Transcripts For CNNW World Business Today 20120227 : vimarsa

CNNW World Business Today February 27, 2012



american base last week. the u.s. says the holy booked were burned by mistake and has apologize. with russia's presidential election less than a week away, russian state media says a plot against the number one candidate's been foiled. prime minister vladimir putin's about id to return to the presidency has stirred widespread protests. and now russian tv says two suspects in an alleged plot to as nature him have been arrested in the ukraine. they attempted a number of attacks in moscow, plus one on mr. putin right after the march 4th presidential poll. those are the headlines from cnn, the world's news business leader. i'm zain vergee and "world business today" starts right now. good morning from cnn london, i'm nina dos santos. >> and a very good afternoon from cnn hong kong. i'm andrew stevens. you've watch be "world business today." our top stories this monday, february 27th. the world bank issues a stark warning to china, free up the markets or face some dire economic consequences. >> g-20 finance ministers say europe needs to beef up its bailout fund. they're ramping up the pressure on germany to lead the way. >> and the numbers say it all. 71-31. julia gillard remains in power but the australian prime minister must now restore unity within her own party. first up, though, european stock markets have been open for a touch over an hour now. it's not get off to the best week so far. it wasn't much different in asia where the trend was overwhelmingly a downward one. let's go over to andrew. zblf that's right, nina. our top story today, the world bank plus a chinese think tank issuing a stern warning to the chinese government. in a report entitled china 2030, the two institutions say china has to move to a freer, more commercially driven economy if it wants to sustain its rapid growth path. estimates suggest that state-owned enterprises, the soes like an oil giant, account for some 40% of china's total economic output, total gdp. the new report recommends an overhaul of the powerful state-owned companies, turning them into commercial enterprises. growth is largely govern driven. it calls for greateren innovation and greater competition. china's economy is the world's second biggest and growing at a rate of 10% a year and it's been doing that for the past three decades. certainly enormous growth in china. the critics do question whether such a high rate of growth can be sustained under the current economic model. already we've seen signs a slowdown. the report says china can maintain its strong growth but there are some risks. stan grant joins us now with more on that. you've been looking at this report. it's a huge overhaul of the system they're talking about, land reforms, financial sector reforms, labor reforms but the state-owned enterprises. >> it probably doesn't come as a surprise to be honest. it's no the as they're living in a vacuum. they know what's happening in their own country. the old saying about stage play, the gun in the first act always goes off in the third. we already saw the gun 350 years ago. now it's in danger of going after. this is a country where the ground is shifting beneath its feet. the economy has been in transition. we're starting to see it slow down. we know internationally some of the export markets, u.s., europe, not as deep as they once have been. not likely to come back soon. you have an economy very much in transition. there's an economic reality and then there's a political will. do they have the political will to carry this out? we know they know what the economics are. are they going to be able to free up, is the government going to feel comfortable enough to take its hands off the wheel? that's what they're asking for here, away before being directly involved to more indirectly involved. they want to see the government to be able to set more rules and guidelines without directly interfering. >> and then stepping back, basically? >> stepping back. as you pointed out before, we know there's been a preference for the state-owned companies. they know how to work with state-owned companies. they're the product of the government. now they want to step back from that, open up more to private companies, allow them to more freely in the marketplace, give them the access to the funding from the banks that the state-owned companies have enjoyed. that will mean freeing up the labor force as well. one of the things of this is focusing on the heco system. that's the ability for people to move where and when for work. you can't control people when they start to move out around the country. economic reality and political will is what we're talking about. >> they're being asked basically to tear up the playbook, aren't they, and say you start again and do it this way, which is a huge thing. stan, as you pointed out, obviously they see stresses and strains in the system they've created so far. what do you think of the key points they're going to be focusing on? what needs to be fixed first if you like? >> look at the report. the real key is more freedom, more economic freedom. the government stepping back, allowing private companies to operate more freely. allowing the people to be able to move around more freely. really key part of this to me is focusing on domestic consumption. the old model, relying on high exports, having a big, cheap labor force, a lot of investment, that model is tapped out. i know that, they know that and you know that. what are they going to replace it with? domestic consumption. a lot of people i speak to say they should have started this process 15 years ago. now they're trying to catch up. if you were to get to where consumption needs to be, at the moment it's 30% of gdp, it only goes to 50%, people need to feel secure. they can't stash their money under the bed. they have to know they'll be provided for in old age, there has to be health care. people feeling confident to spend, they have to be able to take care of the social welfare system in the country as well. that will mean upheaval, a cost to the government at a time when there's international turmoil as well. >> the timing is curious, because we have a change of leadership in beijing this year. do you think this report is some sort of marker, perhaps, being put down by the incoming leaders to say, this -- these are the sort of steps we're going to take? >> what a parting gift. here you go, it's all yours, you can take it from here. look, hu jintao has been lucky. he's been able to preside -- not just lucky. he's been competent as well. he hasn't had to do a lot. economy has continued to function. he's been swept along by the growth. xi jinping is not going to be as fortunate. you look at this report, by 2030, china will probably be the biggest economy in the world if it stays on track. it will be growing at 5% to 6%, not 10%. it will have a gross national income of $16,000, $17,000 per person. that's very different to today. how do you manage the expectations? how do you manage a more wealthy country? how do you manage a country that the economy is starting to slow? you can't rely on the old leaders of growth. he's going to have a huge economic problem to deal with. i would argue, perhaps, even a greater political problem. you can't have free market without a free country. and when the government has such tight grip on the reigns as it does and feels insecure about letting that grip drop, releasing that grip, it's a recipe for uncertainty. one thing we do know, they don't like uncertainty. >> absolutely. i guess another key point which isn't mentioned in this, stan, is to have more openness, you need a much more freer press. we can't see that haing for a while either. >> look at the past year, andrew. we've seen an extraordinary crackdown on the movement of the press in the lead up to this leadership change, expect to see the same. >> stan, always good to talk to you. >> nice to be here. >> good to have you back down from beijing. stan grant, our international correspondent based in beijing. nina, it's an interesting question, because this is such a big issue for china facing the next 20 years or so, how do they grow? the old system isn't working. they're not comfortable with the new system yet. this is going to be a story we'll be talking about an awful lot over the coming weeks, months, years, decades. >> it certainly is, andrew, stan, with the weakness we're seeing here in europe and even though the united states' economy ticking up, the concerns remain in china. let's have a look at how this is affecting the stock markets here. europe, basically they've been falling like a stone. since the beginning of the trading day. very much taking their cues from what happens in asia and in light of the concerns surrounding china. if you look at the cac currant in paris, it has been following steadily throughout the course of the day. one stock in particular we're keeping an eye on in this market, the ftse 100, hsbc, europe's biggest bank has reported a net profit equivalent to $21.9 billion. hsbc's earnings include a $3.9 billion gains for re-evaluation of its own debt to try to mitigate the effects of all sorts of things many a bank has been contending with these days. it's stock not that much moved in the uk market. down to the tune of 0.2%. on a day when many of the markets are down in excess of 1%. andrew? >> certainly a stock that was watched very closely here. a lot of people own hsbc shares. it is the stock that's always been the one to have in portfolios in hong kong. this is how the asian markets ended today. we have one green arrow amidst the red. the shanghai is up about 0.3%. you'll see the nikkei down a fraction, though, that was the -- the losses were muted somewhat by the exporters. they made gains on hopes that the weaker yen which we've been seeing recently will boost over to these profits, obviously. the yen is down 4.5% against the dollar over the past month or so. there's a bit of ray of light there for the japanese exporters which have been hammered so much. elsewhere, though, it was a high oil price story. this is a story we'll be talking about for a while. certainly for the rest of this week. the nymex light crude getting to $110 a barrel. that sparks fears, obviously of what it's going to do for growth in not just the u.s. but the global economy, still so dependent on oil. in australia, even a decisive victory for the prime minister julia gillard in the leadership battle. stocks trading weaker as investors also reacted to those higher oil prices. let's just quickly tell you what the new york markets are looking like. this is the futures obviously. see there, all red arrows as well, the s&p, down about 0.5%. the nasdaq down by about the same, the dow, a fraction less. i suspect it's going to be oil-dominating in the u.s. as well this day. speaking of oil, the millionty billion dollar trial to determine civil liability in the gulf of mexico has been delayed for one week. it was originally due to start today with thousands suing bp in an effort to try and establish kulpaability for that april 2010 explosion. this explosion killed 11 people and led to the worst u.s. spill in u.s. history, oil spill i should say. they have another week to try and reach an out of court settlement. bp has earmarked 20 billion u.s. dollars in settlement money to be distributed to the victims of this spill which is the worst in the entire u.s. history. live from cnn hong kong and lon dob, you're watching "world business today." finance leaders say the eurozone rescue fund may be in need of a boost. we'll have the full story, just ahead. [ male announcer ] it's simple physics... a body at rest tends to stay at rest... while a body in motion tends to stay in motion. staying active can actually ease arthritis symptoms. but if you have arthritis, staying active can be difficult. prescription celebrex can help relieve arthritis pain so your body can stay in motion. because just one 200mg celebrex a day can provide 24 hour relief for many with arthritis pain and inflammation. plus, in clinical studies, celebrex is proven to improve daily physical function so moving is easier. and celebrex is not a narcotic. when it comes to relieving your arthritis pain, you and your doctor need to balance the benefits with the risks. all prescription nsaids, like celebrex, ibuprofen, naproxen, and meloxicam have the same cardiovascular warning. they all may increase the chance of heart attack or stroke, which can lead to death. this chance increases if you have heart disease or risk factors such as high blood pressure or when nsaids are taken for long periods. nsaids, including celebrex, increase the chance of serious skin or allergic reactions or stomach and intestine problems, such as bleeding and ulcers, which can occur without warning and may cause death. patients also taking aspirin and the elderly are at increased risk for stomach bleeding and ulcers. do not take celebrex if you've had an asthma attack, hives, or other allergies to aspirin, nsaids or sulfonamides. get help right away if you have swelling of the face or throat, or trouble breathing. tell your doctor your medical history and find an arthritis treatment for you. visit celebrex.com and ask your doctor about celebrex. for a body in motion. the price of oil has been in the spotlight in recent weeks as tensions grow with iran. about supply plus the potential of closing down the straits of hormuz. this is european crude, $124 a barrel. it's come off highs on friday, down by $1.17. you're watching "world business today." we're live on cnn. finance ministers from the world's leading economies are piling the pressure on germany to boost the fund that's supposed to contain the eurozone's debt crisis. g-20 ministers met in mexico city over the weekend insisting that europe must increase the size of that bailout fund before it receives further assistance from the imf. europe's rescue fund, the so-called european stability mechanism currently has around $670 billion at its disposal these days. officials from inside and outside the european union have suggested that that figure should be substantially boosted, maybe even doubled here to contain the problems. however, germany says that beefing up this fund would remove the incentive for such countries like italy and spain to reform their economies. speaking of which, germany plans to announce a decision on the eurozone in march. the lower house of germany's government is preparing to vote on the second bailout package. the bundestag is planning to vote on this on monday. david, first of all, we really do need to boost this esm, this bailout fund, don't we? how much would be your guess? >> it's a little bit of a finger in the air. it's one of those things where maybe now the other countries around the world are taking a much more cautious and conservative view and saying we need to make sure there's more money in the coffers just in case there's monday down the line. just the greek situation has mushroomed. it always seems to be a few steps ahead of the politicians. it's maybe not too surprising that other countries are saying we need to increase the buffer. also, not too surprising clearly that the germans are saying, no, we don't want to commit any more funds to this at the moment. >> they're more or less advocating the same argument we saw when lehman brothers went down in 2008, this issue of moral hazard. if you put more on on the table, it's a disincentive for other countries to reform their economy. do you buy that theory or are things too acute at the moment and they need to put more money aside to calm people's fears? >> i'd probably side with the germans on this one. let's not make it seem too easy for countries to get bailouts and elevate down the line. let's try and view greece as the absolute -- the pinnacle of the crisis and hopefully things can get better from here. politicians will get their house in order, hopefully. the worry is, because maybe it's politicians and more worried about the popularity rather than a business, worried about its p & l, they may see the bailout as the easier option. i think the germans have a fair argument. i don't think they're being antagonistic for the sake of it. >> where do you think the markets are going with concerns now surrounding china which seem to be steaming ahead? obviously the eurozone is a huge export market for the likes of china. and as the eurozone continues to be sluggish, well, even the power houses of the world are in trouble, aren't they? >> it's very true. i think it's quite telling the reaction we had in financial markets last week to the fact that the greece was done and things like rosier. markets rallied on a sunday night asian trading but spent much of the week treading water. today we got off to a fairly weaker start this morning. even though there are signs of strengths in certain areas and certain months, the u.s. economy looks better than this month. nobody is really kidding themselves about how much economic recovery has stuttered in the last six to eight months. if you look at how far the likes of the ftse 100 have come, the s&p 500 in the u.s., maybe there is a feeling that we're back up to where we are ten months ago, are things really that good? have things recovered that well? there is definitely an element of caution that's crept into markets the last couple weeks. if we get disappointing numbers out of china, disappointing numbers there, it could be the catalyst to put a bit of pressure on what have been positive markets this year. >> david from ig index, always good to see you. still ahead here on the show, nina, we'll be heading to hollywood and of course, anyone who is anyone was in tinseltown last night for the 84th annual academy awards. we'll tell you who went home with one of those golden statuettes in just a moment. and now, b vitamins to boot. coffee doesn't have fiber. unless you want it to. splenda® essentials™ are the first and only line of sweeteners with a small boost of fiber, or antioxidants, or b vitamins in every packet. mmm. same great taste with an added "way to go, me" feeling. splenda® essentials™. get more out of what you put in. ask me. [ male announcer ] if you think even the best bed can only lie there... ask me what it's like when my tempurpedic moves? [ male announcer ] ...talk to someone who owns an adjustable version of the most highly recommended bed in america. ask me about my tempur advanced ergo. ask me about having all the right moves. [ male announcer ] these are real tempur advanced ergo owners. find one for yourself. try your friends on facebook. see what they have to say unedited. ask me what it's like to get a massage anytime you want. [ male announcer ] tempur-pedic brand owners are more satisfied than owners of any traditional mattress brand. [ woman ] ask me why i'm glad i didn't wait till i'm too old to enjoy this. [ male announcer ] start asking real owners. treat yourself to the ultimate sleep experience and save up to $200 during the tempur ergo savings event. plus visit tempurpedic.com for full details on our five day, five year special financing offer. don't wait. the tempur ergo savings event and five year special financing ends february 26th. tempur-pedic. the most highly recomended bed in america. you're watch be "world business today" live on cnn. welcome back. the 84th academy awards are in the books. this year was the year of the artist. the mostly silent black and white film won five oscars on the night, including best picture, best actor and the best director. desjardins is the first frenchman to win an acting oscar. he thanks douglas fairbanks in his acceptance speech. meryl streep won for "the iron lady" and christopher plummer won for best supporting actor in his film "the beginners." he's the oldest person ever to win the award. and the awar

Related Keywords

Energy , Results , Referendum , People , Base , Police , Suicide Attack , Responsibility , Burning , Taliban , Korans , Retaliation , Jalalabad Airport , Nato , Afghanistan , Nine , Plot , Candidate , Number One , State Media , Mistake , Holy , Apologize , Election , Russian , American , One , Vladimir Putin , Number , Suspects , Presidency , Tv , Protests , Kid , Nature , Ukraine , Two , Cnn , World Business Today , Headlines , March 4th , Plus One , Attacks , The World S News Business Leader , Mr , Zain Vergee , Moscow , 4 , Nina Dos Santos In London , Andrew Stevens , Cnn London , Hong Kong , Stories , Monday February 27th , China 2030 , Europe S , Warning , Markets , Finance Ministers , Consequences , World Bank , February 27th , G 20 , 27 , 20 , Prime Minister , Numbers , Bailout Fund , Way , Julia Gillard , Pressure , Germany , Power , Australian , 31 , 71 , It Wasn T , Stock Markets , Economy Ticking Up , Party , Asia , Trend , Touch , Unity , Report , Government , Zblf , Story Today , World Bank Plus , Think Tank , Let S Go , 2030 , Economy , Soes , Freer , Growth Path , Estimates , Institutions , Gdp , Account , Output , Oil Giant , 40 , Companies , Growth , Overhaul , Competition , Innovation , Greateren , The World Economy , World , Question , Rate , Model , Biggest , Critics , Three , 10 , Stan Grant , Risks , Signs , Slowdown , System , Labor Reforms , Surprise , Enterprises , Land Reforms , Sector , Vacuum , Country , Saying , Gun , Ground , Stage Play , Fact , Danger , Feet , 350 , Reality , Export Markets , Transition , Will , Economics , Wheel , Back , Guidelines , Rules , Product , Preference , Things , Marketplace , Banks , Funding , Labor Force , Access , Ability , Work , Heco System , Thing , Strains , Stresses , Aren T , Playbook , Freedom , Points , Stepping Back , Lot , Domestic Consumption , Part , Exports , Investment , Big , 15 , Money , Bed , Consumption , 50 , 30 , Social Welfare System , Care , Health Care , Spend , Cost , Upheaval , Leadership , Leaders , Sort , Marker , Turmoil , Change , Timing , Beijing , Hu Jintao , Steps , Parting Gift , Yours , He Hasn T , Xi Jinping , Track , Expectations , Income ,

© 2025 Vimarsana