15/04/2016 BBC Business Live


15/04/2016

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This is Business Live from BBC News with Alice Baxter

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China's mighty engine is losing steam - the Asian giant

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reports the weakest growth since the financial crisis in 2009.

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Live from London, that's our top story on Friday 15th April.

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China's economy expanded at an annual rate of 6.7%

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in the first three months of this year - better than many

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developed economies - but too weak for this Asian might.

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the fallout from BP's dramatic shareholder revolt as a $20 million

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pay package for the boss Bob Dudley is rejected.

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But will it change the way executive pay is agreed?

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And we'll keep you up to speed with the markets.

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Global stocks pretty mixed on Friday as investors await the outcome

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And we'll be getting the inside track on a pact to share

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information by the five largest economies in the EU in the wake

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of the Panama Papers leak with our guest editor Andrew Walker.

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And so on that note, we want to know, do you think Russia

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and France will play ball and share their

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Would you share your tax information?

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We start in China with the slowdown in the world's number two economy.

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The latest growth figures show the weakest growth

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numbers since 2009 - since the financial crisis.

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In the first three months of this year,

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China's economy expanded at an annual rate of 6.7%.

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That's down from the 6.8% we saw in the last three months of 2015.

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This chart shows growth since the 1980s.

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From 2000, you can see the boom which boosted

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the whole world's economy - followed by a sharp slowdown.

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China's facing an array of challenges.

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From weak global demand for its products

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But at home, it's become too reliant on huge,

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inefficient state run firms, often called Zombie Companies.

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Some six million jobs will need to be cut over the next few years.

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This week the International Monetary Fund called China one

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of the biggest threats to global financial stability.

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In particular, Chinese firms that are struggling to pay their debts.

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That could be a huge ticking time bomb.

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The IMF says loans worth almost $1.3 trillion

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I'm joined by Jinny Yan, Chief China Economist at ICBC

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Standard Bank and also by our Asia Business Correspondent,

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Thanks for coming in. Karishma, you have been looking at this over

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there. And every time we get numbers out of Beijing, the big question is,

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can we trust those numbers? That is what everyone always asks, as you

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say, when these sorts of figures come out of Beijing. And certainly,

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it is very much in line with what the market was expecting. Analysts

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said that growth should come anywhere between 6.6 and 6.8%.

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Even the Chinese Communist Party, the National People's Congress, when

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they laid out their plans for the economy, they said that growth

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should come in between 6.5% and almost as if these figures have been

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plucked from the minds of Beijing officials themselves. But a lot of

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questions being asked about how real these figures are and whether there

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is a more protracted slowdown on the ground and how sustainable this sort

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of growth is for the Chinese economy.

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where you are. Jinny, can I ask you this, is China addicted to stimulus?

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I think the world is addicted to China.

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To China having high growth. I think the world very much needs China to

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be strong at the moment. The reason for growth in the rest of the world

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is not very clear at the moment. think a strong China is very good

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for the rest of the world, particularly emerging economies. So

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it is not very clear what is behind the growth for the rest of the

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world? What is behind the growth in the numbers for China? What we see,

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the real news is not really the headlines. 6.7%, everyone was

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expecting that. That is not the story, the story is that other

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official statistics, investment and production, those beat economic

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forecasts. That is actually a very strong trend. What we need to be

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concerned about is what lies beneath that. And of course we are going

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back into the traditional model of growth, pumping credit from the

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banks, and also infrastructure, government spending. This is how

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China grows and this is how they know to grow their economy. But

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China is very much trying to rebalance that towards consumption.

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But that seems to be taking a bit of a back

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seat for the moment. Jinny, is trying on

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toll of 6.5%? -- is China on course. How big a problem is corporate debt

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answer, 6.5% is achievable. I think the government will do a lot and the

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government has a lot of physical power to be able to achieve that

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growth. On the corporate debt story, that is a key

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This is a problem that China is trying to solve. A lot of that

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corporate debt, 160% of GDP, is sitting on banks' balance sheets.

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them, and if the government needs to step in with a capital injection, it

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may ultimately have to. And some of those state owned enterprises... Can

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I just bringing Karishma back in? On the debt, we

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talked about this could be a possible default. Can

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China handle that kind of some? Well, what we have been witnessing

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is a 30 year miracle of economic growth in China, and that proves

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that China can pretty much handle whatever it says it wants to handle.

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Don't forget, Beijing officials always points to the fact that China

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has a massive that is one of the big buffers to

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these problems. It also points to the fact that it is trying to reform

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the economy, as Jinny points out, but this level of debt, pumping

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money into the system and creating this economic growth figure that we

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have seen, how sustainable is that going forward? Because it can only

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produce growth for a period of time. And that is the big concern over the

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next couple of years. But Karishma, with growth still the

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China, very briefly, might we see that a rebalancing within the

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economy taking a back-seat? Indeed. And I think we are seeing

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sides of that. This is a difficult political issue

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for the government. Don't forget, a lot of what the Chinese economic

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on is that stability, the idea that people will not have massive job

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losses. We have been hearing about the massive

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steel and coal services... Industries. Thank you very much to

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you both. In other news, the five largest

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European economies have agreed to work together to try

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to combat tax evasion - urging other countries

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to follow their example. The UK has joined France,

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Germany, Italy and Spain in agreeing to share information

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about the secret owners of businesses and trusts who hide

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behind so-called 'shell companies'. The deal, announced

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at the International Monetary Fund meeting in Washington,

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comes in the wake of the tax Microsoft is suing the US government

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over the right to tell its users when federal agencies want access

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to private data. It says keeping access requests

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secret is against the US constitution, which states that

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individuals should be made aware if the government searches

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or seizes their property. BP shareholders have rejected

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a pay package of almost $20 million for chief

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executive Bob Dudley at the oil Just over 59% of investors rejected

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Mr Dudley's 20% pay increase - which came despite record losses

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and thousands of job cuts. It is one of the largest rejections

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to date of a corporate The vote is non-binding on BP,

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but the company's chairman has We are having a quick look at the

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BizLive website. Car sales up across Europe, not a good story.

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Volkswagen, if you read the tablet, is down. Down by 1.6%. Despite the

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UK buying the highest number of VW cars

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since the uproar over that scandal. And the other one you

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wanted to highlight? Sales are up at the world's

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retailer, Carrefour, after robust sales in Spain and Italy.

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Let's take a look at what is happening around the world,

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kicks off its spring meeting on Friday. Finance

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leaders have been gathering in Washington, DC this week.

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High on the agenda, concerns over the global economy as well as

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possible risks of the UK exiting from the EU, known as a Brexit.

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Meanwhile, we will also find out how American

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consumers have been feeling lately when the latest figure for April

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gets released. And it is expected that they have been feeling slightly

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better thanks to steady hiring in the labour market. And of course the

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earnings season continues, with another banking

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giant, Citigroup, reporting its results for the first three months

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of this year. So far its rivals, such as JP Morgan

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and Bank of America, have all managed to surprise the market with

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slightly better-than-expected results. But you have to remember

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that investors have been expecting the

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worst quarter since the financial crisis, so it is the case of under

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promising and over performing. Well, let's move to Asian now

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where stocks are fairly subdued on Friday as investors digest

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China's slowing but relatively upbeat GDP numbers,

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which were in line Meanwhile here in Europe,

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after a buoyant few days lead by a surge in crude prices,

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markets have opened pretty flat - holding their breath before a key

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weekend meeting of oil producers - lead by Saudi Arabia

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and Russia to discuss The FTSE 100, fairly flat at the

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open. We are joined by Jane Sydenham,

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Investment Director, A familiar face to us all. Let's

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stay with the subject of oil and the

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markets. Not so much today but oil has had a bit of a surge and the

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markets have been that upward swing. It has had quite

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an effect. The oil majors have had a good run this week, feeling that

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perhaps finally the market is stabilising.

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This meeting at the weekend is going to be quite interesting though I do

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not think we are expecting that it will make a huge difference to the

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supply of oil. But for the first time in months and months, we might

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have a sense that maybe there is some discipline

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coming back into the market. That is what we are looking for. Can

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we switch gears? Nice little entry there, by the way. Every mistake

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that goes on here, I pick it up! I was just going to mention, crude

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prices, we saw this spike in equity earlier this week. Was that a case

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of markets taking their lead from what we saw happen to the crude

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price? Definitely. It was a downward force

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over the last few months, the sense that maybe to some extent it is

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good for consumers, if the prices for oil, but it is bad for stocks.

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-- if the prices fall. There is less demand in China for

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crude and commodities, so the sense of stabilisation is quite important.

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Mariko was mentioning it, but boy, what a difference a

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years can -- a year can make. 2016, pretty

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dismal, although 2015 was cracking. What is behind the change? To some

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extent, China. China is affecting growth around the world and the

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manufacturing part of most economies is performing brulee, even though

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services are doing well. That has affected all the major economies, we

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have seen a lot of for European companies coming down.

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A lot of those companies, to some extent,

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are under promising. 2-wood will be interesting to see if the earnings

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are as bad as expected. To some extent in the US, the strong dollar

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has been a worry because companies will be affected by that to some

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extent. If we see slightly better earnings, that would be good for the

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markets. Still to come, spring

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is in the air, the cherry blossom is in full bloom -

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so why such glum faces at the IMF and World Bank

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meetings in Washington? We'll tell you why -

:15:53.:15:54.

global economic jitters, headwinds from China

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and the damaging fallout You're with Business

:15:57.:15:58.

Live from BBC News. He's a game changer on the pitch

:15:59.:16:04.

and is now hoping to change Arsenal footballer turned

:16:05.:16:09.

entrepreneur Mathieu Flamini has been pioneering research

:16:10.:16:15.

into an alternative to oil With his business partner

:16:16.:16:18.

he co-founded GF Biochemicals, which is the first company to mass

:16:19.:16:28.

produce Levulinic Acid, which is said to be able to replace

:16:29.:16:30.

oil in all its forms - it could potentially

:16:31.:16:34.

be used as a bio fuel or to make pharmaceuticals,

:16:35.:16:36.

plastics, cosmetics and even Tanya Beckett began

:16:37.:16:40.

by asking how it works. It is acid which reacts

:16:41.:16:48.

exactly like oil. That means you can substitute oil

:16:49.:16:52.

in traditional products. And obviously you have

:16:53.:16:57.

patented the technology We have appropriate technology

:16:58.:17:02.

that we developed eight years ago. The company was created eight years

:17:03.:17:10.

ago in Italy. We started the production in 2015

:17:11.:17:14.

and today we are entering the market, increasing our

:17:15.:17:21.

production to 10,000 tonnes. That is obviously a relatively small

:17:22.:17:24.

amount compared to the whole market. How is it that you got started

:17:25.:17:29.

in investing in this business? I moved to Milan eight years ago

:17:30.:17:33.

to play for AC Milan. At the time we were already very

:17:34.:17:36.

interested in climate change. So we created this opportunity

:17:37.:17:43.

by meeting with a scientist and together we developed

:17:44.:17:53.

this bio technology. What skills do you

:17:54.:17:55.

bring to the table? For the operation we have a very

:17:56.:17:58.

strong team on the field. I'm more focused on the

:17:59.:18:09.

strategy of the company. Also what helps a lot is my business

:18:10.:18:13.

partner who is on He is dealing with the day-to-day

:18:14.:18:16.

operation. How have you managed to get sport

:18:17.:18:18.

and business to mix? I want to make clear something,

:18:19.:18:24.

my priority is football, But as you can imagine,

:18:25.:18:26.

all players have other interests outside the pitch

:18:27.:18:31.

and my interest is the bio economy. You're watching Business Live -

:18:32.:18:42.

our top story - China's economy grew at an annual rate of 6.7%

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in the first three months of this year -

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better than many developed economies And now let's get the inside

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track on a busy week Our economics correspondent

:18:55.:18:58.

Andrew Walker joins us now. But let's start with a story making

:18:59.:19:07.

headlines at the IMF and World Bank. They are going to share sensitive

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information, these five countries? Yes, I think so, if they can

:19:31.:19:33.

establish the owners of these so-called shell companies who are

:19:34.:19:41.

used to hide their high earnings from the tax companies, they say

:19:42.:19:44.

they will share that information with each other. It is five

:19:45.:19:49.

countries. They want the rest of the G20 to take up the baton and do the

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same thing. This is a battle with the tax authorities? Yes, where they

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have the information about who benefits from a company whether they

:20:04.:20:08.

are the formal legal owner of it, they will share that information

:20:09.:20:12.

with each other. Was this on the agenda? Or is this because of the

:20:13.:20:23.

Panama leaks? The IMF meetings, there is much going on in the

:20:24.:20:27.

sidelines, this was not formal IMF business as such, but no question

:20:28.:20:33.

there is a desire to be seen to be doing something rapidly in response

:20:34.:20:36.

to the panama papers. We have spoken about the impact of rising prices on

:20:37.:20:44.

crude oil, there is the key meeting of oil producers this weekend, and

:20:45.:20:49.

key people not attending, as well. We have two very large oil producers

:20:50.:20:54.

not there, the United States and China, although they are producers,

:20:55.:20:59.

they also very large importers, so on balance they tend to do better

:21:00.:21:03.

from a low oil price. They would not want to be seen to be propping the

:21:04.:21:09.

price up, but there is no question we have got Opec, probably all of

:21:10.:21:15.

Opec, which includes Saudi Arabia and Iran, but some suggestion the

:21:16.:21:21.

Iranian minister will not be there in person, sending one of his

:21:22.:21:25.

officials instead. Russia, Kazakhstan, Mexico. If they can

:21:26.:21:30.

agree to do something, that is a substantial chunk of the world oil

:21:31.:21:36.

market. Two points I want to make. We hear that may be they will freeze

:21:37.:21:43.

production at January levels, those levels were already record high.

:21:44.:21:48.

Iran is just back and it would like to build its output up to the

:21:49.:21:53.

pre-sanctions time of something like four million and it needs the money.

:21:54.:21:58.

They do, they feel very strongly that they are entitled to reclaim

:21:59.:22:03.

the market share they lost as a result of sanctions. There have been

:22:04.:22:08.

conflicting signals from Saudi Arabia about whether they would not

:22:09.:22:13.

be prepared to do some sort of freeze without Iran taking part. The

:22:14.:22:18.

deputy crown prince said that they would not, but I think Mosby both

:22:19.:22:22.

think that is not the last word from them on it, and the signs are that

:22:23.:22:25.

they will be prepared to make an exception for Iran -- but I think

:22:26.:22:33.

most people think. It would be no more than a phrase, as you said, but

:22:34.:22:38.

the prize is now 50% above the low it reached in January -- no more

:22:39.:22:44.

than a freeze. It is about $43, something like that, for Brent,

:22:45.:22:52.

compared to 27, in January, and the high reflects the expectation that

:22:53.:22:55.

there might be at least a freeze agreed, but the longer-term context,

:22:56.:22:59.

it was less than two years was $115, so a good deal less than

:23:00.:23:06.

half the peak it reached. Andrew, thanks for joining us.

:23:07.:23:16.

In a moment we have the business pages.

:23:17.:23:24.

But first here's a quick reminder of how to get in touch with us.

:23:25.:23:28.

We can keep you up-to-date with all the latest details with insight and

:23:29.:23:37.

analysis from the BBC team of editors and analysts from around the

:23:38.:23:42.

world. You can get involved with the BBC business web page. You can find

:23:43.:23:52.

us on Twitter and Facebook. Business live, on TV and online, whenever you

:23:53.:23:54.

need to know. What other business

:23:55.:23:56.

stories has the media been Joining again us is Jane Sydenham,

:23:57.:23:59.

Investment Director, We have found this story. In the

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Financial Times. We could not avoid it. The fallout of this shareholder

:24:10.:24:19.

revolt of BP shareholders, voting in huge numbers against Bob Dudley's

:24:20.:24:26.

20% pay rise. It is a complex issue, it is true that he can't be blamed

:24:27.:24:32.

for the level of the oil price and BP went into loss last year because

:24:33.:24:36.

it was paying out in relation to the deepwater horizon disaster. On the

:24:37.:24:41.

other hand, the absolute level of his pay and the multiple compared to

:24:42.:24:49.

the average pay for a BP employee. The force of this vote against this

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kind of pay package, does this mark a turning point? I think it does,

:24:54.:25:01.

actually. 60% vote against is quite something and in the past we simply

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have not seen that kind of level of protest and I think shareholders are

:25:07.:25:09.

becoming more activist and they are thinking about shareholder

:25:10.:25:14.

responsibility, it is a good thing. We only have 30 seconds. Microsoft

:25:15.:25:20.

suing the Justice Department? Another Civil Liberties action on

:25:21.:25:28.

behalf of tech companies, Apple are doing the same, Microsoft are

:25:29.:25:32.

concerned that the bar for what is a reasonable request for privacy is

:25:33.:25:36.

just too low. Consumers should know if their phone is being looked at by

:25:37.:25:41.

the government? Absolutely. There is a big increase, the US Justice

:25:42.:25:49.

Department looking at this. Yes. Jane, thanks for joining us.

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