar Monterroso Chief Economist Central Bank of Guatemala May 9, 2008

2. China´s Rapid Growth Finally Ignites Overheating? Source: Global Insight

3. China´s Liquidity Growth Remains High Despite Rate Hikes Source: Global Insight

4. Excess Liquidity Has Not Yet Pressured CPI Inflation … Source: Global Insight

5. … But Has Inflated the Asset Markets Source: Global Insight

6. Price Control Has Kept China´s Domestic Energy Prices Long Under International Prices Source: Global Insight and Bloomberg

7. Exports to U.S. Main Drag on Recent Chinese Export Growth Source: Global Insight

8. Chinese Export Outlook Depends on Whether the U.S. Will Drag the Global Economy Source: International Monetary Fund

9. U.S. Recession Impactful on Chinese Exports Source: Consensus Forecast

10.  Economy could get squeezed domestically and externally.  Monetary policy tightening has started  Exports to the U.S. already slowing  Policy dilemma – exports and investment/inflation in different phases of cycle and require countering policies.  Without inflation risk, Beijing is willing to continue loose monetary policy to cushion the impact of sliding exports.  Inflation is key! Conclusion

11. May, 2008