20/01/2017 World Business Report


20/01/2017

The latest business news with informed analysis from the world's financial centres.


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Now for the latest financial news with Aaron Heslehurst

:00:00.:00:00.

Slashing taxes, talking tough on trade, and ripping up

:00:00.:00:17.

America's President-Elect promises double the growth and millions

:00:18.:00:23.

Plus, his arch rival, China, confirms its weakest growth

:00:24.:00:35.

since 1990, with fears of even tougher times ahead.

:00:36.:00:44.

Welcome to the programme. We have the Friday feeling. You will see a

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snapshot of all the different things going on in the business world.

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We start in Washington, where, as you've been hearing,

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later today, Donald Trump will be sworn in as the 45th President

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The billionaire businessman has gone from longshot candidate

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to the leader of world biggest economy in just a year and a half.

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His supporters will now be hoping that he can shake up the US economy

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in the same way the he shook up the presidential race.

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He has promised to create 25 million jobs over ten years and to double

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the annual rate of economic growth to 4%.

:01:29.:01:30.

He's promised to take a tough line on trade,

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and on countries he sees as undercutting US workers

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He has famously threatened to slap a 35% tariff on Mexican imports

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and a 45% tariff on products from China, raising fears

:01:43.:01:45.

To start with, though, he will renegotiate

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the North American Free Trade Agreement.

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He also says he'll cut America's high corporate taxes,

:02:03.:02:04.

which have pushed big US firms to offshore a lot of their business

:02:05.:02:08.

Critics say this is too expensive and will help big companies rather

:02:09.:02:12.

And he promises to free up business by ripping up red tape.

:02:13.:02:16.

He says 70% of all federal regulations can go.

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He hopes that will encourage firms to keep more jobs in the US

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Shares of the United States' biggest companies have certainly reacted

:02:23.:02:26.

The Trump Rally has faded in recent days, but the benchmark Dow Jones

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industrial average is still up around 9% since Mr Trump

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Some of the top gainers have been the big Wall Street banks.

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They were hit by a huge amount of regulation since the 2008

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financial crisis, known as the Dodd Frank Act.

:03:01.:03:02.

And as Samira Hussain reports, they are hoping its days

:03:03.:03:05.

The Trump inauguration will no doubt be the main talking point

:03:06.:03:19.

at the World Economic Forum in Davos.

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We've been reporting from there all week.

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So, let's go live to Switzerland now for some reaction.

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Dr Paul Sheard is Global Chief Economist at S Global.

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It is great to have you on the programme. Lots to talk about. Can

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we start with this whole thing about reversing globalisation and bringing

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jobs back to America apparently 5 million have been lost from the US

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since 2000. Most of the reason is technology, not because they have

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been outsourced across the world. It is great to be here. It is difficult

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to untangle the effects of technology and liberalisation. There

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are probably elements of both. -- globalisation. Most economists

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probably think that comparative advantage is driving it more than

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anything else. As you indicated, there is a sense of a shift in the

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atmospherics and the policies coming out of the world's largest economy.

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Are people in your game bracing ourselves for a possible trade war?

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That is on everyone's radar screen, but people are not expecting him to

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go in that direction. Trade war, protectionism, the 1930s and that

:04:41.:04:45.

situation, it would not be consistent with aiming for 4%

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growth, because he is the man with the art of the deal, the negotiator

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in Chief. The message seems to be we want free trade, but on fair terms

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to America. In the past, America has been open with its market. The

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message is now that has not always served all segments of the American

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population well. So he will get tougher when it comes to striking

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trade deals and re- looking at them, and NAFTA is at the top of the list,

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of course. They will start with that straightaway, apparently. Shortly,

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the big tax cuts he has planned, will they be enough if they go

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through to bring a lot of this American corporate money, the

:05:35.:05:36.

millions and billions offshore, bring it back to the US? I think it

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could be an important development, Aaron, because it has been out a

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long time. We have had divided government in the US and it has been

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difficult to get anything done. There has been a strong consensus

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that this corporate cash going offshore needs to come back. Donald

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Trump may be the man to do it with the economists on his side. Put a

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jacket on! It is -20 down there! We appreciate you joining us. At least

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the global economy is not freezing. There you go! See? A nice line to

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end on. Joining us from Davos in Switzerland.

:06:28.:06:29.

We are also in China, where official growth figures have

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They have confirmed that last year, China's economy grew at its slowest

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pace in more than a quarter of a century.

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China's growth rate hit 6.8% in the last three months of 2016.

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That's slightly better than expected, and slightly better

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But it still leaves the annual growth rate at 6.7% for 2016,

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bang in the middle of the government's target

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The bad news is that it's the weakest rate in 26 years.

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1990 was just after the crackdown in Tiananmen Square,

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when China was isolated internationally.

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But the good news is, China has avoided the economic slump

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many around the world were fearing, largely thanks to huge amounts

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Let's talk to the BBC's Steve McDonell in Beijing.

:07:23.:07:29.

It is good to see you. Let us start with how interesting 6.7% is. Right

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in the middle of what Beijing said they would do. Can I ask you this,

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the last thing President Xi Jinping needs is Donald Trump to start a

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trade spat because that could hit the Chinese economy quite hard,

:07:52.:07:56.

couldn't it? Absolutely. There is a lot of fear here that China, which

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has benefited greatly from globalisation, could take a hit from

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these tariffs if they take place. A could argue that United States

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consumers have also benefited greatly from free trade. They will

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suffer if there is a tariff on iPads, for example, and prices go

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up. Every time we see these numbers the questions lies about. I have to

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throw it out. Can you trust these numbers and what comes out of

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Beijing? This is a good question. I am in just before I come to whether

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the figures are real, let us assume they are solid. -- I mean,. The

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Chinese government, 6.7%. Many governments would give their hand

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for that. For China, it means they are worried about a slowing economy.

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Policymakers say it is all part of the plan here though. China needs

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slower growth that relies more on domestic consumption and less on

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exports. That is why we are seeing these figures. But as to whether

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they are real or not, it is interesting, people have long

:09:12.:09:13.

suspected some provinces artificially inflate their GDP

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figures to make the government look good. Sometimes they underestimate

:09:18.:09:22.

them to draw more attention and help from the central government. For the

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first time, we have just had the governor admitting that over several

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years in his province, the figures were fake. The figures were

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doctored. And so he says that they have misled the national government

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on GDP figures. This is just fuelling more and more concerned

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that you cannot trust these statistics in China. Indeed. Thank

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you very much for the explanation, Steve. Have fun on the weekend.

:09:52.:09:57.

Other news now. President-Elect Donald Trump's

:09:58.:10:03.

choice for Treasury Secretary, Steven Mnuchin, has

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faced strong criticism during a Senate

:10:06.:10:06.

confirmation hearing. Mr Mnuchin is a former

:10:07.:10:08.

a Goldman Sachs banker turned hedge He faced accusations

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that his former bank, OneWest, ruined lives during the US

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property crash by foreclosing But he told the Senate Finance

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Committee "I have been maligned." I don't really want to do the

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markets. You are forcing me to do it. There you go. Everyone is

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watching the inauguration today. I will be back with James Menendez to

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look at the papers.

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