17/02/2016 BBC Business Live


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This is Business Live from the BBC with Ben Thompson and Aaron


The China Conundrum - how to reform the world's second


largest economy without causing financial chaos around the world.


We'll assess what's at stake as China prepares for a new normal.


Live from London, that's our top story on Wednesday, 17th February.


We're taking a look at the latest moves by Beijing to try


and re-ignite the world's seconnd largest economy and the impact


that's having on investors around the world.


Also in the programme: Asia's biggest aerospace and defence


airshow is in full swing in Singapore.


We will get the latest buzz from the world's fastest


And as Iran says it will continue producing oil despite agreement


between Saudi and Russia to cut production,


we'll assess what markets make of the latest round of oil volatility.


We'll get the inside track on the cost of HIV.


The boss of specialist drugs firm Veev will be here to discuss


the work being done to tackle and treat the disease.


As Apple refuses to grant US police access to data


on the iPhone of a gunman who killed 14 people,


we want to know, should tech firms play a greater role in solving


and preventing crimes or would it be an invasion of privacy?


China is going through a difficult transition.


Gone are the days of rigid socialism and it's starting to open the doors


to more market-based economics of supply and demand.


It's now one of the world's fastest-growing economies,


a leading exporter and major overseas investor.


But the turbulent start to the year on global markets highlighted


After enjoying rapid growth for more than a decade,


China's economy grew by 6.9% in 2015, compared with 7.3% a year


earlier, marking its slowest growth in a quarter of a century.


The government is trying to shift the economy to one driven


by consumption and services, rather than manufacturing,


exports and investment in state enterprises.


But managing that transition has been challenging.


There are doubts about whether Chinese data can be trusted.


Critics say that real growth figures may be much weaker.


And at the same time, worries about the devaluing currency


Even though the yuan strengthened this week,


thanks to China's Central Bank governor breaking his silence


We hadn't spoke heard from him for six months.


The BBC's Tanya Beckett spoke to Dale Nicholls,


who manages a big Chinese investment fund for Fidelity,


and started by asking him, if he thinks the authorities


in China have coped with the stock market volatility well.


I think there is probably a learning process going on there. I have got


to be quite frank and say that overall I have been disappointed


with the level of intervention that we see in the market when things


started to correct and I think you could argue that there probably


should have been a little more oversight as the market was moving


up and we saw margin balances, you know, in the market really sort of


expand significantly. But, you know, I do think, you know, the overall


direction of the Government is towards opening up and reform and


moving to a more market been based economy. I do think, if you look at


things in the long-term, the progress that's being made and if


you look at the direction that is set in areas, the direction is set


for the long-term, it is about opening up and a more market based


type of economy. What sectors do you think benefit particularly from this


rebalancing that you're describing? Well, I still think really any


consumption related. That's anything that is consumption related is going


to be interesting for China in the medium-term. The Government has


clearly made this goal that the economy needs to rebalance and the


consumption needs to grow, but it will happen naturally, I think. It


is just general development of middle-class. People want to have,


if you look at just broad penetration whether it is autos as


in cars, home products, the penetration levels are still very


low relative to what you see in the west. In the IT space, in the


internet area, it is very interesting and I think things are


moving online globally, but you can argue that it is happening faster in


China in a range of sectors as well. That was Dale Nicholls there.


Charles Dumas, the chief economist for Lombard Street,


an independent research house based London.


Charles welcome to the programme. He was fairly positive and optimistic


on China. Do you feel the same way? Well, I mean, the situation is worse


than they're showing because the growth rate is about 3.5% or 3%, not


7% or whatever they're broadcasting. That's the interesting point. The


other thing is, it has been predictable for several years that


this was going to happen and it is only a bunch of blind bulls who


ignored it and now they are in a panic that they got it wrong and we


are all in a panic with them. To pick up on the point about the real


growth rate. The world markets got in a tiz about a slow down to 6.9%,


you are saying it is significantly lower and this is what many people


expect the reality on the ground is very, very different from what the


official figures tell us? We recalculate Chinese growth and it


comes out at 3%. But I mean, that's not so bad. The investment was


ludicrous to nearly half GDP and saving was a little bit more. Both


of them wildly high and unsustainable and they had to come


down. So if 46% of GDP comes down, the whole economy gets dragged down


which is why they have to weaken their currency. Now, the real


exchange rate, the relative prices are being cut by massive deflation


of 6% in the producer price index. So the Chinese are actually


adjusting and they've got roughly speaking the right policies and we


think that they'll pull through, but it will take three to five years.


We're not talking about a quickie here. So we have got to brace


ourselves that this is the norm for China as they get through this,


three to five years, you mention the currency. We heard from the big boss


of the China's Central Bank. He has been stumm for six months. He spoke,


the currency strengthened in value. Well, the thing is, as you say, six


you get to August. August is when you get to August. August is when


they started making a fool of themselves in the stock market. I


dare say the Central Bank governor was embarrassed by what they got up


to because it was an extremely ineffective intervention in


something which they clearly didn't understand. And that bungling was a


big source of the subsequent financial market troubles.


Charles, we're short and sweet, but we appreciate your time. Thank you


very much for your insight. Iran signalled it'll take a tough


line in talks among oil producers on curbing production,


aiming to get output back up to levels seen before international


sanctions were imposed. It comes as oil prices keep falling


despite Saudi Arabia and Russia agreeing to freeze oil output


if other producers follow suit. Japanese carmaker Nissan is to start


assembling cars in Myanmar this year The company will initially


assemble its sunny sedan at an existing facility of partner


Tan Chong Motor Group, It comes as the Southeast Asian


country opens up its economy. Is that the opposite of a cloudy


sedan? A cloudy station wagon! Asia's biggest commercial aerospace


and defence airshow has opened It's a chance for the industry's


major players to gather in one of the world's fastest


growing regions. In fact


in South East Asia Boeing expects to sell almost 4,000


new planes, worth $550 billion It is usually the air show where we


see the big order announcement. Me thinks, we are seeing big orders,


but they are not as big as they have been in the past? Well, Aaron, it is


the second day of air show and we have had slighty meatier deals


announced today compared to yesterday so Airbus said Philippines


Airlines is buying 12 of their latest A250 jets for $4 billion.


That's meatier. The A350 is a more fuel efficient, quieter plane.


Boeing said that a Chinese private airline called OK Airways is


spending 1.3 billion to buy 12 their 737s as well. Compared to yesterday


where we saw smaller orders, I think we're getting meatier ones come


through today. Have fun. We will talk to you soon,


no doubt, lots coming from you guys as the show progresses over the next


few days. Cheers. We look different today. Those are


the numbers. That's what happened in Asia overnight and of course k those


are the figures from the US yesterday.


A couple of things to keep an eye on. We get unemployment figures


later in the UK. But that section in the US yesterday helped translate to


a more positive start for markets despite the falls in Asia overnight


and it is the volatility as far as the oil markets are concerned that


is still causing problems. Oil gone down again. It is below $32


a barrel. How low can it go?


Why are we different today? We may have one less camera in the studio.


Let's have a look at what's going on in the markets.


Michelle Fleury can tell us what will making the headlines


in the business world in the United States today.


America's third biggest wireless network T-Mobile reports on


Wednesday. It has gone from the poor relation


in US mobile to arguably its strongest performer. Attracting


customers away from its great rivals, Sprint and Verizon and it is


looking for its subscriber base to have grown by four million for the


last three months of 2015. Now comes the hard part of any turn


around and that's higher expectations. Everyone will be


looking carefully for what T-Mobile claims it can do in 2016. Also out


on Wednesday, minutes from the last Fed meeting. Further fuel for the


wildfire of speculation about monetary policy that burns across


the markets these days. .


Joining us is Jane Foley, Senior Currency Strategist at


Shall we start with oil? I love this story. Yesterday, we had the meeting


in Doha. We had Venezuela, Qatar, Saudi Arabia, non OPEC member,


Russia, saying we will agree to freeze levels at January's level, as


long as everybody agrees? That's the point, as long as everybody agrees


and the other thing is this is only a freeze. Many people in the market


had hoped perhaps for a cut and we get a freeze.


Not necessarily a freeze, but January, we are having record


levels? Record production for a lot of countries. So again, frozen at


high levels. It isn't a concession, but we have got to remember Iran,


perhaps OPEC's second largest producer. They have only come back


on to the market and they need revenue after the years of


concessions. Are they going to cut it back? After years of seeing OPEC


work well as a cartel, they have managed to pull together and be


co-ordinated in their action. This time, it is about self interest,


self preservation and keeping the oil taps open for the countries like


Iran that need it? Over time a lot of producers have come online. If we


go back 20 years ago, OPEC didn't have the competition from Canada,


and the US, etcetera, every time the oil price went higher, it became


profitable for other countries to invest and bring all the supply


online and now, we have a situation, OPEC is playing a game. It wants to


squeeze out marginal producers by keeping and pumping and keeping the


price low to cause bankruptcy in some of the other corporates or to


stop the investment for more oil feeds and it is the game it is


playing. And it is a dangerous game. We're going to wrap it up. You're


coming back to talk us through the papers.


Still to come: Cutting the cost of HIV.


The boss of specialist drugs firm Veev Healthcare will be here.


He'll give us the inside track on developing treatment and funding


You're with Business Live from BBC News.


Clothes manufacturing was once a thriving part of the UK economy


but competition from abroad means it has been in steady decline


Let's head to a factory in Blackburn where staff are hoping


She gets the glamorous once! Last week it was pigs, today it is


clothing. I have upgraded!


Good morning. This business started off making leather where the men


delivering coal, then they moved into military uniforms. But this


time last year, the company got into trouble because a lot of those


contracts for making military clothes went overseas, and we have


seen that across the textile sector. The number of people employed in


this industry in the UK has gone from 800,000 in the 1970s to around


85,000 people in the last few years, so it has been a big fall. And if


you look at the wages in this area, there is a big difference between


the wages people would get, chemical workers for example will earned more


than people working in this industry, even though they are all


in manufacturing. We are seeing some jobs coming back to the UK, and one


analyst is predict that around 20,000 jobs will come back from


China to the British textile industry, and this is good news for


a factory like this one. What they are doing here is something called


community clothing, led by the fashion designer, because a lot of


this business is seasonality. In this time, they will make products


sell direct to consumers, so they will make a couple of garments which


they sell at a lower price than they normally would in the hope of


keeping these types of places open. Steph McGovern in Blackburn for us.


We were trying to work out what it actually is that they are making. We


should pay more attention. Let me take you to the tablet. There are


now more estate agents in London than independent butchers,


greengrocers and fishmongers, so the decline of our high street not great


for those traditional businesses. But if you are an estate agent, good


news, you can't move for them on the high Street.


Our top story - Beijing tries to re-ignite the world's second


largest economy, where growth continues to slow.


It is having trouble doing it, and that has had huge repercussions


right around the world, more coverage of that online.


Drug companies have come under flack for the way they sell


Under particular scrutiny is how accessible their drugs are in poorer


countries and what they charge for them.


So when a new start-up offers drugs at not-for-profit prices,


you might question where it makes its money.


And ViiV health care says its doing just that.


ViiV is a specialist drugs company, part-owned by GSK, Pfizer


and Shion-ogi, and focuses solely on developing treatments for HIV.


The company has 12 HIV treatments, generating annual sales


The company says it grew by 54% in 2015, which is faster


Dominique Limet is chief executive of ViiV health care


Can we start, that growth number is staggering. How have you managed to


achieve that, 54% growth? When you deliver a product which really is


well differentiated and adding value to patients and Society, which is


fairly priced, you get such a result, and I think we have


demonstrated that our innovation strategy that we put in place in


2009 is delivering great results. And let me get this in and get this


out of the way, because I'm sure people are thinking about it. If


you're HIV treatments are a not-for-profit, going to countries


that account for 75% of people living with HIV, if you're doing


that not-for-profit, how are you making money? We have a strategy


which is very clear. We make money in the Western countries and we give


away our products in the countries that are poorest, the sub Sahara


countries, where we have agreed with companies to give them access to our


IP rights. So in a way, what we are doing is we are selling in the most


developed countries while we are also giving away free of charge the


products for most of these countries. And that is the first


decision that we took in 2009, which was to give this right to those


companies, the generic rights for our products. We often hear from the


big health-care firms that they need to charge high prices to fund future


research and development of new drugs. You are saying that is not


the case, you don't necessarily need to charge those prices in the


developing market because you can make money elsewhere? That is


exactly right. I think it is clear that we needed to make sure that we


had a fair pricing strategy to ensure that our products are


affordable in all territories. We can't talk about HIV drugs of the


cost without talking about Martin Scott rally. Many people will know


he was described as the most hated man in America because he took over


the drugs firm and put the price up by 5000%, and The U's that excuse,


that it was to fund the drugs to pay for new drugs. I think it is a sad


story. It doesn't help the reputation of the pharmaceutical


industry. We have continually tried to respect the contract between


society and us. That is why we are currently pricing and product at a


fair price reflecting the value, the differentiation, of our product, and


that is why at ViiV health care we have been able to be so successful,


because we have fairly priced our products and we are considered as a


fair partner for society. Do you feel comfortable that your drugs are


being ethically delivered to those in the nations where we see a lot of


HIV? Do you sleep at night that the drugs are getting to the right


people? It is a continuous preoccupation. We want to make sure


there is no patient left behind, but it is a tough job, because we have


to get the registration right in those countries, then we have to get


access and supply, and it is a very challenging environment. But we do


at Won everything we can do to improve access through voluntary


licensing agreements, to work with positive action initiatives that we


have to improve the infrastructure, to work on stigma discrimination, to


work with the governments to improve accessibility and affordability, but


it is a very challenging and demanding task. I can only imagine.


Dominique, we're going to leave it there, but thank you. Dr Dominique


Limet from ViiV health care. In a moment we'll take a look


through the Business Pages but first here's a quick reminder of how


to get in touch with us. The Business Live pages where you


can stay ahead with all the latest business news. We will keep you


up-to-date with insider analysis from around the world. Get involved


on the BBC Business Live web page, on Twitter and you can find us on


Facebook. Let's see what other


stories are being talked -- Let's take a quick look


at the stories making business The Verge says a US judge has


ordered Apple to help the FBI to unlock the San Bernardino


gunman's phone. The Times reports on the dip


in oil price as traders According to the Business Insider,


some analysts are now expecting an imminent collapse of China's


banking system and currency. And the Telegraph says there are now


more estate agents in London than independent butchers,


greengrocers and fishmongers. Jane Foley from Rabobank


is back with us to talk us through what the business


pages are looking at. Lets start with China. If we look at


the possibility of the next crisis, if China's debt could be it? This is


what a lot of people are worried about. If you look at the amount of


debt China has, it is huge, particularly for an emergency


economy, and the pace of growth of debt has been shocking. So there is


the fear that this debt could collapse, and one thing that is


really very worrying is where the debt is being, if you have taken on


debt, you are hopefully investing in product of capacity, what they have


is too much infrastructure in housing and factories, so there is a


concern, but a lot of other people say they will manage to muddle


through, they will get through this. It depends which side of the coin


you are looking at. And this story, a judge says that


Apple must help the FBI break into an iPhone belonging to the man who


killed 14 people in the US. Apple says it can't actually do this, it


doesn't have the technology, but at the same time, it strikes me that


they should be able to do this and want to. With this operating system,


it cannot be broken into, 90% of it, they say. What about the other 10%?


Does the person have a right to privacy, after such a horrendous


crime, do you give that up? But also on the getting into the software


that Apple will use, some of the critics are saying that even though


the judge has said they need to do this, it could take up to five years


to find the right pass code. Jane, thank you!


There will be more business news throughout the day on the BBC Live


web page and on World Business Report.


Hello. We have a band of rain, sleet and snow heading across the UK to


do, but I did, it will turn brighter with a scattering of showers. It is


quite an active


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