17/07/2017 World Business Report


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17/07/2017

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


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Now it's time for World Business Report.

:00:00.:00:16.

Growth figures from the world's second biggest economy

:00:17.:00:20.

We take a look at what goes into the making of the world's most

:00:21.:00:28.

popular television series, Game of Thrones.

:00:29.:00:36.

In a minute we'll also find out why Lloyd's of London believes a massive

:00:37.:00:45.

cyber attack could cost the global economy more than some

:00:46.:00:47.

But we begin with China's economy, which has grown more than expected

:00:48.:00:53.

in the second quarter of this year - by 6.9%.

:00:54.:01:00.

It matters because the country, regarded as the world's factory,

:01:01.:01:03.

As you can see here it's a far cry from how things used to be -

:01:04.:01:09.

this shows how for much of the last 25 years China has been

:01:10.:01:12.

One of the big worries is this number.

:01:13.:01:15.

258% is the size of China's debts compared to it's economy.

:01:16.:01:18.

That means it owes more than two and a half time everything it makes

:01:19.:01:22.

Much of the debt is linked to the red hot property market

:01:23.:01:26.

which the government is trying to cool.

:01:27.:01:28.

The cost of new housing in major cities rose 10.4% in May.

:01:29.:01:31.

The government also looks likes it succeeding with another problem.

:01:32.:01:34.

This year Chinese firms have spent $75.2bn on foreign merger

:01:35.:01:37.

and acquisitions which is down almost half on the same time

:01:38.:01:40.

Financial regulation has become a top priority

:01:41.:01:44.

And over the weekend he's been at a meeting of regulators

:01:45.:01:51.

in Beijing where he called for the country's central bank

:01:52.:01:54.

to take a bigger role in managing financial risks.

:01:55.:01:58.

With me is Linda Yueh, Professor of Economics

:01:59.:02:00.

6.9%, how reliable is this a figure? Many will say it is never that

:02:01.:02:19.

reliable. In a sense, we probably expect a slowdown in the second half

:02:20.:02:23.

of the year so it will probably come in closer to target and the reason

:02:24.:02:28.

is that China has been meeting their growth target by stimulating the

:02:29.:02:34.

economy which is added to the debt. Expectation is that China should

:02:35.:02:40.

slow its economy somewhat but the more reliable figures are factory

:02:41.:02:46.

output and retail sales and both came in stronger than. Factory

:02:47.:02:54.

output a key indicator grew by 7.6% in June. Retail sale, another key

:02:55.:03:01.

indicator especially in terms of Chinese consumption which is more

:03:02.:03:08.

sustainable, grew by 11% so those figures suggest the Chinese economy,

:03:09.:03:15.

on the real economy side, are actually resilient and somewhat

:03:16.:03:18.

readjusting more to domestic demand than export. It is this a just and

:03:19.:03:26.

of the economy which is that target, really. Still an awful lot of

:03:27.:03:32.

reforms to be an act did. -- enact did. Other concerns that too much

:03:33.:03:45.

work still needs to be done? It beat market expectations but the concern

:03:46.:03:49.

is how much of that is still being fuelled by the government stimulus

:03:50.:03:54.

especially around credit. That is probably why markets would like to

:03:55.:03:59.

see a greater slowdown than last year. 6.7% last year and the

:04:00.:04:06.

expectation is that China should slow its economy down because most

:04:07.:04:10.

people would rather see a more sustainable slower growth rate for

:04:11.:04:17.

China, already a middle income country, then mimicking the past 25

:04:18.:04:24.

years. As it becomes middle income it needs to adjust to a slower pace

:04:25.:04:32.

of growth and to accept it. Then I think some of the reforms become

:04:33.:04:38.

more palatable, including the financial, which is one of the main

:04:39.:04:43.

reasons why it loan growth is such a problem because it is not properly

:04:44.:04:46.

allocated by the market interest rates. Markets would like to see

:04:47.:04:51.

that and slower growth rather than something that could ultimately end

:04:52.:04:59.

rather badly. Thank you very much for talking to us.

:05:00.:05:00.

The second round of Brexit negotiations will begin in Brussels

:05:01.:05:03.

Ahead of the meetings between UK and EU officials,

:05:04.:05:07.

the UK's finance minister has warned that businesses are delaying

:05:08.:05:09.

investing in the UK because of the uncertainty surrounding Brexit.

:05:10.:05:13.

Speaking to the BBC, Philip Hammond explained the need

:05:14.:05:16.

for clarity, and a smooth transition process.

:05:17.:05:23.

It is absolutely clear that businesses, where they have

:05:24.:05:29.

discretion over investments and can hold off, are doing so and you can

:05:30.:05:35.

understand why - they are waiting for more clarity about what the

:05:36.:05:39.

future relationship with Europe will look like and the way to get the

:05:40.:05:44.

economy moving and restore business confidence and then consumer

:05:45.:05:47.

confidence is to give as much clarity as possible as early as

:05:48.:05:52.

possible which is why I have been talking a busy all or five weeks of

:05:53.:05:56.

the importance of a transitional arrangement.

:05:57.:05:58.

In other news About 4 out of 10 British firms say Brexit has

:05:59.:06:14.

In a report on cyber crime, Lloyds estimated that in the most

:06:15.:06:17.

likely scenario, a malicious hack would take down a cloud service

:06:18.:06:20.

provider, with estimated losses of $53 billion dollars.

:06:21.:06:23.

That's roughly the same cost as Superstorm Sandy,

:06:24.:06:25.

the hurricane that hit the east cost of the United States in 2012.

:06:26.:06:28.

But that's just the average estimate.

:06:29.:06:30.

Lloyd's believes that because of the uncertainty around

:06:31.:06:32.

calculating cyber losses, the damage could be as high

:06:33.:06:35.

as $121 billion, or as low as just $15 billion.

:06:36.:06:40.

China's President Xi Jinping has called on the country's Central Bank

:06:41.:06:43.

It's the most popular TV show of all time,

:06:44.:06:46.

the most downloaded show of all time and is shown in 170 countries.

:06:47.:06:49.

And last night, fans were rewarded after more than a year of waiting,

:06:50.:06:54.

with the premiere of the show's penultimate season.

:06:55.:07:16.

Over six seasons, TV fantasy Game of Thrones has captured the imagination

:07:17.:07:29.

of millions of people. But far from the seven kingdoms, the costumes,

:07:30.:07:32.

ran the sets and authentic armoury that feature in the show is serious

:07:33.:07:39.

business for a few firms in India. Send them at least two options. It

:07:40.:07:45.

is not just Game of Thrones. This business supplies props to many

:07:46.:07:55.

films. We still have the art of hand embroidery alive. They cannot get it

:07:56.:08:03.

in the West so whatever we do, it is a very handmade, it is very period

:08:04.:08:12.

looking. I am in geek heaven. I do not know where to begin. I spotted

:08:13.:08:18.

the sword from the Game of Thrones but nothing can beat John Snow and

:08:19.:08:24.

here is my chance to try my hand at his cloak which is fairly heavy and

:08:25.:08:30.

to top it all, I have his sword as well. What is John Snow without his

:08:31.:08:39.

trusted weapon? This is where the swords are made. The largest

:08:40.:08:45.

factories of its kind. They make every type of sword from heavy steel

:08:46.:08:52.

to light titanium. It supplies two armies around the world but it's

:08:53.:08:56.

swords are not sold commercially in India. Domestic business is only 10-

:08:57.:09:05.

15%. Sometimes it can stretch in the 30%. But it is mostly seasonal. But

:09:06.:09:17.

these are the details that make the story come alive on the big screen

:09:18.:09:23.

and, as long as the battles go on, it means more business on the

:09:24.:09:25.

workflow here. Lets check in with the financial

:09:26.:09:37.

markets: The Nikkei is closed for a public holiday today -

:09:38.:09:40.

will be interesting to see how investors will react to the news

:09:41.:09:44.

that Sony is in the final stages of talks to acquire French music

:09:45.:09:47.

distribution and label services Other indices have

:09:48.:09:50.

mainly risen in Asia following another record

:09:51.:09:53.

close on Wall Street, however Shanghai stocks fell

:09:54.:09:54.

after that data came through showing China's economy grew more

:09:55.:09:57.

than expected in the second quarter.

:09:58.:09:59.