09/07/2013 World Business Report

latest headlines from BBC World News. Now for the latest financial

Greece gets its next chuck of much needed bail-out funds but with tough

strings attached. Food prices jump in China but there

are fresh signs of weakness at its factories. We assess what this means

for the world's second largest Welcome to World Business Report.

I'm Sally Bundock. Also in the programme: As trade talks continue

in Washington, we focus on the benefits to patients on both sides

of the Atlantic hoping for life saving treatments.

It's proving to be a summer of discontent for Greece. Eurozone

finance ministers agreed to lend more money to its beleaguered

government but warned the country's economic outlook remains uncertain.

Its international lenders also said Greece's reform programme is moving

too slowly. So the next tranche of much needed bail-out funds comes

with strings attached. Greece needs to show its making further progress

with its reforms especially the privatisation of state assets. Plus,

the government must see through its commitment to reduce the public

sector pay roll. Around 25,000 civil servants will be put on reduced

salaries before being deployed or dismissed. Not surprisingly, this is

the issue that is proving to be the most controversial. Thousands of

Greek municipal workers and teachers were taking to the streets of Athens

on Monday in angry protest. With me here in the studio is

Christian Schultz, Senior Economist at Berenberg Bank. Is this a sign of

mistrust? The Europeans want to see delivery performs first and then the

money coming after that. Of course they also don't want to risk risk

going bankrupt because of liquidity issues, so the money is carefully

spread over the next few months, so that important payment deadlines are

met. But they have to meet certain milestones. It is a management tool,

just as in projects anywhere in the world. The money comes upon delivery

of certain milestones. How is the Greek government faring? Recently it

had a deep crisis following the decision to close down state

broadcaster. And the coalition government has changed. Indeed.

They've had a political crisis, reflecting how tough some of these

decisions are. Some people within that governments can't take

responsibility for them and don't want them. We have seen that in the

past as well. Greece has gone through five years of extremely

tough decisions and we still have that ruled conferences to do

everything necessary to stay in the euro. -- that broad consensus. I

think it has pretty much achieved all it can and now it is about

safeguarding the achieved, rather than pushing through a lot of new

reforms. What about the privatisation programme? This seems

to be direct with problems. Indeed. Selling off some of the state

companies is very difficult. Some companies in Northern Europe or

Germany, some of the countries that want to buy the companies, find the

powers of the unions are so strong that you can't reform them or make

them profitable. That obviously lowers the price of these assets,

which in turn means the government doesn't get the revenue it needs to

cover some of the gaps. Did think they'll keep the mark when it comes

to the reforms? -- do you think. think they will. It will require

some flexibility and not everything will be met. The Greeks will have to

make more efforts. But also, the troika, the Germans, the ECB, will

have to show some flexibility. But in general the confidences, that

grand bargain that supported the eurozone, is still there. The

periphery is reforming and the call of the eurozone is supporting.

hope you are right. Thanks for your thoughts on the situation in Greece.

As we've been telling you, trade negotiators are locked away in a

room in Washington pouring over the details of a huge trans-Atlantic

trade deal between the US and EU. To give you a sense of the scale of

these talks, we are focusing on just one area that needs to be grappled

with - medicine. Currently, a drug approved for use in America could

take two years or more before it's approved in Europe, and vice-versa.

That's bad for patients waiting for life-saving cures. So, one of the

aims of these talks is to make it easier for medicines licensed on one

side of the Atlantic to get the go-ahead on the other. Jeremy Howell

reports. This doctor is one of the leading

drug developers at this Institute of drug research the forced nowadays he

says almost all big projects are done jointly with US and European

scientists. But he says the American government and European Union still

have completely different licensing systems. So, a drug approved for use

in one territory must go to an other series of before being approved in

the other. Patients needing the new drugs must meanwhile wait.

Particularly with the drug discovery, there are laboratory

programmes working across both sides, in the US and the UK.

Clinical trials are also transatlantic. We have patience

going to trials across the Atlantique in hospitals.

Unfortunately, when it comes to registering a drug, we have to go to

multiple agencies. Drug licensing is done in the US by the drug and food

administration and in the EU by the European medicines agency. It's a

costly process and small biotech companies, which come up with many

of the new medicines, can't afford to apply to both bodies at once.

They have discarded their applications. That's not only

frustrating for patients waiting for a cure, it also loses the drug

development company is a lot of revenue. Why can't the authorities

on both sides of the Atlantique work in parallel to approve drugs? That's

the issue they are discussing at the free trade talks this week. They'll

be discussing the need for collaboration, particularly the need

for a joint approach for the fast track of these important new

medicines. This has already happened before but only for a few selective

medicines like anti- HIV and cancer drugs. This weeks talks are unlikely

to prevent -- reduce a transatlantic licence but if they start working

together more medicines could be concurrently in the US and European

markets. And the European team will be pointing out that this type of

cross-border collaboration is the first step they took to moulding

their 20 plus National drugs agencies into one single EU white

body. Prices are gathering pace in China.

In particular, the price of food. Consumer price inflation rose to

2.7% in June from May's 2.1%. Rico Hizon is our Asia Business hub in

Singapore. He can make sense of this. Lovely to see you. Should we

be concerned about this movement in prices? Not at this point. According

to economists. Although food prices remained the main driving force of

inflation and have increased by almost 5%. The upward trend is still

well below the governments inflation target for 2013, at 3.5%. But when

you talk to analysts, they say this basically reduces the likelihood of

interest rate cuts this year from the central bank and they will

likely keep policy largely neutral in the near term, to keep inflation

in check and also these possible property bubble. On the flipside, we

have producer prices falling by 0.6%. One -- this is due to weak

demand, excess production capacity in many industries and lower costs

for raw materials and components. Basically, we will see prices

remaining where they are at. Economists say recent art shows

growth could dip below 7% due to government efforts and weak demand

for Chinese exports. Thank you very much.

In other news, an architectural landmark is to change hands. China's

Ping An Insurance Group has agreed to buy the Lloyds building in London

for $388 million. The building, which is home to the world's leading

insurance market, was owned by German asset management fund Commerz

Real. Chinese firms have been looking to

buy assets in key markets in their quest to expand their presence

globally. In the US, the earnings season kicks

off with results from Alcoa. The US' largest aluminium producer reported

second-quarter earnings of $76 millions, excluding the impact of

restructuring costs and costs tied to a racketeering and fraud probe.

-- million. But revenue disappointed somewhat.

Let's have a look at the markets in Asia. They have rebounded today.