01/06/2017 World Business Report

regions from forces linked to the so-called Islamic State

Now it's time for World Business Report.

Closer ties between the EU and China - that's the aim.

The leaders are meeting at at summit in Brussels later hoping to counter

President Trump's stance on trade and climate change.

Brazil is expected to announce that its economy is growing

for the first time since 2014 - but could that be overshadowed

We'll look at whether that could threaten the return

In a minute we'll find out why today is a big day

But first, the EU and China will attempt to deepen ties

There is concern among some about the direction taken by US

President Donald Trump on trade and climate change.

Chinese Premier Li Keqiang will meet European Council president

Donald Tusk and European Commission head Jean-Claude Juncker.

They are hoping to come up with an answer to Donald Trump's

Trade in goods between the EU and China is worth well over 1.5

The EU is China's biggest trading partner, while China is the EU's

second largest trading partner - after the United States.

But the EU is worried about industrial overcapacity

in China - most notably, in the steel sector.

For example, in April this year the European Commission increased

anti-dumping duties on imports of hot-rolled flat steel products

from China by up to 36% - much to Beijing's anger.

China invested four times as much in European businesses as European

businesses did in China. With me is Dr Yu Jie,

Head of China Foresight, There is likely to be some common

ground as far as climate change and statements of intent regarding the

Paris agreement are concerned. But still some areas where there could

be some friction? I would say it plenty of friction. That is

partially because the Chinese take investment more seriously, whereas

the EU take rules more seriously. Chinese played by the money, there

are differences here because of that. Regarding the overcapacity

issue, this is not just an issue in terms of foreign investment. It is

also an issue for China in terms of domestic politics. We know that this

party congresses in pipeline. Xi Jinping is trying to stabilise the

economy, and to make sure less people are unemployed. So they don't

want to lay off and steel in China. Therefore, I am expecting some tough

talks. Do you think this talk of getting together and continuing a

protectionist stance with Donald Trump, do you think that has been

overblown? Partially, yes. Xi Jinping also wants to look like a

very stable leader on the international stage, so by

presenting himself into some kind of alliance regarding climate change

would not give him a very good image. This is also testing the

Chinese Communist Party's governing ability, and whether they can

address the issues of pollution and poor air quality. That is something

Xi Jinping is trying to present to the world as well as the domestic

audience. How big of a sticking point do you think this issue of

steel tariffs is going to be? It is an ongoing issue. It has become

particularly pressing, because what is happening in the political arena

and what is happening inside China, that is affecting it. I can only see

the problem escalating. Thank you very much for your analysis.

Today it re-joins the MSCI Emerging Markets Index -

a massive reputational boost for the country,

and a sign that things could be turning around for a nation that's

been beset with political and terror related problems.

The MSCI Emerging Markets Index is made up of 23 emerging markets

Pakistan used to be a part of the index, but was removed

because of the exchange's decision to shut down for four months in late

2008 after prices dropped dramatically.

That meant foreign investors couldn't get their money out.

We are joined by our Asia business correspondence. In practical terms,

what difference does this make. It makes a big difference. Pakistan was

once called the basket case of South Asia in terms of its economic

prospects. Now it is being called the new Asian tiger. A lot of that

is down to the new reputational boost you are talking about. It is

now part of the emerging markets index. That includes top-ranked

stocks from all over the world. Some of the world's biggest businesses

use this list. Just take a look at some of the evidence. Pakistani

stocks versus the emerging markets index, you can see on your screen

how shares have outperformed the emerging markets index, despite all

the troubles that have come out of Pakistan in recent years. Why is

this happening? A lot of it is down to good corporate governance, and it

is also a domestic consumption story. Much like India and China,

Pakistan is all about spending money and seeing incomes rise. Take a look

at this chart. GDP growth in Pakistan has been pretty solid of

late. That is coming after a low period in the mid- 2000. I think it

is also important not to disregard the obvious issues with security and

terror related concerns. At least for today, a sign that this country

could be facing a turnaround. Thank you very much.

Brazil may be about to announce the end of the country's worst

It is expected to report that its economy grew for the first

three months of the year - it'll be the first quarter of growth

But just as the country seems to be turning a corner,

another political crisis has kicked off that could halt the recovery

Daniel Gallas reports from the capital, Brasilia.

Violence flared outside Brazil's national congress as protesters made

it clear they were not happy with how the country is being ruled.

Inside the building, politicians were debating radical reforms to the

economy, including making Brazilians work longer and retire later. We are

tired of being a country with a president accused of corruption. We

want a new president and we want to know are by tree Labour reforms.

These people do not want reforms, they say it will hurt pensions.

Despite the political crisis engulfing Brazil, they know that

sooner or later, Congress is likely to vote on the reports, some say

that is crucial for the Brazilian economy. The Brazilian population is

ageing. It presents a serious challenge, the cost of caring for

the elderly is rising sharply in the government does not have the money

to pay for it. The country spends around 11% of its GDP on pensions,

that is twice as high as in more developed economies and it is set to

double in the next 40 years. Brazil's debt is also growing,

doubling in the past three years. Without reforms, the IMF says that

debt could balloon to 90% in five years. President Michel Temer has

been pushing reforms to get the economy back on track, but he is now

embroiled in a corruption scandal which could see him forced out of

office. The question is, if he goes, will his reforms survive? Is -- if

the current president has to step down, I am certain that politicians

would find a new president who is committed to these reforms. Changes

needed, but the proposals are unpopular. -- change is. There is

little appetite for more pain, but without more reforms, the recovery

could prove short lived, bringing the prospect of yet more unrest.

A quick look at the markets now. This is how the Asian markets

finished. We are out of time, I'll see you soon. Goodbye. Then we'll be