In august, we ask if beijings growing debt pile is one of the worlds biggest risks. Youre watching Worldwide Exchange. Bringing you Business News from around the globe. Hello, everybody. Good morning. Welcome to Worldwide Exchange. A new face on cnbc. Its all very exciting here this morning. Wilfred, welcome. Thank you very much. Tell us about yourself. I decided recently to take the step into television. Im very excited about it and looking forward to the two hours. And youre english. Indeed, very much so. With a name like wilfred, i would say so. Youre from england. Yes. The last five years ive been working to follow into my fathers footsteps to be in television. Its a pleasure already and we look forward to getting to know you more. Well, thank you very much. Russias foreign minister says they will look for further sanctions following a summit over the weekend. Lavrov also said in talks later today between kiev and moscow should seek an immediate ceasefire. Meanwhile, u. S. Lawmakers urged the white house to take steps to arm the Ukrainian Government to stop putins aggression against the country. Democrats are Robert Menendez who heads the Foreign Relations committee saying the u. S. Should Work Together with nato and the European Union to arm kiev. This as russian president Vladimir Putin stoked fears he supports calls from rebels for independence after he called for the, quote, statehood of southern and Eastern Ukraine. I am in meaningful talks relating to the issues of the societys Political Organization and statehood in southEastern Ukraine should begin immediately in order to protect legitimate interests of People Living there. And in an attempt to clarify the president s comments, the kremlin later said Eastern Ukraine should remain part of the country. And he also called the tensions in the region a domestic ukrainan conflict. Hatley gamble was there earlier this week and has more. We know troops are on the ground there according to angela merkel, but she didnt want to define, she didnt know the definition of invasion under international law. She didnt want to go there. The and to be fair to the eu leaders, neither did president obama this week. Hes got an lot of flak for that as well. So the senate coming out, bob menendez, trying to get on his back saying we need to arm the rebels, why are you trying to arm them . These are the bigger questions and unfortunately the eu is going to be hesitant to do much more than in a weeks time possibly ratchet up sanctions and close loophole that is are already there. So i dont see any military engagement any time soon. What type of sanctions are we looking at . I mean, just more of the same or are they going to be targeting different sectors . That was the bigger question. Initially when the ukrainian president , i spoke with him, he said we are targeting and looking at level three secondtorial sanctions. And essentially i said, is this because we reached the point of no return. Mr. Baruso earlier talked about the need for diplomatic solution before we reached the point of no return, can you define then what is the point of no return and how do you plan to defend your country . I think that we are very close to the point of no return. The point of no return is fullscale war, which already happened on the territory controlled by regular russian troops. And any defensive action which we would undertake if it would happen would be the point of no return. And thats why we undertake the normal efforts to stop that and to bring the discussion under diplomatic form and under diplomatic dialogue. The issue, the essence of the discussion is also very easy to understand. This is the peace plan. And i hope that in the next week we will publish the draft of this peace trend and on monday it will be Trilateral Group meeting with the participation of the ambassador of the oec, the expresident of ukraine and the russian ambassador. And the discussion would be not only for the hostages, including the hostages which are illegally kept in russia. The discussion will not only be with the mission of the oec including the mugs alongside of the border, but the i cross my finger and hope that it will be ceasefire. There you see the ukrainian president , this poor man is essentially saying we need help, weve been invaded, but none of the other leaders of the eu wanted to come aboard with that. Because once they do, the military options have to be on the table. Essentially, they want to stay as far away from that as possible. I guess we are also waiting more to see what the response of the eastern part of ukrainian people is as well. Whether they would more want to be towards russia or whether they actually would want to remain ukrainian. Absolutely. And i spoke with the lithuanian Prime Minister and asked how worried she was about this. Russia is against ukraine meaning it is in stage of war against the country. Practical russia is in a stage of war against europe. And that means that we need to help ukraine to battle it back, to defend itself, its territory and its people and to help militarily, especially with the military materials to help ukraine to defend itself. Because today ukraine is fighting war on behalf of all europe. The European Union uses soft power. Soft power, number one, was the Association Agreement with ukraine. Soft power number two, when the situation escalates is to use sanctions. Have they worked or not . I think the jury is still out. And have they looked at the objective figure earlier. It doesnt strike me as someone confident. Hes going to get the support he needs. I think essentially hes walking away from this hoping next week at nato hell be able to push for a further discussion of nato membership for ukraine, but i dont think in any real sense he thought he had much of a hope of getting anything more than possibly more sanctions. Someone said something very interesting to me the other day. In order to push forward with nato membership, which even if it were to happen would be very far out, you have to have control over your own territory. Exactly. And which they dont at this stage, so the nato membership seems if anything a red herring in order to throw focus on what europe is doing to support ukraine at this stage. And the united states, no one really wants to admit anything is happening there, but things have been happening there since march. One diplomat said to me on the sidelines, he made the comment essentially, what they should have done when ukraine became its own state was to have the referendum and allow the people to go. But of course that didnt happen, but that was definitely discussed at that time. Hadley, thank you very much for being with us. Hadley gamble giving us the latest on the summit out of brussels. Timmy welsh is here now, welcome. What do you make of the latest round of discussions in brussels and what should europe be doing in regards to the ukrainian crisis . Its pretty clear, the european mentioned obama would rather ignore it and rather this was not happening. This discussion on invasion or not on insurgency, whatever you make of it, bottom line, its a fullscale war with a lot of casualties. Europe doesnt want to admit that and rather not do anything is the reality. We heard the finnish Prime Minister talk about the eu having soft measures up until now, but what could the eu otherwise do apart from sanctions and apart from the lines they have been giving us. What else can they do . The problem is sanctions. I think sanctions can work but it depends on how their shapes are formed. Unfortunately, russias allies in europe, the italians, the greeks, the bulgarians and austrians, theres plenty of them. And every chance to put sanctions in place, they watered them down so much they hardly work and are hardly effective. Sanctions can work in russia and can be effective and can encourage russia to change its actions, but you have to have meaningful sanctions. How much has the weak nps the european economy played in this . Very weak statements out of merkel over the weekend if the european economy is booming, would the tough sanctions have been imposed already . Im not sure. In the end its about close historical and cultural relationships between certain member states. And really very significant business relationships. Both of the professional and the personal level. I mean, russia is very effective at lobbying through business interests in europe. To counter the threat of sanctions. Just looking at the markets for a moment and looking at the august that we just closed out in the last couple of months that we are heading into, do you think geopolitics are going to weigh more on the european markets or less on the european markets heading forward . Im afraid we are sleepwalking through the Russia Ukraine crisis. Thats the reality. Its hard to see a resolution, frankly. This has been going on for ten months. Theres been a lot of focus on eu very senior diplomats and politicians, and we are nowhere near a resolution. It is escalating. And the events over the last few days, putin has made it pretty clear hes not going to butt out of ukraine. And if ukraine wants a western orientation, which the vast majority of the ukraine population does, hes taking crimea and hes likely to take other bits of the country. Is poleshenko or the ukrainian population willing to stomach that or fight more to retain territory . These are huge question marks for ukraine. The imf approved over the weekend a 1. 4 billion loan to ukraine. Is that going to help them at all . Its a small change. Its basically covering up the cracks. I mean, the west is, doesnt really want to go down the sanctions route, doesnt really, as i mentioned, doesnt want to admit theres a problem between russia and ukraine. I think the big problem with the imf program is when it was originally drafted in march april, you know, they painted a very optimistic scenario in terms of security situation in ukraine. And the macroassumptions wasnt very credible. Again, if you read christine la guards statement around the release of the 1. 4 billion credit lawn ch, if theres no resolution, the ukrainian economy will remain very deep in recession and the budget financing hole will be larger an there will be a need for more imf money. At the moment, the imf program doesnt add up well. Timothy, thank you very much for being with us. When you come back, well chat more in the next couple of minutes. Incidentally, if you want to get involved, feel free to send us your email, send through your twitter questions or your comments as well. An email at worldwide cnbc. Com. And on twitter, you can find us at my address, wilfred is on twitter, wilfredfost. And well post our questions to the guests in the studio. Lets have a look at markets. The s p 500 had its strongest august for 14 years. And that is house september is started. A mixture of green and red today in europe. Slightly up, the stoxx 600 is up but not with a huge amount of conviction. Why is it lacking conviction in because there was a lot of data earlier in the week. We had confirmation of the german 1. 2 contraction in the market. That market is slightly off. And we have important pmi credit data out of the u. K. In 20 minutes time. The ftse 100 slightly down as we look at things at the moment. Well look at bonds. If we go to the start of the summer, we thought the growth in europe was recovering. How far are we from that now . With the poor macrodata out pushing bond prices down, the record lows we have been telling you about, the german tenure is on 90 points that is really astonishing lower. And the most interesting thing to look at today is the euro, a fraction off the dollar, but it has hit the 12month low on friday and today. That both on the geopolitical tensions lifted up, but also looking ahead to thursday when we hear from the ecb from mario drugge. Thats the big question. Here on todays show, it is not just wilfreds first day on the show, but dave lewis is looking at the problems stocking up for tesco. And also all the details on one of the most highly anticipated ipos since facebook. This is a big one as alibaba goes public next week. And a list of them, we discuss how the festival season has become a lucrative business for artists with rapidly declining record sales. I used to love going to festivals but havent been in a long time. Im not much of a festival person. They are fantastic, the mood, the atmosphere. Im not the one to give updates on that, but if you have been to many festivals, we want to hear from you. Do you enjoy those or are you still buying albums in local stores . What was the last album people have bought . Join the conversation by email or by twitter cnbcwex. And still to come on the show, prodemocracy activists storm a news Briefing Held by chinese officials after beijing blocked universal sufficient ra rage in hong kong. More on the protests, next. [ woman ] the cadillac summer collection is here. [ male announcer ] during the cadillac summers best event, lease this 2014 ats for around 299 a month. Hurry in this exceptional offer ends soon. Antigovernment protests in pakistan turned violent with at least three people reported dead and hundreds wounded. Police used tear gas overnight to try to disburse the crowd demanding the resignation of the countrys president. The National Television station was also forced off air. At the same time, police used pepper spray against prodemocracy protestors in hong kong after the Chinese Government ruled beijing must now prove candidates running in hong kongs next leadership election. Emily towne has been following this story and filed this report. Reporter beijing officials just completed a twoandahalf hour briefing on the latest proposals for universal suffrage here in hong kong. Of course, this was not without protest just minutes into the seminar we had a number of democrats stand up voicing their dissent sent. After making a lot of noise, they were escorted out in order for the briefing to continue. There was also an incident with pepper spray where police were reportedly charged by protesters and had to use pepper spray to make them back down. Apart from that, we heard from the deputy secretary general of the National CongressStanding Committee outlining the framework for hong kongs universal suffrage saying this is a historical moment for hong kong allowing one man and more than 500 citizens here in hong kong, bringing new change to hong kong. And he urged hong kong people to put down their differences. The next move is for the lawmakers to move this to legislation, but the pandemocrats said they will be vetoing the proposal that does require twothirds majority in order for it to come into law. Thats the latest from here in hong kong, back to you. Peter lawson is joining us now. Good morning, peter, good afternoon to you there. Is china trying to ditch universal suffrage altogether . Well, there are some people definitely in hong kong who believe that. They have taken a very hard line view or very narrow view really of the democracy they are prepared to allow in hong kong. And there is a point of view that says as you heard in that report just now, in order to get this through the hong kong parliament, they need a twothirds majority meaning some of the pandemocrat party have to support it. If they dont, if they with hold support, the whole proposal will fail and the chinese have already made it pretty clear that in that case then universal suffrage goes off the table, possibly indefinitely and certainly until the next election in 2022. Thank you very much. Well be back with you shortly. We will, indeed, because theres more to talk about with regards to what is taking place in china. The slowdown in chinese activity provide more evidence at the second largest economy to be cooling. The official manufacturing pmi rised from the 27month high reading of 51. 1 in august, just shy of the reuters forecast of 51. 2. Meanwhile, the hsbc market slipped to a threemonth low of 50. 2, so barely clinging on though to that expansion territory above 50. The asian markets shrugged off the data. Some analysts suggested that beijing will need to step in with further easing measures. And with debt levels in china near 250 of gdp according to recent estimates, is the country at risk for default . Samantha laura is here with more. Reporter this is reminding us of chinas level of debt. The report is pointing out that chinas debt to gdp ratio is at 250 . And as you can see, thats slightly better than the u. S. And the u. K. And certainly a lot better than japan, but as a developing economy it has accumulated debt at lightning speeds. And countries like argentina have been sitting in the same position as the gdp ratios leading to financial crises. We know that beijing used credit during the financial crisis of 2008 to propel growth and that was when debt to gdp was sitting at 130 . So 250 you can see how quickly they have accumulated debt. Now another way to measure debt in china is looking at total social financing. This was a metric employed in 2011 to keep tabs on the Financial System as it diversified a way from traditional lending. You can see the blue line there representing a Traditional Bank loan. Orange and green representing shadow banking activity. And tend to be unregulated in the economy. This for trust products and trust loans as well as Wealth Management product. Both blue and green are rising drastically since the early 2000 and now sitting at 125 trillion, thats 25 of the gdp and currently growing at 16 outpacing nominal gdp growth of 9 . So now we are in a position which china has lofty debt, growth is slowing and of course we know that servicing debt is going to eat into the profits. And thats going to drag growth lower. That could have been allocated to reinvesting in the economy, so thats one aspect to it. Moodys warns if there are alarm bells, this could lead to a hard landing in china. Of course, chinas debt position is an erroneous conclusion. Yes, the rapid rise in debt in china is unhealthy, but china and beijing, the banks have buffers and they will capitalize nonperforming loans at the percentage of total loans sitting at relatively low levels right now. And overall, the strength i