09/05/2016 World Business Report


09/05/2016

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The Odyssey of the Greek debt crisis continues.

:00:00.:00:19.

Politicians pass a controversial package of tax

:00:20.:00:22.

and pension reforms despite fresh protests against austerity.

:00:23.:00:33.

I'm Sally Bundock. Also in the programme, detail on Facebook's

:00:34.:00:47.

battle with a Chinese food company for the right to use the same name.

:00:48.:00:51.

Greek MPs have passed a controversial package of tax

:00:52.:00:57.

and pension reforms, vital for the receipt of the next instalment

:00:58.:01:00.

It follows a 2 day debate which was held amid violent protests

:01:01.:01:06.

Lets take a quick look at the key reforms the parliament has approved.

:01:07.:01:12.

Top of the list, the government has changed the income tax banding

:01:13.:01:15.

system, meaning that Greeks will now see a larger portion of

:01:16.:01:22.

Pensions are also being hit with a number of benefits being

:01:23.:01:27.

The hope is that this will reduce pension spending from 17 to 15%

:01:28.:01:33.

Dividends tax has also been increased to 15% from 10%.

:01:34.:01:45.

And let's not forget that Greece is already looking to

:01:46.:01:47.

implement spending cuts that will amount to 3% of the country's GDP

:01:48.:01:52.

Later today, finance ministers meet in Brussels

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Our economics correspondent Andrew Walker explains the background to

:02:01.:02:06.

Strikes in Greece. Once again, they are about the bailout of the tax and

:02:07.:02:21.

pension reforms that the government has promised as a condition for

:02:22.:02:24.

financial assistance from the rest of the eurozone. Since the crisis

:02:25.:02:29.

began, Greece has taken dramatic steps to reduce its borrowing needs.

:02:30.:02:33.

Government spending has been cut by more than 30%, and the deficit has

:02:34.:02:39.

plunged from 36% -- 30 6 billion euros to 7.4 billion euros last

:02:40.:02:43.

year. The government has agreed on further measures, but lenders are

:02:44.:02:49.

not ready to sign off on a bailout package that was approved last year.

:02:50.:02:52.

Euro Finance ministers have warned Greece to commit to further this

:02:53.:02:55.

terrorist -- further hysteric if they fail to reach cutting targets.

:02:56.:03:02.

A do not believe Athens is on court to achieve them. Greece is being

:03:03.:03:05.

asked to come up with additional measures, spending cuts and tax

:03:06.:03:10.

rises of for the 2% of GDP that would be activated if they miss the

:03:11.:03:13.

target. Greece needs the money ahead of debt payments of more than 2

:03:14.:03:17.

billion euros ute eurozone central banks in July. -- due to eurozone.

:03:18.:03:23.

The anger of ordinary Greeks spilling out on the street is a

:03:24.:03:27.

reminder of the political difficulties Athens will face if it

:03:28.:03:31.

does not turn the austerity screws even further.

:03:32.:03:34.

New fears about the health of China's economy have been sparked

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by figures showing that both exports and imports fell more than

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Exports fell 1.8% compared with April last year while Imports sank

:03:40.:03:43.

That marked the 18th consecutive monthly decline, suggesting that

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domestic demand remains weak despite a rise in infrastructure spending.

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With me to dig into these numbers is Jinny Yan,

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Chief China Economist at ICBC Standard Bank.

:03:58.:04:02.

Good to see you. We rely on you to tell us whether this is good or bad

:04:03.:04:11.

or ugly, how bad is it in terms of the export - import numbers? It is

:04:12.:04:15.

worse than the market was expecting, but actually I think that the market

:04:16.:04:19.

seems to get a bit more used to negative numbers out of China. We

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cannot rely on the stronger figures that we saw in the first quarter,

:04:24.:04:27.

that was through more and more credit through bank lending is, that

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was the old economic growth style. Increasingly we keep continuing to

:04:32.:04:36.

hear voices from Beijing saying that this is not sustainable. First of

:04:37.:04:40.

all domestic demand is still, it doesn't have much momentum, and also

:04:41.:04:47.

external demand is not picking up. We will get trade numbers that

:04:48.:04:51.

continue to look bad. Also I understand the government had been

:04:52.:04:54.

talking about the issue of jobs and the fact that some sectors, where

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there is just too much capacity right now, like steel there are

:05:00.:05:04.

laying off a lot of people. They are quite concerned about that? We had

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the you're just before the weekend coming out to say that we need to

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ensure stability in growth and to ensure that we create jobs, continue

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to create jobs, and also make sure that there are no large-scale

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layoffs. That is in fact a sort of an implicit guarantee for the

:05:24.:05:28.

economy, suggesting that we won't get huge policies, for industries

:05:29.:05:35.

for example, the coal industry and the steel industry, and also other

:05:36.:05:41.

industries that are due for the phasing out of overcapacity, but so

:05:42.:05:45.

far we are not going to see large-scale layoffs. And very

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quickly, foreign reserve figures came through, just explain what is

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happening with the foreign reserve in real terms? The foreign reserves

:05:54.:05:57.

actually rose. A lot of that was because of the dollar valuation.

:05:58.:06:01.

Without that come without looking at the dollar impact, actually reserve

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still fell. That means there is still pressure on the outflow of

:06:11.:06:14.

capital in China's economy. So overall, the outlook... ? The

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outlook is that we are going to see more volatility of the economy, but

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we are not going to see a new shape of recovery as the government has

:06:25.:06:28.

said time and time again, we are looking for stability within the

:06:29.:06:32.

economy, rather than any expectation of again pick up or a strong pickup

:06:33.:06:37.

in the economy. You put it in perspective for us, thank you for

:06:38.:06:41.

coming in. We will look at markets like to see what numbers -- impact

:06:42.:06:46.

those numbers have on trading in Asia.

:06:47.:06:48.

It's being reported that Facebook has won a trademark case in China

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against a food company that has been using the same name.

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The Financial Times says that Zhongshan Pearl River Drinks

:06:55.:06:56.

Factory, which makes items like potato chips, had registered

:06:57.:06:58.

The ruling comes as a coup for the social network,

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which remains banned in China. Our very own Rico is in Singapore

:07:03.:07:05.

Nice to see you. Fill us in, because this is interesting, given that

:07:06.:07:15.

Apple last week was not so successful. It right. The court

:07:16.:07:21.

victory could be a sign that Beijing's attitude, is indeed

:07:22.:07:28.

softening towards Facebook, which is blocked to China's 700 million

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users. Any decision to unblock these social networking sites would come

:07:34.:07:37.

with strict conditions. If you look at that position, it is indeed

:07:38.:07:41.

significant, because under Chinese law, a multinational with a globally

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recognised brand must prove that its trademark is also well-known within

:07:46.:07:50.

the mainland. You mentioned last week a Beijing court ruled that an

:07:51.:07:54.

accessories manufacturer was entitled to use the trademark

:07:55.:07:59.

iPhone, despite the widespread popularity of Apple's iPhone. This

:08:00.:08:05.

is indeed a major decision, and this charm offensive on Facebook founder

:08:06.:08:12.

Mark Zuckerberg may be working, as well is trying to master the Chinese

:08:13.:08:16.

language, he has entertained China's chief centre at his home --

:08:17.:08:25.

sensor, and drove through Cantonment Square. All of this may be working,

:08:26.:08:32.

-- can and square. All of this may be working.

:08:33.:08:35.

In other news, Takata shares fell as much as 3.5%

:08:36.:08:37.

on Monday as media reports suggest more recalls over faulty airbags

:08:38.:08:40.

Sunday's Nikkei newspaper said that Japanese car maker Honda will

:08:41.:08:44.

recall an additional 20 million airbags provided by Takata.Honda

:08:45.:08:49.

shares have edged slightly higher despite the news.

:08:50.:08:53.

Oil prices have jumped because of supply shocks caused by Canada's

:08:54.:08:58.

The disaster has shut half the country's oil sands capacity,

:08:59.:09:02.

More than 80,000 people have left Fort McMurray in the heart

:09:03.:09:07.

of Canada's oilsands, where the fire has torched 1,600

:09:08.:09:11.

Currently both brent and WTI crude prices are up more

:09:12.:09:18.

You can see the news about China not phasing sentiment at the moment

:09:19.:09:48.

which is encouraging. Looking at the currencies:

:09:49.:09:56.

that's all from me that now, stay with this, we will review the

:09:57.:10:01.

newspapers in a minute. The BBC picked up more than half the

:10:02.:10:13.

awards at last night's TV Baftas. Some winners used their acceptance

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speeches to defend the corporation, ahead of this week's government

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white paper on its future.

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