04/01/2016 World Business Report

A new year starts with fresh fears China's manufacturers are boxed

into a protracted slowdown - but the service sector is booming -

Oil and commodities were the worst performers of 2015,

yet US shale remains resilient - but will it remain so in 2016?

China looks set for a sluggish start to 2016 after activity in the

manufacturing sector contracted for a fifth straight month in December.

This data - released in the past couple of days - suggests

the government may have to step in to avert a sharper slowdown.

Even though China's services sector ended 2015 on a stronger note,

the economy still looks set to grow at its slowest pace in a quarter

Much of this can be blamed on volatile stock markets,

slowing growth and wobbles in the housing market.

One of the biggest risks this year is a sharp depreciation of the yuan.

Experts also fear the number of corporate debt defaults could

policy could create turbulence ahead, from the removal of capital

Even as China attempts to steer away from growth of its factories

and state owned enterprises, rebalancing its vast economy could

With me to look at these issues is Roderic Wye.

Thank you for coming in. Your thoughts on the latest news we have

had in December, it just shows it is a two speed economy, doesn't it? It

does, it is a real problem for the Chinese. In a sense, it is good

news, they want economic growth to be consumer driven and maybe we are

seeing the first signs of that. On the other hand, if manufacturing is

going slowly, this will affect overall growth rates and it will

affect confidence in the Chinese economy. Towards the end of last

year, the Chinese government is saying we have got new ideas to

sustain growth, to boost growth in the New Year. What are they going to

do? They are talking about supply-side stimulus as the new way

forward. Rather than going back to the waste of stacking interest

rates, they do not want to get back onto that treadmill. They want to

find a new way forward through supply-side cutting overcapacity,

boosting regulation, improving business conditions. They hope that

will be a new way to provide stimulus. In the meantime, evidence

that difficult for them to take control. They have had to halt

trading because shares have gone down by 5%. Also, the UN will float

freely. -- yuan. It has been very difficult. They are talking about

how they are going to manage risk in the coming year and then suddenly

the first thing that happens in the beginning of the year is risks of

all kinds start coming in. It will be a problematic time. The Chinese

economy is moving in the rough sort of direction. But it will take a lot

of time and there will be a lot of worries. Thank you so much for

coming in and sharing your thoughts on what is happening in China and

the year ahead. That story has a huge impact on commodity prices and

oil prices worldwide. Oil has surged on the

Saudi Arabia/Iran tensions Throughout 2015,

they were in a slump. Great for the car driver,

a nightmare for countries whose The blame, or credit, for the low

oil prices lies with America's shale oil producers, who've created

a glut of crude of world markets. OPEC, the oil cartel,

hope these low oil prices will drive But the shale oil producers

held out well throughout 2015. Can they survive throughout

the coming year? 2015 was a year for motorists.

Petrol prices fell and fell. That is thanks mostly to America's shale oil

producers. They have been pumping the market. OPEC normally cuts its

production. They were happy to let it plummet. They were hoping falling

revenues could drive the shield producers out of business.

Production in shale oil fields fell very little in comparison. We have

seen amazing resilience of US shares. Now we think going forward

in 2016 will be the year we see shale oil sustain itself. With the

oil price this slow, most producers are running at a loss. Falling

further into debt. Many of the smallest are now going out of

business. We have very high levels of debt. Because decline rates are

very high, they need to keep investing. That is why we have seen

bankruptcies. We are expecting more of that under the low oil prices.

OPEC predicts the oil market will stabilise in the second half of 2016

as shale oil producers are forced to retreat. Unless these producers can

make dramatic savings, it could be the year the industry buckles.

We can talk more on this with our Singapore hub. It is not the start

we would like. We have got the oil price spiking, but also shale

markets across Asia down quite a bit. A lot going on. That is right,

a lot of issues in the equity markets, with Japan 2.4%, South

Korea 1%, China 0.5%. All of the focus right now is on that tension

in the Middle East. And the issue right now, will this escalate or

Will diplomacy prevailed sooner rather than later. For now,

investors are jittery. Food prices increasing, Saudi Arabia is the

world's second largest oil producers. Despite the jump, oil

prices are still done by two thirds since mid-2014. That is due to

oversupply from producers. Traders are forecasting prices to pick up

slightly this year from about $50 per barrel to $70 per barrel.

Thank you very much. More than a million private cars are

being banned from Delhi's roads, as authorities begin testing

drastic new measures to cut smog in The capital is testing a formula

where private cars will be allowed on the roads only on alternate days

from January depending on whether their license plates end

in an even or an odd number. It has not been a good start to a

new year for the world's financial markets. All of the major markets

down. What is causing all of this concern? The tensions between Saudi

Arabia and Iran in the Middle East. Ringing fears about where that could

lead. These are the American market at the end of the trading year in

2015. These markets were reopened. Also, the other massive story.

Chinese manufacturing data more disappointing than we were

expecting. Very shortly, we will be looking at the stories can be News

review. -- in the News review. See you in a few minutes.