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Now for the latest financial news with Aaron and World Business | :00:00. | :00:00. | |
Yep, the big economic slowdown continues. | :00:00. | :00:24. | |
The world's second-largest economy is making less and buying less. | :00:25. | :00:28. | |
And all of that will have an impact on you... | :00:29. | :00:30. | |
Plus - living la dolce vita - but the fizz has long gone out | :00:31. | :00:37. | |
We have a special report from the northern city of Ferrara. | :00:38. | :00:46. | |
If you watch as regularly, thank you, and if you are new, keep | :00:47. | :01:03. | |
watching. Also in the programme - | :01:04. | :01:05. | |
party like it's 1999. All three US markets reach | :01:06. | :01:07. | |
new record highs at the same time - the first time that's | :01:08. | :01:11. | |
happened for over 16 years. They are partying on Wall Street. | :01:12. | :01:14. | |
Not here, though. We start in China, where we have had | :01:15. | :01:18. | |
an update about the health of the world's | :01:19. | :01:22. | |
second-biggest economy. Those numbers are becoming weaker, | :01:23. | :01:24. | |
undermining hopes that the great Let's remind you of what has | :01:25. | :01:26. | |
been going on and put Last year, the Chinese | :01:27. | :01:37. | |
economy grew 6.9%. That was the weakest growth | :01:38. | :01:42. | |
in China for a quarter, In the six months until the end | :01:43. | :01:46. | |
of June, growth has slipped to 6.7%. The fear has been that the slowdown | :01:47. | :01:59. | |
is getting worse and the figure could be far lower by | :02:00. | :02:02. | |
the end of the year. We have had the latest numbers | :02:03. | :02:10. | |
from China's factories and shops. Industrial production, | :02:11. | :02:16. | |
everything China churns out, But that is weaker than | :02:17. | :02:18. | |
the 6.2% we saw in June. We were expecting the same, | :02:19. | :02:25. | |
but did not get the same. China is trying to rely less | :02:26. | :02:28. | |
on being the manufacturer of the world, the factory floor | :02:29. | :02:32. | |
of the world, and relying more Basically getting its people to | :02:33. | :02:36. | |
spend. Retail sales, a big part of that, | :02:37. | :02:46. | |
for July, were at 10.2%. Investment by firms was up 8.1% | :02:47. | :02:50. | |
in the first seven months But it was a lot lower | :02:51. | :03:02. | |
than everybody was expecting. Louis Kuijs is from | :03:03. | :03:09. | |
Oxford Economics. Great to have you with us. Let's | :03:10. | :03:22. | |
talk about this. We thought the China slowdown was basically the new | :03:23. | :03:28. | |
norm. We thought 7%, the high 6%s. But it doesn't look like the | :03:29. | :03:31. | |
slowdown is having a slowdown. That's right. I think the slowdown | :03:32. | :03:39. | |
still has further to go. The government would like growth of | :03:40. | :03:43. | |
something like 6.5% or 7%, but if you look at the organic sources, | :03:44. | :03:49. | |
like investment, consumption, exports, we are not getting there. | :03:50. | :03:53. | |
The anyway for the government to get to these ambitious numbers is by | :03:54. | :03:58. | |
stimulating the economy. Any time growth slows, they are going back to | :03:59. | :04:00. | |
the stingless. It is an ongoing game. -- stimulus. But I think the | :04:01. | :04:08. | |
slowdown has further to go. Is the slowdown still part of the attempt | :04:09. | :04:12. | |
by Beijing to re- shift the economy away from being the manufacturer of | :04:13. | :04:17. | |
the world to being more domestic demand, or is this a reflection on | :04:18. | :04:22. | |
the global economy? It is a bit of both. Definitely a subdued state of | :04:23. | :04:28. | |
the global economy and trade, these things don't help. But a lot is | :04:29. | :04:32. | |
within China's own economy. Domestically, the bill are worried | :04:33. | :04:36. | |
that private investment is weak, and that is for good reason -- people. | :04:37. | :04:42. | |
They are looking at spare capacity in the sectors. Pretty subdued | :04:43. | :04:46. | |
proper development, and uncertain sales prospects. People are | :04:47. | :04:50. | |
reluctant to invest. The government may try to keep credit growth up, | :04:51. | :04:57. | |
but that is not a lot for private investors to invest more. While I | :04:58. | :05:03. | |
have you, can I ask you this? For many people watching in Britain and | :05:04. | :05:06. | |
around the world, perhaps the uninitiated who do not follow this | :05:07. | :05:12. | |
kind of thing, we look at this is and go, wow, 6.7%, countries would | :05:13. | :05:17. | |
give their right arm for that growth, but can you explain why | :05:18. | :05:23. | |
China needs to sort of numbers? That is a good question. A country like | :05:24. | :05:29. | |
China is still very poor on average. We might see the fancy cities from | :05:30. | :05:34. | |
the outside, but on average, Chinese people are only 15% as rich as | :05:35. | :05:40. | |
Americans. There is a long way to go in terms of catching up. China | :05:41. | :05:43. | |
diffidently needs pretty solid growth. But the big question is, is | :05:44. | :05:49. | |
5% enough, or does it have to be 6.5%? The government thinks it needs | :05:50. | :05:56. | |
6.5% growth. That is why it keeps piling up dead. Economists may say | :05:57. | :06:02. | |
that 5.5% would be enough and still allow you to catch up -- debt. And | :06:03. | :06:07. | |
put you on a more sustainable footprint. Where will China be at | :06:08. | :06:11. | |
the end of the year, growth was? What do you reckon? | :06:12. | :06:16. | |
LAUGHTER It has proven to be very hard to bet | :06:17. | :06:20. | |
against China's government, so I would say we will have 6.5%. That is | :06:21. | :06:25. | |
what they want. That is what they want, that is what they will get, | :06:26. | :06:29. | |
right? Whether it is real or not. Joking. Thank you. We appreciate | :06:30. | :06:31. | |
your time. We are also in Italy | :06:32. | :06:35. | |
where the latest GDP figures are expected give little | :06:36. | :06:38. | |
cause for celebration. Growth is expected to have fallen | :06:39. | :06:46. | |
to just 0.2 % in the three And we were talking about 6.2% in | :06:47. | :06:50. | |
China! That's despite promises | :06:51. | :07:00. | |
by Prime Minister Matteo Renzi of deep reforms to | :07:01. | :07:02. | |
revive the economy. Our reporter Theo Leggett has been | :07:03. | :07:06. | |
in the northern city of Ferrara, where the laidback cafe lifestyle | :07:07. | :07:10. | |
hides a growing sense of pessimism. A warm afternoon in the Italian city | :07:11. | :07:24. | |
of Ferrara. The cafes and rest runs are thronging with people. It looks | :07:25. | :07:28. | |
prosperous. You might think the economy was booming, but appearances | :07:29. | :07:33. | |
can be deceptive -- rest runs. Italy's, is struggling, and expected | :07:34. | :07:39. | |
to grow by 1% this year, and not expected to pick up speed any time | :07:40. | :07:45. | |
soon. And implement its at 11%, and the banks, so important for economic | :07:46. | :07:50. | |
recovery, weighed down by 360 billion euros worth of loans that | :07:51. | :07:54. | |
may never be paid. No wonder that the International Monetary Fund | :07:55. | :07:57. | |
thinks Italy will not be back to where it was before the financial | :07:58. | :07:59. | |
crisis until the middle of the next decade. And there is assuming cost. | :08:00. | :08:06. | |
This woman is highly qualified, but she is working in an ice cream | :08:07. | :08:10. | |
parlour because she says it is the best job she can get. I was looking | :08:11. | :08:15. | |
for a job in my field, archaeology, in which I have a degree, but it is | :08:16. | :08:20. | |
very hard lately in Italy to find jobs. So this is the best I have | :08:21. | :08:29. | |
seen. I am responsible for a shot. -- shop. And I have learned to make | :08:30. | :08:34. | |
ice cream. I'm quite happy with this. I would be happier to work in | :08:35. | :08:40. | |
archaeology, but for now, it is impossible. If an successful | :08:41. | :08:43. | |
companies are finding life difficult. Because our production is | :08:44. | :08:51. | |
high-level, we used to punch every item with this tool. This man runs a | :08:52. | :08:56. | |
jewellery specialist, and most of what he makes is sold abroad as | :08:57. | :09:00. | |
Italians struggle to buy it. He thinks red is stifling business. At | :09:01. | :09:05. | |
the end of the year, when you gain 1000 euros, 50% is in tax, or maybe | :09:06. | :09:13. | |
more. So it is very high. Then we have the problem of bureaucracy. | :09:14. | :09:18. | |
When you do something, you have to fill in paper, the process is very | :09:19. | :09:27. | |
compensated. It is very hard. --, located. Italy's government has | :09:28. | :09:31. | |
promised far-reaching reforms, but now it is avoiding a full-blown | :09:32. | :09:41. | |
banking crisis. There is also a vital referendum on the constitution | :09:42. | :09:44. | |
later this year. Plenty to talk about in the bars and cafes. But | :09:45. | :09:48. | |
businesses are not expecting much up any time soon. -- help. | :09:49. | :09:55. | |
Let me show you the markets. There are the Asian markets. That is of | :09:56. | :10:02. | |
the back of what we saw in War Street. Take a look at this. ! Wall | :10:03. | :10:10. | |
Street. But since 1999, they are partying on Wall Street. Record | :10:11. | :10:15. | |
highs. Oil is having a bit of a blip up. Strong earnings numbers. And | :10:16. | :10:27. | |
also the expectation that American's central banks will not raise rates. | :10:28. | :10:31. | |
People are throwing their money into the markets and Wall Street is | :10:32. | :10:35. | |
enjoying that. Follow me on Twitter. I will be back with James to take a | :10:36. | :10:40. | |
look at some of the papers from around the world. | :10:41. | :10:42. |