:00:03. > :00:13.morning. Stay with us. We switch now for the latest
:00:13. > :00:21.
:00:21. > :00:26.Welcome. This is World Business Report. The headlines: China, the
:00:26. > :00:30.global engine of growth, expands at this -- its slowest rate in two
:00:30. > :00:34.years. As the UK, consumers feel the
:00:34. > :00:44.squeeze as prices rise at their fastest rate for three years while
:00:44. > :00:50.
:00:50. > :01:00.China's growth rate is the envy of most of the industrialised world.
:01:00. > :01:02.
:01:02. > :01:08.Wealth expanded at an annual rate but things are changing. The aim
:01:08. > :01:12.was to reduce growth gradually. But the rest of the world his county on
:01:12. > :01:16.China to get the balance right because they hope Chinese buyers
:01:16. > :01:21.will replace cash-strapped consumers in Europe and the US. In
:01:21. > :01:25.a moment we hope to go live to Beijing to speak to an expert about
:01:25. > :01:30.the latest growth numbers out of China and what they need for the
:01:30. > :01:35.rest of the global economy. -- what they mean. New data is set to show
:01:35. > :01:40.prices rising at their fastest rate for three years. Higher fuel and
:01:40. > :01:43.energy costs are to blame. Terrible timing as incomers are frozen and
:01:43. > :01:48.the number of people out of work is on the up.
:01:48. > :01:51.As autumn takes hold in the UK, many homes will be turning up their
:01:51. > :01:55.central heating. But with energy prices are rising from three of the
:01:55. > :01:59.main suppliers, it could be a costly card for households and
:01:59. > :02:04.businesses. The rise in the cost of energy has been singled out as the
:02:04. > :02:10.biggest influence in UK inflation this mark. Putting the brakes to
:02:10. > :02:20.the highest level in three years. - - pushing the rate. Prolonged debt
:02:20. > :02:24.crisis in the eurozone means the UK is at a virtual standstill.
:02:24. > :02:28.Inflation is set to flow sharply in the next 12 months. The current
:02:28. > :02:31.rate of inflation is unlikely to concern the Bank of England
:02:31. > :02:36.Coberley, even though we had been - - it has been above their target
:02:36. > :02:46.every month since December 2009. The bank recently increased its
:02:46. > :02:49.quantity of -- quantitative easing programme. There is a general
:02:49. > :02:54.expectation that the eurozone could fall back into recession in the
:02:54. > :02:58.final quarter of this here and next year. The UK's major trading
:02:58. > :03:03.partner is the eurozone so that will impact us as well. UK growth
:03:03. > :03:09.will stay week from now export markets. And we have problems at
:03:09. > :03:13.home that will weaken domestic economies. The major supermarkets
:03:14. > :03:18.have begun a price war in advance of the festive season. But those
:03:18. > :03:22.price cuts are not expected to show until late in the year. So with
:03:22. > :03:26.consumers feeling the pressure of higher energy costs, lower food
:03:27. > :03:33.costs will be a relief. Many will be keen to see if inflation does
:03:33. > :03:37.peak as promised by the bank at this level.
:03:37. > :03:43.The Bank of America and Goldman Sachs are the latest major US banks
:03:43. > :03:47.to report earnings later today. On Monday, Citigroup said they saw a
:03:47. > :03:52.drop in revenue compared to the same period last year. Banks have
:03:52. > :04:00.been hurt by the market turmoil and the fall in consumer and business
:04:00. > :04:05.confidence. Protesters are demonstrating
:04:05. > :04:10.against corporate greed. But there may be less for them to occupy as
:04:10. > :04:15.banks continue to struggle and try to count cost. Take the Bank of
:04:15. > :04:20.America. The country's largest lender plans to lay off about
:04:20. > :04:24.30,000 employees of the next few years. It has been busy baffling
:04:24. > :04:28.lawsuits relating to mortgagors and its investment banking division
:04:28. > :04:36.which lifted profits for the first half of this year is unlikely to
:04:36. > :04:40.repeat that again. One man explains why. We will hear a lot of bad news,
:04:40. > :04:50.for to the Lea. Banks are a reflection of the US economy and
:04:50. > :04:53.
:04:53. > :04:57.when that is slow, Bledisloe. When it comes to revenue, things will be
:04:57. > :05:06.down. We sit inside this bilby also appear to be using their magic
:05:06. > :05:16.touch. -- inside this building. In July, golden and sacks said they
:05:16. > :05:18.
:05:18. > :05:28.would lay-off 1,000 around 1,000 employees. They are neck and neck.
:05:28. > :05:31.
:05:31. > :05:40.They are good competitors. Morgan Chase's were soft. That will be the
:05:40. > :05:47.case with Goldman Sachs as well. Their results are based on
:05:47. > :05:50.investment banking. This crowd is unlikely to shed too many tears.
:05:50. > :05:54.But for the finance industry faced with new banking rules and tough
:05:54. > :06:02.economic conditions the answer to the current slowdown is lower
:06:02. > :06:08.bonuses and fewer jobs. Returning to the top storey, the
:06:08. > :06:13.news that growth in China has slowed in the third quarter. That
:06:13. > :06:19.is the 7th quarter in a row or two- year period of growth slowing down.
:06:19. > :06:25.We speak to an associate professor at a school of economics in Beijing.
:06:25. > :06:30.Thank you for joining us on the line. What is your interpretation
:06:30. > :06:33.of growth slowing in China? Is this something to be concerned about or
:06:33. > :06:38.have Chinese authorities got it right, they are slowing it at a
:06:38. > :06:43.sustainable level? The concern is not so much slowing-down. The
:06:43. > :06:48.government is trying to introduce a slowdown. The concern is if China
:06:48. > :06:54.comes off the high level of growth, that cracks emerge in the financial
:06:54. > :06:58.system in China. There are people who have debts on high levels of
:06:59. > :07:03.growth. Especially real estate developers and others. If they are
:07:03. > :07:09.not able to achieve these incredibly high levels of growth,
:07:09. > :07:13.they will not be able to pay their loans. That means local government
:07:13. > :07:19.cannot continue to sell property to pay off their loans. Then you get a
:07:19. > :07:23.domino effect. So there are already cracks emerging in the financial
:07:23. > :07:31.system in China. Even though growth has not slowed that much, it is
:07:31. > :07:34.still quite high. They want growth to slow at a sustainable level, as
:07:34. > :07:40.I said. But you are implying that unless it has better at double-
:07:40. > :07:46.digit growth numbers, we are heading for real problems? Yes. It
:07:46. > :07:51.is very difficult for them... They want to stage a correction without
:07:51. > :07:57.having a correction. That is what they mean when they say soft
:07:57. > :08:07.landing. In fact, China needs to undergo a quality of adjustment in
:08:07. > :08:08.
:08:08. > :08:14.what is driving economic growth. What they need to do is develop a
:08:14. > :08:18.consumer economy in China. But it has not been happening. Consumer
:08:18. > :08:23.demand has been increasing but not enough to tilt the balance. So