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Appen Bloomberg got Gone. This is taking Stock. I'm Kathleen Hayes along with Pim Fox Well certainly one of the biggest factors in the big, big drop in the stock market the first quarter of six Team was the Chinese economy slowing down, dropping below seven percent as it moves from an export led to a consumer led economy. As the stock market recovers, people try to place their bets on investments for the rest of the year. What do we really need to know about China? We're going to
find out in a new book coming up now, Pim. Yes, and we are also going to get some business news right now from Catherine Calgary in the Bloomberg newsroom. Thank you, Pam. The downward momentum continuing on Wall Street today, the smps I founded headed for its worst two day drops ince February amid disappointing ear injury reports Gilead Sciences is the biggest drag in the benchmark index after its profit fell short of analysts estimates and Apples declining for a seventh session.
Richard Dobbs, director of research at McKinsey, says investors should be prepared for lower equity and fixed income returns, but the returns that we've seen in the last um the last thirty years of both EXTE and BOMBS have been on average around suit descent for ex Season four cent performed more than the hundred year average has been a great parent. We check the market every fifteen minutes throughout the training day. Dow Industrial Average is down two hundred
It's down one hundred twenty five points. That's a loss of seven tens of percents. Reading at seventeen thousand, seven hundred five. SMP five foundered down nineteen points, nearly one percent, trading at two thousand fifty six. Then naz dack is down forty nine points, a loss of one percent, training at forty seven fifty five. West I since intermediate curt Oil down twelve cents a barrel to spot rolled up
twenty six dollars. Announced at twelve thirty ten. Your Treasury down three thirty seconds, held one point eight three percent among today's top business stories. Valiant Pharmaceuticals International is trying to put the worst of its problems behind it. Valiant has announced a shake off of its board and filing a long awaited annual report winner It promised significant changes
to its strategy and better oversight of its executives. It blamed senior managers for problems that is center stock down more than eight since last August, and then put the company at risk of defaulting on its debt. It is two thirty two on Wall Street, and that means it's time to get an update on some of the others where stories were following today On Bloomberg Radio, Catherine, thank
you from the Bloomberg News Room. I'm Mark Crumpton. The Obama administration is proposing new rules for people applying for jobs. Bloomberg's Michael Barr with more on the story. Several employers will look into a job applicants passed for any criminal record or their credit history. The Obama administration says too many job applicants are rejected on that alone, even before they get a fair chance to compete for the position.
A new rule is being proposed that would prohibit federal agencies from asking certain job applicants such questions until a conditional offer of employment has been made. The rules would not apply for positions dealing with national security, intelligence, and law enforcement. Michael Barr Bloomberg Radio. On Saturday, Americans can safely drop off their old pills as part of a semi annual take back day. The d A S Chuck Rosenberg says officials are trying to address a national crisis.
It's important for folks to know that this is completely anonymous. We just want those medicines out of their cabinets so other people down the line don't get hurt. Forty six thousand Americans died of drug overdoses last year. Puerto Rico's health secretary says the island has recorded its first ZEKEA related death. A seventy year old man infected died from a drop in blood platelets in February. The US territory has seen more than six hundred ze cases, seventy three
of those involved pregnant women. Senator Chuck Schumer's pushing new laws to help the state school districts test their water for lead contamination. He says discoveries of high lead levels and more than sixty samples show testing is needed. Global News twenty four hours a day, powered by our twenty four hundred journalists in more than one hundred fifty news bureaus around the world. From the Bloomberg Newsroom. I'm Mark Crumpton, Catherine, thank you, and now let's get a quick update of
the equity benchmarks down. Industrial averages down one thirty three points at seventeen thousand, six hundred ninety seven. Smp F I foundered down twenty points to two thousand fifty five. The nastact is down fifty seven fifty five. And that's a Bloomberg Business Flash BIS taking stock with Kathleen Hayes and Pim Fox on Bloomberg Radio China taking a look
at China in the context of the country's economy. Also China taking ups yesterday to impose greater control and limit the influence of westerners on Chinese society, passing a new law that restricts the work of foreign organizations and their local partners, mainly through police surveillance. Here to help us survey the Chinese economy and the country is Arthur Kroeberg. He is the author of a new book entitled China's Economy What Everyone Needs to Know, and he is a
founding partner of gav Cal dragon Omics. Arthur, thank you very much for coming into the studio. First begin by telling us about gave La gav Cal dragon Omics. Why is it called dragon omics? Dragonomics is a company that I found in Beijing in two thousand and two to provide economic information about China too, um, institutional investors, companies, governments, anyone who's interested in what's going on there. Uh. And you know dragon stands for China and anomics is economics,
and so that's what it's all about. So it's a very interesting time in China's politics and its culture in a society so many challenges they face, and the markets have made so much of this slowdown. You know, us be ten eleven percent now below seven and some would say it's much weaker, maybe three and a half percent,
because the Chinese measurements aren't necessarily accurate. But is it partly that their economy is so much bigger and more mature that that early stage double digit growth could never happen now, and that if you put it in more perspective, you'd say Yeah, it's an economy with challenges like any other economy, but the growth rate is fairly healthy. Yeah,
that's basically right. And I just like to say, I mean, there's a lot of commentary that you can't believe the Chinese numbers and the actual growth rate is much lower than they report, and and basically I think you should ignore those kinds of statements. There definitely some issues with Chinese statistics, uh. And there's a bit of a marchin of air on either side. But the people kind of make those statements ignore the fact that China is now
a two track economy. There's an old economy it's related to investment in capital spending and so forth, and that's in some serious trouble uh. And it's going very slowly, but there's a new economy of consumer spending and services that's going incredibly rapidly, is very vibrant. And yeah, I think your basic point is correct that this is a
natural transition. China group for about thirty thirty five years at a very high rate building all the infrastructure for modern economy, and every country that's gone through that, Japan, South Korea, Taiwan and for that, the European countries. Uh, you get to the end of that stage, and then you have to have an economy that's built on consumer spending services efficiency, and the natural growth rate is a lot slower. So a lot of the slowdown that we're
seeing in China is related to that transition. The role of the Communist Party and particularly the Organization Department. Tell people about this, well, Okay, so China is kind of a weird Malcolm. It's a very dynamic economy that many elements of it are highly capitalist and highly competitive and almost wild West in their nature. Uh. And it's married to a political system that's still highly leninist and controlled and authoritarian and centralized and in a lot of ways
hasn't changed that much in the last twenty years. Uh. And the Communist Party obviously is at the center of that. And one of the mechanisms that they use to uh control the country is that they their their personnel department, their human resources department points not only all the top government officials, but the heads of all the main media organizations, the heads of all the university's think tanks, all the
top judges, etcetera. It's very comprehensive, um. And you could think, well, This is a really bad way of running things to have one central HR department for a country at one point four billion people. But they've actually managed it pretty well because, um, they have a system of bring people up based on kind of objective criteria, rotating through jobs and making sure that people don't stay around in any one job for too long. So as these things go,
it's it's a pretty effective mechanism. Arthur Carl Walter was on our show recently. He's the former CEO CEO of JP Morgan in Chinese, been a long time there. You mentioned tensions rising in China now and UH President gen Ping being reluctant to trim back the state role role
and let markets rule. Carl does the stuff further, he said that there's a sense that there's something more akin to how the cult of Mao and how that rule was, that that that regime was structured and how it ran things seems to be some of that seems we have possibly cropping back in the j pain. What do you think? Well, first have to say, Carl's an old friend of mine and I have enormous respect for his knowledge and judgment. Um, I have a slightly different take on that where I
would disagree. I don't think the Chijing pain is the reincarnation of now. It's a very different country. It's a very different system. The bureaucracy is much more powerful UH, and he is using a few maur As tactics, but fundamentally UH is a much more sort of organizationally oriented, sort of sort of leader UH. I think where Karl is on the mark, and this would be my big concern too, is that China needs to make this transition
to a more consumer and service oriented economy. What that means is that the state needs to take a step back. It doesn't need to go away necessarily, but he needs to step back. It needs to give more space for market forces in the private sector. And what we've seen in China is a mixture. We've seen some policies that seem to move in that direction, and then we've seen some real reluctance to let market forces fully play out.
So there's I think I think there is a real risk that UH there will be some hiccups on the way to China's transition to a consumer led economy. Arthur Krobert, You'll have to follow all these developments with us. Check out his new book China's economy, but everyone needs to know. This is a little brig. Radio Bloomertaking Stock is brought to by Bentley University. What do rebooting America's oldest ski shop and crunching numbers at Vista Print have in common?
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