12/02/2014 World Business Report

visits to a resort in the North. Those are the latest headlines from

BBC World News. Now for the latest financial news with World Business

Report. Back in business, Chinese trade

grows at a much faster pace than expected. Were the fears of a

slowdown exaggerated? And all eyes on the governor of the Bank of

England as he gets ready to evolve his controversial forward guidance.

But will we have a better clue as to when interest rates will go up?

Welcome to World Business Report. I'm Sally Bundock. In a minute,

we'll also hear how the EU is planning to implement its

controversial emissions trading scheme for airlines. But first, at

last some good news from China about its economy. There's been a surprise

spike in exports and imports in January. In fact shipments of goods

overseas grew by 10% when compared to the year before. That's far

better than most economists predicted. This is the first bit of

encouraging news about the world's second largest economy for some time

and has added to the feel good factor on financial markets. Rico

Hizon is in our Asia Business hub in Singapore. Some good news from

China. Is it a trend or a blip? That is the question. There are? -- two

sides. This should allay fears that the economy is rolling down --

slowing down. China may overtake the United States to be the world's

largest importer. But some economists are worrying about the

credibility of the data. There might be some round tripping trade between

Hong Kong and China. There have also been mixed signals in the economy.

There has been a slowing factory at liberty. -- activity. This has made

some investors nervous. At the moment, there is boosted confidence.

We will have to wait and see if this growth can be sustained and if it is

consistent with the other growth in January. It will be interesting to

see what growth we will see from the mainland. Thank you. At the end of

the programme, I will talk to about how other markets are suggesting

this news. -- digesting. Yesterday, all eyes were on Janet Yellen, as

she made her first appearance before congress as Fed Chairwoman. What she

had to say about the US economy and the central banks role in

withdrawing stimulus gave markets around the world a boost. Will Mark

Carney, the relatively newly appointed head of the UK central

bank, have the same effect today? The Bank of England governor is set

to overhaul his flagship forward guidance policy on interest rates

after just six months. The governor had linked a rate rise to a fall in

unemployment, but the policy is being reviewed after the jobless

level fell faster than expected. The changes will come as Mr Carney

delivers the bank's latest Inflation Report on the UK economy. With me is

Rob Wood, UK economist at Berenberg Bank. What will he say? He will say

that interest rates will go up, but they will go up gradually. When he

talked about that six months ago. Other people thought it was

fantastic. Was it a bad decision to talk about it? I think it was a

mistake because the economy has turned around. Unemployment has come

down very fast. The ability of the economy to grow has fallen, because

we have grown a lot. It was a mistake. We had just come through a

worry about the triple dip recession. Today, he will change

that for -- forward guidance. They will give indications about wage

growth. There is underemployment. He will say that they don't need to

raise interest rates immediately. But because the economy has grown,

they will have to be taken up earlier than previously thought. So

we had been guessing about it before. We should be clear about the

date when interest rates are due to rise. Bank of England said they

would not go up until late 2016. They will move away from giving

specific details. They will need to increase rates gradually. I think

now is the right time to give that message. You would know because he

used to work at Bank of England. Thank you for coming in. We will

update you will we hear from Mark Carney. Away from the glamour and

deal making of the Singapore Airshow, not all is harmony. The row

over the European Union's attempts to impose an emissions trading

scheme airlines to make them pay for their carbon emissions remains

unresolved. The move has provoked widespread opposition elsewhere in

the world and the UN-backed International Civil Aviation

Organisation or ICAO wants to come up with a scheme by 2016. Will the

EU go ahead on its own in the meantime? Sharanjit Leyl spoke to

the EU Transport Commissioner at the airshow and asked him how the EU

aims to resolve the issue. We have two different views. One is still to

implement partly the emissions trading scheme. The other is to

postpone it on to 2016. In the European Parliament, it now goes to

the European Council for a final decision. We will expect an outcome

soon. What happens if there is no resolution and the deal doesn't go

through? Then there will be a confrontation between the EU and its

partners. Everyone will be waiting on the outcome. Some of our partners

are critical. Some of them have been talking about a court solution. We

can't say anything more until this has been decided I'd be European

Parliament. -- by the. We have been talking about withholding passes.

How much pressure is the EU under? We are not looking for a trade war.

That is very clear. In other news, the US House of Representatives has

voted to suspend the country's debt limit until March 2015. The move

raises the government's borrowing authority for one year in order to

avoid a default at the end of this month. The outcome is a victory for

President Obama, who has lobbied for weeks to have the debt ceiling

raised without additional conditions and cuts. The 2015 plan goes now to

the Democratic-led Senate. The recovery in the US labour market may

be far from complete, but the US central bank is on track to continue

pulling back on its stimulus programme. That is according to new

Federal Reserve chair Janet Yellen. Her comments have been keenly

awaited and her message was clear, no sudden changes. That means a slow

reduction in the trillions of dollars of bonds bought by the

Federal Reserve in the wake of the financial crisis. Those stories were

key on the end of trading. Not strong gains, but steady. Toyota has

released news that it has had to issue another recall. This is for

the third generation of its Prius car. This is a huge recall. Most of

those cars are in Japan and North America. I will see you soon as we

talk about the