12/08/2016 World Business Report


12/08/2016

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Now for the latest financial news with Aaron and World Business

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Yep, the big economic slowdown continues.

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The world's second-largest economy is making less and buying less.

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And all of that will have an impact on you...

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Plus - living la dolce vita - but the fizz has long gone out

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We have a special report from the northern city of Ferrara.

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If you watch as regularly, thank you, and if you are new, keep

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watching. Also in the programme -

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party like it's 1999. All three US markets reach

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new record highs at the same time - the first time that's

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happened for over 16 years. They are partying on Wall Street.

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Not here, though. We start in China, where we have had

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an update about the health of the world's

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second-biggest economy. Those numbers are becoming weaker,

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undermining hopes that the great Let's remind you of what has

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been going on and put Last year, the Chinese

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economy grew 6.9%. That was the weakest growth

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in China for a quarter, In the six months until the end

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of June, growth has slipped to 6.7%. The fear has been that the slowdown

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is getting worse and the figure could be far lower by

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the end of the year. We have had the latest numbers

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from China's factories and shops. Industrial production,

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everything China churns out, But that is weaker than

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the 6.2% we saw in June. We were expecting the same,

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but did not get the same. China is trying to rely less

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on being the manufacturer of the world, the factory floor

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of the world, and relying more Basically getting its people to

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spend. Retail sales, a big part of that,

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for July, were at 10.2%. Investment by firms was up 8.1%

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in the first seven months But it was a lot lower

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than everybody was expecting. Louis Kuijs is from

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Oxford Economics. Great to have you with us. Let's

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talk about this. We thought the China slowdown was basically the new

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norm. We thought 7%, the high 6%s. But it doesn't look like the

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slowdown is having a slowdown. That's right. I think the slowdown

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still has further to go. The government would like growth of

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something like 6.5% or 7%, but if you look at the organic sources,

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like investment, consumption, exports, we are not getting there.

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The anyway for the government to get to these ambitious numbers is by

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stimulating the economy. Any time growth slows, they are going back to

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the stingless. It is an ongoing game. -- stimulus. But I think the

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slowdown has further to go. Is the slowdown still part of the attempt

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by Beijing to re- shift the economy away from being the manufacturer of

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the world to being more domestic demand, or is this a reflection on

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the global economy? It is a bit of both. Definitely a subdued state of

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the global economy and trade, these things don't help. But a lot is

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within China's own economy. Domestically, the bill are worried

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that private investment is weak, and that is for good reason -- people.

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They are looking at spare capacity in the sectors. Pretty subdued

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proper development, and uncertain sales prospects. People are

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reluctant to invest. The government may try to keep credit growth up,

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but that is not a lot for private investors to invest more. While I

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have you, can I ask you this? For many people watching in Britain and

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around the world, perhaps the uninitiated who do not follow this

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kind of thing, we look at this is and go, wow, 6.7%, countries would

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give their right arm for that growth, but can you explain why

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China needs to sort of numbers? That is a good question. A country like

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China is still very poor on average. We might see the fancy cities from

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the outside, but on average, Chinese people are only 15% as rich as

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Americans. There is a long way to go in terms of catching up. China

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diffidently needs pretty solid growth. But the big question is, is

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5% enough, or does it have to be 6.5%? The government thinks it needs

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6.5% growth. That is why it keeps piling up dead. Economists may say

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that 5.5% would be enough and still allow you to catch up -- debt. And

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put you on a more sustainable footprint. Where will China be at

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the end of the year, growth was? What do you reckon?

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LAUGHTER It has proven to be very hard to bet

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against China's government, so I would say we will have 6.5%. That is

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what they want. That is what they want, that is what they will get,

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right? Whether it is real or not. Joking. Thank you. We appreciate

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your time. We are also in Italy

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where the latest GDP figures are expected give little

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cause for celebration. Growth is expected to have fallen

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to just 0.2 % in the three And we were talking about 6.2% in

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China! That's despite promises

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by Prime Minister Matteo Renzi of deep reforms to

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revive the economy. Our reporter Theo Leggett has been

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in the northern city of Ferrara, where the laidback cafe lifestyle

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hides a growing sense of pessimism. A warm afternoon in the Italian city

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of Ferrara. The cafes and rest runs are thronging with people. It looks

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prosperous. You might think the economy was booming, but appearances

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can be deceptive -- rest runs. Italy's, is struggling, and expected

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to grow by 1% this year, and not expected to pick up speed any time

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soon. And implement its at 11%, and the banks, so important for economic

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recovery, weighed down by 360 billion euros worth of loans that

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may never be paid. No wonder that the International Monetary Fund

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thinks Italy will not be back to where it was before the financial

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crisis until the middle of the next decade. And there is assuming cost.

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This woman is highly qualified, but she is working in an ice cream

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parlour because she says it is the best job she can get. I was looking

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for a job in my field, archaeology, in which I have a degree, but it is

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very hard lately in Italy to find jobs. So this is the best I have

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seen. I am responsible for a shot. -- shop. And I have learned to make

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ice cream. I'm quite happy with this. I would be happier to work in

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archaeology, but for now, it is impossible. If an successful

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companies are finding life difficult. Because our production is

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high-level, we used to punch every item with this tool. This man runs a

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jewellery specialist, and most of what he makes is sold abroad as

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Italians struggle to buy it. He thinks red is stifling business. At

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the end of the year, when you gain 1000 euros, 50% is in tax, or maybe

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more. So it is very high. Then we have the problem of bureaucracy.

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When you do something, you have to fill in paper, the process is very

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compensated. It is very hard. --, located. Italy's government has

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promised far-reaching reforms, but now it is avoiding a full-blown

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banking crisis. There is also a vital referendum on the constitution

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later this year. Plenty to talk about in the bars and cafes. But

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businesses are not expecting much up any time soon. -- help.

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Let me show you the markets. There are the Asian markets. That is of

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the back of what we saw in War Street. Take a look at this. ! Wall

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Street. But since 1999, they are partying on Wall Street. Record

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highs. Oil is having a bit of a blip up. Strong earnings numbers. And

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also the expectation that American's central banks will not raise rates.

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People are throwing their money into the markets and Wall Street is

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enjoying that. Follow me on Twitter. I will be back with James to take a

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look at some of the papers from around the world.

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