19/10/2016 World Business Report

Is China's dragon economy still firing on all cylinders?

The country is growing at 6.7%, but analysts warn it could be

Box office superstar Leonardo DiCaprio says

he is cooperating with an investigation into Malaysian

state fund 1MDB, which may have helped to fund The Wolf

I'm Sally Bundock, here with your daily business snapshot.

We will have the details on Yahoo! 'S latest results in a moment.

New growth figures from China has added to a raft of indicators

suggesting the Asian powerhouse is becoming addicted

The world's second-largest economy grew at an annualised rate of 6.7%

That is slightly below last year's growth rate,

but still within the government's target range of 6.5%-7%.

As we have been reporting, the country's growth rate has slowed

significantly since hitting double digits five years ago,

and is now at its slowest rate in more than 25 years.

The figures underline China's difficulty of transforming

the economy away from factories and exports, towards consumption,

to help drive up wages and living standards.

And that is a transition that takes time.

To keep the economy on track in the intervening period,

the government has been stimulating growth through cheap credit.

Now, while government debt in China may appear to be relatively low,

corporate debt stands at a worrying 145% of GDP.

State-owned businesses actually account for more than half of that

debt pile, and Chinese banks are now holding more and more loans

from those companies that are either in default or close

We can cross live now to Beijing, and speak to Jeremy Stevens,

Good morning. Give us your reaction to today's numbers, in the middle of

the government target, with the service industry pacing the growth.

Good morning. As far as I can tell this is a continuation of relatively

stable data out of the Chinese economy, underpinned by state led

infrastructure spending, and we are telling our client is predominantly

that but we anticipate that the next six months will probably see some

weakening in the macroeconomic data, as they shift to supply-side reform,

getting a little bit more serious on debt, and pushing against the

housing price gains. What about the issue we have raised about credit,

about toxic debt? It is a problem, a huge problem, and something that we

have been watching very carefully. China is basically, there are

economy has become more reliant on credit and it is a very policy

oriented economy, and this year has really all been about fixed

investments underpinned by debt and we are seeing the average continue

to rise but one of the things we are seeing on the ground here in China

is that a lot of the policy documents which have been released

in the last two months have started to push ordered against this rising

debt and finding ways to address, and we are seeing debt commissions

where companies are sitting with creditors and local government

authorities to try and negotiate the terms of the debt and try and get

serious on repaying the debt. It suggests to us that the credit cycle

has probably peaked in the Chinese economy for the time being, and they

are going to push forward on constraining the credit so that they

can create a better environment for the private sector next year. So as

you say that has been a policy towards reining in financial risk.

They have also tried to prevent a real estate bubble from bursting,

and figures 'Today' show that investment was up by nearly 6%

between January and September, so it would seem that the real estate

market is also spiking as well. Correct. So this year we have seen

life in the real estate market, it has predominantly been in prices and

sales. Construction, and as you mentioned 6% growth is not crazy in

the context of China. We anticipate that inventory levels in one or two

cities will be back to 2011 levels by the end of the year and so one of

outside calls for the end of next year is that when the government

does want to support growth next year after the second, third and

fourth quarters, they may allow development in real estate in one or

two cities but the inventory levels are way too high in third and fourth

years cities, and we see them as deadweight on the economy, and have

for some time. Are you concerned about the outlook for China? If you

say what is happening over China for the next five years, absolutely.

What I am trying to fight against is the complacency around the data we

have seen for the first three quarters. We do anticipate witness

in the economy over the next six months. Then we think as China leads

into the 19th party congress, we see life in the second, third and fourth

quarter. Then we see the downgrading and continuing weakening in economic

momentum in China to continue for some time. That is typical in an

economy which has seen an explosion of credit as we have in China, for

some time. In other news: Yahoo's profits more

than doubled to $163 million in the third quarter,

beating Wall Street estimates. The numbers provides some

reassurance to investors, after it was revealed that

500 million customers These are the first financial

results since Verizon announced its plan to buy the tech

company for $4.8 billion, a figure that could now be

renegotiated in light Two of Australia's biggest gambling

firms have announced a plan to merge, as they try to compete

against the rise of online betting. Tabcorp and Tatts Group,

the country's two largest non-casino gambling firms, hope to form

a business worth $US8.7 billion, if they can get regulatory

and shareholder approval. Australia is the world's most

lucrative gambling market per head, with an average loss every year

of $US1,130 per person. Shares in Sharp have

risen by more than 10%, after the loss-making Japanese

company announced it expects this full year profits to improve

significantly compared to last year. The electronics firm was snapped up

by Taiwanese manufacturer Foxconn for $3.5 billion in July,

after going through two major South Korean prosecutors

are reportedly poised to file corruption charges against

the chairman of one of the country's most influential conglomerates,

the Lotte Group. It is alleged Shin Dong-bin,

together with his father and brother, committed

offences worth hundreds Oscar-winning star Leonardo DiCaprio

says he is aiding authorities with the ongoing investigation

into Malaysian state In July, the US department

of justice moved to seize more than $1 billion from the fund,

which it said had been misappropriated to fund the lavish

lifestyles of some public officials. The Hollywood star is tied

to the case because money from 1MDB was allegedly used to fund

the production of the movie The Wolf of Wall Street, and might even have

gone to Mr DiCaprio's charity Mariko Oi joins us

now from Singapore. Good to see you. So the plot

thickens. Tell us the latest. Indeed, it is a bit ironic, isn't

it, his film about Wall Street corruption and greed was actually

financed by a production company which was co-founded by the stepson

of the Malaysian Prime Minister, who of course created the 1MDB fund back

in 2009. The aim was to invest in the country's development, but of

course as we have been reporting over the last year or so, it has

been accused of corruption and has now been investigated, not just in

the US but in several countries including here in Singapore. Both he

and 1MDB deny the investigation but when the actor found out, he had his

representative contact them to see whether he or his charity received

any gifts or donations, and if so to return them as soon as possible. US

authorities are, as you mentioned, trying to seize more than $1 billion

from 1MDB, so the plot thickens, as you mentioned. This is probably the

twist that we were not really expecting. Let's show you financial

markets. The news about the Chinese markets being stable has led the

market is treading water at the moment. The price of oil heading up

by 1% and you can see the pound tinkering around $1, just over 22

cents at the moment. I will see you very soon as we review the other

stories in the media. Stay with us. A senior member of the European

Parliament has accused