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Now for the latest financial news, with Aaron and World Business | :00:00. | :00:00. | |
The credit boom that could cripple China. | :00:00. | :00:24. | |
Its economy is recovering, but the cost is a $25 trillion | :00:25. | :00:27. | |
Plus: From Brexit fears to electric dreams, we hear from the boss of car | :00:28. | :00:31. | |
giant Nissan at the Paris Motor Show. | :00:32. | :00:40. | |
If you are tuning in for the first time, stay where you are. It is | :00:41. | :00:56. | |
eight minutes, and it is a bite-size snapshot of all the latest in the | :00:57. | :00:59. | |
world of You'll Know It's Christmas and money. -- all the latest in the | :01:00. | :01:05. | |
world of business and money. We will hear from Carlos Ghosn | :01:06. | :01:06. | |
in just a moment. We start in China, and that huge | :01:07. | :01:09. | |
slowdown in the world's second-largest economy that has been | :01:10. | :01:12. | |
felt across the world, There is more evidence | :01:13. | :01:15. | |
the economy is stabilising, thanks to massive amounts | :01:16. | :01:18. | |
of stimulus from the government But it is not all good | :01:19. | :01:20. | |
news, by any means. A private survey of manufacturers | :01:21. | :01:30. | |
out in the last few hours suggests China's factories continued | :01:31. | :01:35. | |
to recover in September, after returning to growth in August, | :01:36. | :01:37. | |
this ahead of official data out tonight that is expected | :01:38. | :01:41. | |
to confirm the same thing. Last week the global | :01:42. | :01:43. | |
central banking watchdog, the Bank of International | :01:44. | :01:55. | |
Settlements, warned China that it faces mounting risks | :01:56. | :01:57. | |
of a financial crisis. Borrowing by companies | :01:58. | :01:59. | |
and individuals hit $25.6 That is 250% of GDP, in other words, | :02:00. | :02:10. | |
2.5 times the size of the whole It is something that | :02:11. | :02:24. | |
can't be ignored. China's currency is becoming central | :02:25. | :02:31. | |
to the global financial system. From Saturday the Chinese | :02:32. | :02:33. | |
yuan will be included on the International Monetary Fund's | :02:34. | :02:36. | |
list of reserve currencies, joining the US dollar, the euro, | :02:37. | :02:38. | |
the Japanese yen and British pound. But the US treasury secretary, | :02:39. | :02:41. | |
Jack Lew, is among those who have expressed concern about the move, | :02:42. | :02:45. | |
saying that China still has work And remember, earlier this week | :02:46. | :02:47. | |
the former chief economist of the IMF told us of his grave | :02:48. | :03:01. | |
concerns about China. There is no question it is really | :03:02. | :03:18. | |
China that is the greatest risk. China has been the engine of global | :03:19. | :03:23. | |
growth. The US is sort of picking up but China has been really important | :03:24. | :03:27. | |
and China is going through a big political revolution, there is no | :03:28. | :03:31. | |
question about that. I think the economy has slowed down much more | :03:32. | :03:34. | |
than the official figures show, and if you want to look at a part of the | :03:35. | :03:39. | |
world that has a debt problem, look at China. They have been a credit | :03:40. | :03:43. | |
fuelled growth, and these things don't go on forever. Everyone says | :03:44. | :03:47. | |
China is different, the state owns everything, they can control it. | :03:48. | :03:51. | |
Only to a point. So I definitely worry about China. | :03:52. | :03:53. | |
Jinny Yan is chief China economist at ICBC. | :03:54. | :03:55. | |
That is the Industrial and Commercial Bank of China. | :03:56. | :04:00. | |
Thank you for coming in at this ungodly hour. Chinese factories are | :04:01. | :04:08. | |
making more stuff, it appears. They are doing better which suggests | :04:09. | :04:11. | |
around the world we are buying more stuff from China. And importantly | :04:12. | :04:18. | |
suggest that China's produces a more confident about the climate in | :04:19. | :04:21. | |
China. That is the key thing. They are replenishing industry so they | :04:22. | :04:24. | |
are purchasing more commodities, they are purchasing more in order to | :04:25. | :04:29. | |
produce more goods. . You, so they are looking around the world and | :04:30. | :04:32. | |
feeling more confident. What does this growth, this stabilisation, a | :04:33. | :04:37. | |
return to better times in August so September is also proving to be | :04:38. | :04:42. | |
decent, is that simply off the back of the stimulus that Beijing is | :04:43. | :04:46. | |
pouring out? I am trying to work out, is it real, or is it sort of | :04:47. | :04:52. | |
smoke and mirrors. The good news is obviously that the economy is | :04:53. | :04:56. | |
stabilising so that doom and gloom that market really did think that | :04:57. | :05:00. | |
was going to happen, or the hard landing, as it were, didn't really | :05:01. | :05:04. | |
happen. We had a soft landing in China. Things are stabilising. That | :05:05. | :05:10. | |
is the good news. The bad news is that this continual restructuring | :05:11. | :05:14. | |
and rebalancing of the economy is starting to slow down a little bit. | :05:15. | :05:18. | |
Omentum is not strong enough. So while momentum in new sectors are | :05:19. | :05:24. | |
building, the old sectors and industries are still being relied | :05:25. | :05:28. | |
upon -- momentum is not strong enough. The real estate sector has | :05:29. | :05:32. | |
really been the driver of a lot of pick-up in activity in the recent | :05:33. | :05:37. | |
months. And we should remind people around the world, or the | :05:38. | :05:42. | |
uninitiated, the rebalancing of the Chinese economy is not going to | :05:43. | :05:46. | |
happen overnight. You can't go from the world's factory floor to a more | :05:47. | :05:50. | |
services oriented economy. It took 100 years for the United States, or | :05:51. | :05:54. | |
something like that anyway. You mentioned good news and bad news in | :05:55. | :05:59. | |
your last answer. The bad news, $26 trillion of debt. That is a lot of | :06:00. | :06:04. | |
debt. Is that sustainable? That has to be serviced, as we pay off our | :06:05. | :06:12. | |
mortgage. It is a huge amount of debt, that is not a surprise to | :06:13. | :06:16. | |
anyone. However, not all that is bad. If it does produce growth, if | :06:17. | :06:21. | |
it also means that growth is stabilising in China, then that is a | :06:22. | :06:26. | |
good thing. And key in China is that a lot of that debt is actually | :06:27. | :06:30. | |
sitting on government's balance sheets. What that means is that a | :06:31. | :06:34. | |
lot of it is in control of the government. So they are like a | :06:35. | :06:39. | |
guarantor, almost. That is correct. Not like a lot of advanced countries | :06:40. | :06:44. | |
where it are sitting on that debt and maybe they will not be able to | :06:45. | :06:49. | |
pay off that debt. In China a lot of that is actually sitting in state | :06:50. | :06:51. | |
banks, which is ultimately controlled by the government. So at | :06:52. | :06:56. | |
this stage it is very much sustainable. However, the bad news | :06:57. | :07:01. | |
is that household debt is starting to grow. So coming down the line we | :07:02. | :07:07. | |
may hit some problems. So there are a lot of challenges with that debt. | :07:08. | :07:12. | |
The bullies in my ear are telling me to wrap it up because we only have a | :07:13. | :07:16. | |
short programme, but it is good news that the Chinese yuan has fallen | :07:17. | :07:25. | |
into the IMF currency basket. It is good news. They are going to beat me | :07:26. | :07:30. | |
up as soon as the programme is over. You might be smiling, I am terrified | :07:31. | :07:32. | |
now. Thank you for coming in. We are also continuing our coverage | :07:33. | :07:34. | |
of the world's longest-running motor show, in Paris, which | :07:35. | :07:37. | |
opens officially today. Nissan boss Carlos Ghosn has | :07:38. | :07:38. | |
been taking time out from launching his latest models | :07:39. | :07:41. | |
to speak to our correspondent Theo He started by talking | :07:42. | :07:44. | |
about his growing concerns about Britain's departure | :07:45. | :07:50. | |
from the European Union. The UK is of course a major | :07:51. | :07:52. | |
manufacturing hub for Nissan. Frankly, I think what we are looking | :07:53. | :08:02. | |
for is not to interfere into the situation which is maybe a national | :08:03. | :08:07. | |
situation. What you want is to make sure that when you have a European | :08:08. | :08:12. | |
plant based in the UK, where more than 80% of our products are being | :08:13. | :08:18. | |
shipped from Sunderland to Europe, that this decision which has been | :08:19. | :08:24. | |
taken by the people of Great Britain does not translate into a handicap | :08:25. | :08:31. | |
for Nissan. As long as we don't have a handicap and we can continue to do | :08:32. | :08:35. | |
business the way we were doing business before, we have absolutely | :08:36. | :08:39. | |
no problem. Which means that what we would like is that whatever decision | :08:40. | :08:44. | |
will be taken in terms of Brexit, that the move of goods between the | :08:45. | :08:50. | |
UK and Europe Diaz fluid as it is today. Leaving Brexit to one side | :08:51. | :08:57. | |
for minutes, it is clear the car industry is undergoing profound | :08:58. | :09:00. | |
change at the moment. Where do you see headed? Well, it is going to be | :09:01. | :09:06. | |
everything. It is going to be autonomous, it is going to be | :09:07. | :09:09. | |
connected. You are going to have a lot of mobility services, and this | :09:10. | :09:13. | |
is not going to be in substitution of the rest, it is going to be in | :09:14. | :09:18. | |
addition to the rest which means the car has to be safe, the car has to | :09:19. | :09:23. | |
be easy to drive, nice to drive. You are going to have a lot of | :09:24. | :09:26. | |
constraints. That is why I think, and this is something that we | :09:27. | :09:29. | |
welcome, because we are moving away from the commodity business and more | :09:30. | :09:33. | |
into the added value hi-tech kind of product. | :09:34. | :09:36. | |
In other news: Deutsche Bank shares slumped almost 7%, | :09:37. | :09:39. | |
after Bloomberg reported some hedge funds had taken out cash | :09:40. | :09:42. | |
and withdrawn positions held with its investment bank. | :09:43. | :09:44. | |
There has been speculation that Deutsche Bank may struggle to pay | :09:45. | :09:47. | |
a $US14 billion fine for miss-selling mortgage-backed | :09:48. | :09:49. | |
In a statement, Deutsche Bank said it was confident the majority | :09:50. | :09:53. | |
of its clients have a full understanding of our | :09:54. | :09:55. | |
We will talk about Deutsche bank more when we come back to look at | :09:56. | :10:19. | |
the newspapers. It has been described as too big to fail. | :10:20. | :10:21. | |
Don't forget, you can get in touch with me and some | :10:22. | :10:24. | |
Are you ready to take over? I will be back to take a look at the papers | :10:25. | :10:30. | |
from around the world. People born in the 1980s have | :10:31. | :10:39. | |
about half the wealth those born in the '70s had at the same age, | :10:40. | :10:42. | |
according to a new report The Institute for Fiscal Studies | :10:43. | :10:46. | |
survey echoes what many people in their 30s have felt anecdotally, | :10:47. | :10:50. | |
as personal finance correspondent | :10:51. | :10:54. |