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First Move with Julia Chatterley
The Two Sides Agreed to set up a Working Group to "Seek Solutions on Trade and Investment Issues"; Moldovan President: Ukraine Needs more International Support; Prasad: China Needs the Private Sector; Russia Ramps up Military Spending Amid Conflict; Severe Drought affect Panama Canal; Zimbabwe Torn by Accusation of Election Fraud. Aired 9-10a ET
Aired August 28, 2023 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:00]
(COMMERCIAL BREAK)
JULIA CHATTERLEY, CNNI HOST: A warm welcome to the "First Move", great to have you with us. We begin a new week together lots to get to today
including U.S. Commerce Secretary Gina Raimondo is in Beijing looking for a trade relationship reset. China has a key stock trading tax.
But hopes was sweeping new stimulus still unmet. And Fed Chair Jay Powell warns his inflation fight is far from finished yet a further rate hike
therefore remains I think a fair bet. Meanwhile on global markets, no need for the bulls to fret U.S. Futures pointing to a positive start to the week
Europe mostly higher too with UK investors on holiday. It's a long bank holiday weekend there.
Wall Street closing out last week's trading in the green that despite the Federal Reserve Chair Jay Powell's tough talk on rates during his keynote
speech Friday at the Fed's Jackson Hole symposium Powell not ready to pivot on policy given the still murky inflation outlook but his promise of
continued data dependency means I think little visibility over where rates are headed, and that perhaps might limit some stock buying exuberance we
shall see.
In Asia, the major indexes closing sharply higher as you can see there too, Beijing's move to boost investor confidence by making it cheaper to trade
stocks helping boost sentiment there although Chinese markets finished the session substantially off their highs that's worth noting. All this after
shares have failed property developer Evergrande resumed trade for the first time in 17 months and take a look at that.
Shares promptly tumble almost 80 percent not really a great surprise given all the bad news in the property sector and of course its own bankruptcy
filing earlier this month. We'll discuss China's multi-pronged economic dilemma and how best to battle the crisis of confidence facing both Chinese
consumers.
But also more importantly the private sector businesses later in the show, with Eswar Prasad of the Brookings Institution. For now, let's bring you
the latest from Beijing as the U.S. Commerce Secretary wraps up her first day of talks with Chinese officials.
Raimondo saying stable relations between Washington and Beijing are "Profoundly important", but also admitting the difficult path ahead given
the growing national security friction between the two nations?
Raimondo focusing on the positives however, on Monday showing off U.S. made personal care beauty products sold in China, that she says represent the
promise of trade between the two nations. Steven Jiang joins us now from Beijing.
Steven, the U.S. Commerce Secretary keen to point out that the vast majority of trade between the United States and China doesn't touch on the
sensitive technologies and future technologies in particular too. The question is can they grow the rest of it despite the tension over those
critical smaller elements?
STEVEN JIANG, CNN BEIJING BUREAU CHIEF: Yes, that's right Julia. As they say, beauty is in eye of the beholder, right, even though the overall, you
know, trajectory of this relationship being increasingly contentious out of geo political and ideological reasons.
Few people expect that to change anytime soon that Raimondo of course is going to focus on the positive and the economic sphere because the fact
that she is actually here at being the fourth cabinet level U.S. official to visit China in just about two months is a testament to that resolve to
put a floor on this free fall in this relationship.
Now, you know, she is expected to deliver some tangible results out of this trip by perhaps having the Chinese promised more access to certain U.S.
sectors or firms or even perhaps buying more Boeing jets.
You know, she's going to hold a press conference on Wednesday evening at Shanghai's Pudong International Airport where a Boeing has a large
facility. And also there was talk about her visiting the Shanghai Disneyland obviously, to highlight the success from such bilateral
cooperation.
But as you pointed out, the challenge for her is her agency; the Commerce Department has been the one imposing a growing number of export controls
targeting China in semiconductors in advanced computing.
And the Biden Administration, of course, has also proposed to restrict American investments in these fields, all of that greatly angering Beijing,
with their Leader Xi Jinping himself increasingly talking about self- reliance in key technologies to free China from the American chokehold, because as he puts it, the U.S. has out to contain China's rise.
So Gina Raimondo of course is going to tell her Chinese counterpart these export controls very narrowly focused accounting for 1 percent of America's
export so there's still a lot of room for growth.
[09:05:00]
But the Chinese officials may not be convinced that they don't see any difference between so called de-risking, as Washington has been put it, and
the decoupling. But what's been helping her mission Julia, of course, is the Chinese economy facing its strongest headwinds in decades. So faced
with a lot of domestic pressure, the Chinese leadership may be willing to give their officials more wiggle room to work with Raimondo to stabilize
this economic relationship, Julia.
CHATTERLEY: Yes, being able to export more for the Chinese economy would certainly help with that. And with the concerns over weakening Chinese
growth in particular, and actually, I mentioned it in the introduction to the show Evergrande, the giant property developer in China just
underscoring.
I think, with what we saw over the weekend and their results, a huge challenge for China in the property sector, which is what a quarter of the
economy. Talk me through what we heard from Evergrande and I said, no surprise, really to see the share price fall so significantly as a result.
JIANG: Yes, as you mentioned, it's really depressing, but perhaps not shocking to see its share prices have fallen more than 70 percent, despite
reporting significantly narrowing of its net losses for the first half.
But you know, let's not forget, it's still the world's most indebted real estate developer, it's still going through a government guided
restructuring, not to mention, as you put it, the whole industry the whole sector is going -- is imploding, as many experts have put it with other
massive players like Country Garden, very much in trouble as well.
But the problem for this economy, of course, is not just one sector but multiple sectors, multiple problems and challenges. You know, burgeoning
local government debts, plunging direct foreign investments, not to mention youth unemployment, consumer confidence numbers as bad as you know, the
government has stopped releasing these data.
So that's certainly not a sign of confidence. So I think the problem right now is, you know, the confidence is not back from consumers from businesses
after three years of brutal lock downs and all these crackdowns on the private sector, Julia.
CHATTERLEY: Steven Jiang, thank you so much for that report there. Now, in the coming hours, Spain's Football Federation is set to hold an
"Extraordinary and urgent meeting". It comes after FIFA suspended Federation President Luis Rubiales for 90 days after he kissed star player
Jenni Hermoso at the Women's World Cup medal ceremony.
He has so far refused to resign and Spain's Football Federation has thus far been defiantly defending him. World Sports Amanda Davies joins us now.
Amanda, you and I talked in the aftermath of what was an incredible victory for these women. And that's what we should be talking about. And
unfortunately, we're now talking about this. What are we expecting from this press conference?
AMANDA DAVIES, CNN, WORLD SPORT Yes, I think you're right, Julia. They were though, for so many people, there was an asterisk against Spain's victory
because of the repeated complaints that had been raised by players and other people within the Federation over a number of years that had been
brushed under the carpet.
And players and the management structures felt hadn't been taken seriously in the build up to this World Cup over a number of years. But what has left
so many people kind of sick to the stomach really over the last eight days, is how this moment has been dealt with. And that blatant defiance from the
President Luis Rubiales is the threat of legal action against Jenni Hermoso.
And to put her into context as a player, not that it should make any difference. She is Spain's record all time goal scorer for her country. She
was so integral to this moment. She is a player with influence and power.
And up to this point, the Spanish Federation the RFEF have stood by their man. They have backed Luis Rubiales until now calling this meeting. Luis
Rubiales has been suspended, as you mentioned by World Football's governing body for 90 days as things stand.
And the interim President of the RFEF Petro Russia has called this meeting an urgent emergency meeting of the regional bodies. They've said to
evaluate the situation in which the Federation finds itself to look at the decisions or actions to be taken.
For most people those actions and decisions should have been taken eight days ago, shouldn't they? You know, there are not many decisions or actions
to still be taken that, you know, it's pretty obvious, but they are doing something. We don't know whether a decision an announcement will be made
today.
We don't know what that will be. But the people who we haven't yet heard from Julia, who should be standing up and taking charge of this, a European
Football's governing body UEFA Spain comes under their remit met. Rubiales is a Vice President of their Executive Committee.
[09:10:00]
He was only be reinstated re-elected in April this year, their silence up to this point has been deafening. People ask why you have to say is
football politics? And it shows you just how far we have to go in terms of these kinds of issues.
CHATTERLEY: Yes, we'll see what happens at the press conference today. And then if they say something in light of that. Can I ask you specifically
about reports tied to Rubiales' mother? I've seen a suggestion that she's in a local church that she's conducting a hunger strike. Can you tell us
any more about that anything you know?
DAVIES: I mean these are stories only just coming into us. And what we know is its being reported that Rubiales' mother Angeles Bejar has locked
herself in a church in the Spanish City of Montreux which is near Granada.
And she has said, "She will remain there infinitely day and night until justice was served". So she's gone we understand on a hunger strike.
Because of the treatment she sees, her son has received. She has used the words, she is protesting against the inhumane bloodthirsty hunt of her son.
And I think it speaks really to the emotion and the divisions that have been caused Julia by what has played out over the last few days. You know,
there are on the one hand players both men's and women's in Spain and around the world who very much backed Jenni Hermoso and the Spanish players
and spoken out against Rubiales.
But there are still a number of people who are backing their man. And this is a conversation which speaks to a bigger picture, doesn't it in terms of
not only the treatment of women in football, but in society as a whole?
CHATTERLEY: Yes. And the debate needs to be had as well. We'll see what comes of it. Amanda, thank you for that! To Ukraine now and at least two
people have been killed five injured in a Russian missile strike in the Eastern Poltava region. That's according to the Ukrainian President's
office, which says the explosion caused a fire in an oil mill.
It comes as Russia says it destroyed two drones overnight over a territory bordering Ukraine. And in other news, Ukraine's President says it may be
possible to hold elections next year as scheduled. But says Ukraine would need more financial support. Let's get the very latest from our team on the
ground in Ukraine.
Melissa Bell joins us now from Zaporizhzhia. And Melissa I mean, we could talk about any of these elements. But it was interesting to hear the
Ukrainian President talk about the prospect of holding elections next year, despite the fact that obviously, at this moment that the country is under
sort of martial law conditions, which will obviously make it very difficult, they're clearly going to need help, if they do press ahead with
this?
MELISSA BELL, CNN CORRESPONDENT: That was exactly his point to Ukrainian media Julia that they will be able to do this alone. Essentially, what's
been happening since the Russian invasion of last year is every 90 days martial law has to be reinstated that is the way the law works here in
Ukraine under martial law, which is reinstated for 90 days.
Of course, no elections, no political activity can take place at all. And so until now, the position had been that it seemed very difficult to see
how Ukraine was going to be able to hold the parliamentary elections that are due for this autumn, or indeed the presidential elections that are due
for next year.
What President Zelenskyy has been saying is that whilst there are difficulties, obviously, not just because of the martial law, but because
20 percent of the country is currently in Russian hands, because so many of its young men and women are currently serving on the frontlines, or
actually living abroad because they fled the war.
All of these logistical difficulties will have to be looked into will have to be addressed. But what President Zelenskyy said was that he would not
want to seem to be the one holding democracy back and that he is wholeheartedly behind the idea of the holding of these elections if the
financial help can be given.
His point is that he doesn't want valuable resources to be taken away from the front line and the counter offensive that's now going on to try and
reclaim some of that territory from Russia. But with the financial help from other countries from allies, he said it might be possible to consider
holding these elections, Julia.
CHATTERLEY: Yes and logistical support as well, to your point a lot of the people in the country are not even in Ukraine at this moment too. Melissa
Bell thank you so much for that. Now, in an exclusive interview Moldova's President has told CNN that more support needs to be provided to Ukraine or
there could be serious consequences speaking to our Chief International Anchor Christiane Amanpour. She said that if Kyiv does not get the
international help it needs, Russia will not hold back on its ambitions.
(BEGIN VIDEO CLIP)
CHRISTIANE AMANPOUR, CNN CHIEF INTERNATIONAL: Do you believe that the West is doing enough; do you think it really gets it? I mean do you think it's
yet done enough for Ukraine and is it doing enough for you?
[09:15:00]
MALA SANDU, MOLDOVAN PRESIDENT: We're grateful to all the countries and all the international organizations which support Ukraine. We believe that
Ukraine needs to get more support. Ukraine is fighting the right cause. Ukraine is fighting for its independence, but also for democracy.
And everybody should understand that. If Ukraine is not helped, then Russia will not stop in Ukraine or Moldova. So this is also about the security
first of all the security of the continent and also about the international rules based system.
(END VIDEO CLIP)
CHATTERLEY: The Moldova President Mala Sandy there and you can catch that full exclusive interview on Amanpour right here on CNN, Christiane anchors
from the Ukrainian Port City of Odessa. And we'll have special coverage from Ukraine all week. Tune in at 1 pm if you're watching here in New York
or 6 pm in London.
Now two pivotal court hearings in the cases against Donald Trump are taking place today in Georgia Fulton County District Attorney Fani Willis is set
to lay out key evidence in the racketeering case against the Former President and his alleged co-conspirators.
And in Washington a federal judge is holding a hearing on when Trump's trial will take place on Special Counsel Jack Smith's election subvention
charges. And coming up here on "First Move", reset or economic regret the U.S. Commerce Secretary calling her talks with Beijing officials today open
and pragmatic, encouraging news for both countries that need a robust trading partnership now more than ever, expert analysis next.
(COMEMRCIAL BREAK)
CHATTERLEY: Welcome back to "First Move". The U.S. and China today announcing a new working group on commercial issues, the latest effort
between the two nations to help improve business ties the announcement coming on the first day of talks between U.S. Commerce Secretary Gina
Raimondo and Chinese officials in Beijing.
Washington taking major action in recent months to cut exports of key technologies to China and restrict in with U.S. investment, but the Biden
Administration also remains hopeful that the two nations can boost trade beyond the sphere of national security concerns. Beijing also in need of
ways to boost growth as business and consumer confidence sags unemployment rises and deflationary trends accelerate amid a deepening property sector
crisis.
[09:20:00]
The big question is Beijing able to boost growth in the short term without compromising longer term economic and social stability. Eswar Prasad joins
us now he's a Senior Fellow at Brookings Institution and Professor of Trade Policy at Cornell University, Professor Prasad Eswar fantastic to have you
on the show. This clearly economic opportunity for both sides to boost trade ties beyond the Knottier issues of the technology concerns and
national security issues. Is that possible in your mind?
ESWAR PRASAD, PROFESSOR OF TRADE POLICY AT CORNELL UNIVERSITY: I think it is certainly possible there was a time not too long ago, when the economic
and trading relationship between the two countries was seen as a positive sum game where the two sides could both mutually benefit.
That has not been the case for the last few years, when the bilateral trade tensions between the two sides has been ramping up to some extent, because
the U.S. feels that China is not playing by the rules. In addition, there is now, what is almost an existential battle for supremacy in terms of the
industry so the future especially the higher tech, greener energy sort of technologies where both countries want to establish dominance.
So right now, we seem to have the national security imperative, which Secretary Raimondo has been talking about, and other U.S. officials have
been as well, taking precedence over these economic issues. So that's behind what Washington has been doing in terms of restricting technology
transfers, investments in China.
All of which are seen as conduits for China to get access to technology that might allow it to compete in a way with the U.S. that the U.S. cannot
stay in front of these technologies. But I think there is a way that both countries could in fact benefit from sharing this technology, so long as
there is a clear set of rules that both countries play by, and that's what they seem to be talking about now.
CHATTERLEY: Yes, there can be certainly a greater degree of pragmatism as well, with regards the technology sales in the United States. I mean, some
of these chips will be superfluous and outdated in a couple of years, restricting them now and angering China seems like the wrong answer.
But hey, that's my view. You were recently in China and you were certainly getting a sense of confidence, both of consumers, I think, an ordinary
citizens, perhaps even more importantly, at this moment, the private sector, and companies, businesses operating there.
And that was something that you wrote an op-ed about, and it caught my attention. There's a real disconnect between what official sees competence
in the business sector, and what the private sector itself is willing to admit.
PRASAD: That is a big issue that confronts China right now, as it tries to revive growth towards the end of 2022 last year. There was a tech
crackdown, where many high flying tech companies were, you know, cut down to size. In addition, there was a crackdown on other parts of the private
sector, including the medical sector, the education sector, and so on.
And coming on top of a variety of short term concerns such as the property market unraveling, youth unemployment rises and deflation beginning to set
in, there is a real concern right now that the private sector may not be confident enough either for businesses to invest or for households to go
out and consume.
So right now, I think what is really crucial for the Chinese government is to be able to indicate that, in fact, private enterprise is something that
it views is playing a very important role in the economy, because the reality is that for all the China wants to accomplish, you know, moving up
the value chain, which essentially means moving up to higher technology industries, which will mean more domestic innovation as well they need the
private sector.
The private sector, especially small and medium enterprises have been crucial in terms of employment growth. So unless they fix that and send a
clear signal, and also some actions to indicate that the private sector is seen as playing a very important role in the economy.
I think private investment will continue to fall, household consumption will not pick up and that's going to make even the short term recovery very
difficult to engineer.
CHATTERLEY: I mean, a common prosperity efforts in 2001 involved sort of public takedowns of big companies and tech leaders, they almost became some
of these entrepreneurs, seen as Public Enemy number one. Have you seen steps to try and address that?
Because saying that you're supportive of the private sector and actually being supportive of the private sector. And those efforts are two very
different things. What can they do to restore that confidence?
PRASAD: Yes, Julia, that distinction is indeed absolutely crucial right now. In fact, on my recent trip that was almost an element of cognitive
dissonance between officials in Beijing, who seem to think that they have done enough to reassure the private sector that it is very much in their
favor and that is Beijing central government does see private enterprises playing a very important role in the economy.
[09:25:00]
But many of the entrepreneurs I spoke to convey a very different message that they thought that something fundamental had shifted, that now the
President Xi Jinping ascended to a third term and indicated through a variety of words and actions that he views the state enterprise sector, as
playing a more important role in the economy.
They that are the private enterprises felt that they were falling out of favor. So it's going to be a hard slog for Beijing to send not just the
right messages, but also to show that it is willing to tolerate, if not encouraged private enterprises to innovate, which in some cases could mean
growing big and powerful as well.
And also making sure that small and medium enterprises that I referred to earlier, are getting the financial resources they need in order to play an
important part in terms of both output and employment growth.
CHATTERLEY: Yes, I want to talk about the Chinese consumer as well and raising a degree of competence there. And for me, this is intrinsically
tied actually, to what we're seeing in the property market as well, because as you see, sort of housing concerns and property prices fall.
That's a significant proportion of household wealth that we're talking about, too. How concerned are you by what we're seeing in the property
sector. And obviously, we had the Evergrande results overnight, as well. And I think everybody saw the share price reaction. And there are so deep
concerns about what this means for the economy.
PRASAD: The property sector is really important to the Chinese economy overall, by some estimates, it accounts for about 25 percent or so of
national output, either directly or indirectly, it's been a very important driver of growth. And it accounts for by some estimates, nearly 1/3 of
household wealth.
So when the property sector is not doing well, the economy does not do well. And households feel that their wealth is declining, and that affects
their consumption levels. Now, the real challenge for Beijing is to make sure that it managed the property sector in a more sensible fashion.
The reality is that some of the measures the government took to rein in the property sector in 2021 were perhaps desirable, because there was a lot of
speculative activity in that sector. But what some property developers told me was that those steps were taken in a very abrupt fashion without much
notice.
So the property sector did not have time to adjust. But more broadly, the economy is going to have to adjust to a period where the property sector
simply cannot be such an important driver of growth anymore. Things are stabilizing right now. But the problem is that, as you mentioned, there are
some property developers left Evergrande that have taken on huge amounts of debt.
There are some banks that are exposed to the developers. So we're going to see some volatility in property markets. But Beijing is trying to take back
some of the restrictions on the property sector to give it something of a boost. But again, unless they take broader measures to instill confidence
that policies are going in the right direction, I don't think it's going to have much of an effect in terms of boosting household consumption.
CHATTERLEY: Do you think we see worse growth than we're seeing even if it's not reported that way, and I guess the same for unemployment?
PRASAD: There are many indications that the economy is on pretty rough territory, and the Chinese government has responded essentially, by making
it harder to get access to data. Youth unemployment has been rising in the official data, and they've now basically scrubbed those data.
I don't think that denying people, denying analysts the information they need to analyze where the economy is going, is the right way to build
confidence. But you know there is another perspective worth keeping in mind. This is now an 18.5 trillion dollar economy is the second largest in
the world.
It's about two thirds the size of the U.S. economy. So the 8 to 10 percent growth rates of the past are really going to be difficult to sustain. The
big issue is whether China can get good high quality growth in the next few years, at least in the range of 4 to 5 percent inflation adjusted terms
that would be pretty good for an economy of this size.
But even that is going to be a challenge if you have household consumption staying weak, private investment falling, and that's going to make all the
economic objectives of the Xi Jinping government very difficult to achieve.
CHATTERLEY: Yes, some tough policies choice is still required. Eswar Prasad sir, thank you so much for your time and do your wisdom, Senior Fellow at
Brookings Institution and Professor of Trade Policy at Cornell University. Thanks once again. We'll back after this.
(COMMERCIAL BREAK)
[09:30:00]
CHATTERLEY: Welcome back to "First Move", U.S. stock markets are open and I have to say it's not a very August, like August so far because things are
actually happening, the S&P 500 Unfortunately down some 4 percent so far for the month but a higher open across the board today with tech.
As you can see in the lead encouraging news for the tech bulls after NVIDIA's strong profit report last week, failed to boost Wall Street
overall if stocks closed higher this session though. It will mark the first back to back wins for the S&P this month, a reflection of the ongoing
economic challenges facing investors with more interest rate uncertainty ahead.
And of course we also have a key U.S. jobs report out on Friday this week. Now as we've discussed already on the show as the war in Ukraine grinds on,
Russia is ramping up its military spending and new report reveals Moscow has doubled its defense spending this year so far. Clare Sebastian has with
the details.
(BEGIN VIDEOTAPE)
CLARE SEBASTIAN, CNN CORRESPONDENT (voice-over): In Russia today, military production is secret, Russia's main tank factory showing off its latest
shipment and a choreographed glimpse into the strain of wartime production. Output here has more than tripled over the last year according to Russia's
Prime Minister.
JANIS KLUGE, GERMAN INSTITUTE FOR INTERNATIONAL AND SECURITY AFFAIRS: What we have seen is that military spending has been much higher than was
actually planned for this year. And it looks like that the spending that was planned for this year is already exhausted. Now that we are halfway
through the year,
SEBASTIAN (voice-over): The Russian budget had earmarked roughly $50 billion for defense. The budget documents seen this month by Reuters
suggest Russia has now more than doubled that estimate. Experts say it could be even higher.
RICHARD CONNOLLY, ASSOCIATE FELLOW AT RUSI: It looks as though as expressed as a percentage of GDP.
[09:35:00]
It could be anywhere between 8 and 10 percent of GDP. So we think as a proportion of GDP, it could be having almost tripled.
SEBASTIAN: Are you surprised in any way by this?
CONNOLLY: No, is the honest answer.
SEBASTIAN (voice-over): President Putin was very clear there is he said last December, no limits to military funding. And yet, as Russia's annual
weapons exhibition got underway this month, the Teflon had started to come off its wartime economy. Military spending, helping fuel a resurgence in
inflation, and the plummeting ruble, prompting and emergency rate rise from the central bank and putting even the most loyal Russians on edge.
UNIDENTIFIED MALE: Every other country is now laughing at us!
SEBASTIAN (voice-over): Sanctions and lower prices also sent Russia's vital oil and gas revenues plummeting in the first half of this year, but prices
have been recovering over the summer.
KLUGE: Russia is still earning a huge amount of dollars and Yuan and Euros by exporting energy and other resources. And it is going to earn these
dollars also in the future because you know, as we have learned we cannot easily push Russia out of the oil markets.
SEBASTIAN (voice-over): There is though, another challenge facing Russia's weapons industry. Do you like playing basketball asked this recruitment
video for the Kazan helicopter plant? CEO of its parent company recently told Putin they need to fill 23,000 jobs this year. Wages already up 17
percent.
CONNOLLY: This is a very tight labor force for a number of demographic reasons but also to do with since the war a lot of people have left the
country. Some people have been mobilized.
SEBASTIAN (voice-over): Sanctions have also disrupted supplies of high tech components for weapons experts say raising costs even further. And yet the
Kremlin has found a way to justify this, a war with the West.
VLADIMIR PUTIN, PRESIDENT OF RUSSIA: The Western elite make no secret of their goal, which is, I quote, Russia's strategic defeat.
CONNOLLY: So the Russian populations have been presented with that view. So they've been prepped, they've been prepared and shaped to expect that like
maybe going to have to spend more money to take more of a hit or living standards to fight against such a powerful adversary.
SEBASTIAN (voice-over): A fight is now happening on the front lines and in the factories. Clare Sebastian, CNN, London.
(END VIDEOTAPE)
CHATTERLEY: And an incident to the school in India has been met with shock and outrage after a viral video was released, showing a teacher telling
students to smack a seven year old classmate who is Muslim. CNN's Vedika Sud has more.
(BEGIN VIDEOTAPE)
VEDIKA SUD, CNN REPORTER: Police in India's northern state of Uttar Pradesh are investigating a deeply disturbing video that shows the teacher asking
at least three students to slap a fellow classmate who was Muslim, the incident which took place on Thursday.
According to CNN affiliate CNN News-18 has gone viral on social media sparking widespread outrage and condemnation. In the 39 second video, which
CNN has viewed, shows classmates take turns to slap the boy on the face forehead and his waist. The teacher who can be seen in the frame asked for
the students to slap the boy harder for allegedly forgetting his time stable.
The boy can be seen crying through the video. According to a statement released by the police, the teacher made some objectionable comments in
class.
She said "mothers of Mohammedan students don't pay attention to the child studies which impacts their performance". On Friday, the police issued a
statement saying that a case has been opened against the teacher and that legal action will be taken. However, the teacher Tripta Tyagi speaking to
CNN News 18 on Friday said the video that has been circulated online was edited.
She claims to have been under pressure from the student's parents to be strict with him. She said she's disabled and unable to get up she
instructed the other students to discipline him. Tyagi has issued an apology. Speaking to CNN the father of the student denied the teachers
claims and said his son has been moved to another school but feels restless and scared.
Opposition Leader Rahul Gandhi has blamed the Modi government for inciting religious violence in the country. In a post on X, formerly known as
Twitter, Gandhi said, "Sowing the poison of discrimination in the minds of innocent children, turning a holy place like school into a marketplace of
hatred. There is nothing worse than this that a teacher can do for the country.
This is the same kerosene spread by the BJP which has set every corner of India on fire." The state of Uttar Pradesh is governed by Indian Prime
Minister Narendra Modi's Hindu nationalist party, Janta party. Its controversial Chief Minister Yogi Adityanath has often been criticized for
his anti-Muslim rhetoric.
[09:40:00]
CNN has reached out to Uttar Pradesh police officials for more details. Vedika Sud, CNN, New Delhi.
(END VIDEOTAPE)
CHATTERLEY: And an update to that to the school has now been ordered to close by district officials. Still to come here on "First Move", severe
wherever they're putting the squeeze on a critical international shipping artery, we'll discuss the drought and the impact on the Panama Canal, next.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to "First Move", the Panama Canal one of the world's most vital shipping lanes is facing an unprecedented drought. It's
caused officials to impose limits on the traffic passing through and that's caused significant backlogs. Just to give you a sense 40 percent of the
world's cargo ship traffic passes through the Panama Canal every year.
And even though the direct impact to manufacturers, retailers and consumers appears to be minimal, at least at this stage. The potential for broader
disruption is growing. And joining us now is Peter Sand, Chief Analyst at freight market analytics firm, Xeneta, Peter, good to have you on the show
once again. Just describe the situation, as you see it in the Panama Canal today?
PETER SAND, CHIEF ANALYST AT XENETA: Thanks for having me back. One of the maritime choke points that keeps getting into the face of the public is now
doing it again, the Panama Canal is operating at full capacity right now. Or should I say under the restrictions that has been set out for several
months now and --
CHATTERLEY: -- we seem to have lost Peter there. We'll try and reestablish that connection but in the interest to him. We will let take a break here.
And hopefully bring him back after this, stay with CNN.
(COMMERCIAL BREAK)
[09:45:00]
CHATTERLEY: Welcome back to "First Move", just before the break, we were talking about drought in the Panama Canal and the potential impact on
future shipping activities. Peter Sand, Chief Analyst at freight market analytics firm, Xeneta was talking to us and we lost connection. Peter, can
I just check that you can hear me?
SAND: I can hear you now -- .
CHATTERLEY: OK, fantastic! So I asked you what the conditions were like and you were mentioning, I think before we lost you that since late May there
have been restrictions imposed and a number of vessels have been forced to reduce the amount that they're carrying, so that they don't sit too low in
the water. Can you just give us a sense of the restrictions that are now in place and what impact that's having?
SAND: Yes, in essence, the restrictions that have been in place now for well, since really month, I think February actually started to come down
since. And May, it's been a reduction of two meters, where the ships can basically not ship as low in the water as they normally do when they
transit the canal fully leaking.
So what this translates into is that they need to transit, the Panama Canal with fewer containers on bought than they would otherwise do a reduction of
10, 15 percent. And what this does for shippers with cargo going through the canal is of course that it puts pressure on freight rates.
So associated a freight rates for a key route from Far East into U.S. Gulf Coast that all goes through the Panama Canal is up by $1,000 since in June
and more essentially also the long term contracts have just inched up also in the beginning of August by $250. So it's crunch time.
And this is definitely a wake-up call for those shippers with cargo that needs to go through the canal in the coming well a month and quarters.
CHATTERLEY: OK, there's a lot of information in there. So what we're talking about is containers that can only carry 10 to 15 percent less than
they were so that raises the amount of container ships that are required because that has to be redistributed. Obviously, people are also looking
I'm assuming other options too.
But if prices are elevated, then there's going to be a reluctance to sign contracts, longer term contracts, at least in case those prices adjust.
Just talk to me about the freight rates that you mentioned? Put that into perspective of the kind of levels for freight rates that we saw during the
pandemic at the worst points of the challenges that we saw in global shipping. How do the prices compare to what we're seeing today, just even
in percentage terms that might make it easier?
SAND: Yes, well, in many ways, obviously, especially American shippers, and importers are spooked by this situation as it brings back nasty memories of
all the obstacles that they experienced in terms of disruptions to their supply chains during the COVID years.
But what we see in terms of say real freight rates on the spot market right now we have about $3,500 flat for a standard 40 foot container, and
approximately 1/3 of what you saw during the COVID years. So it's significantly down you might say but the trend is sharply up as alluded to
before 50 percent from in June, so the direction is clear.
We're going up there is a squeeze on capacity, and there's only someone to pay for that. That is the shippers. So it's a risk to manage and you need
the right tools to do just that.
[09:50:00]
CHATTERLEY: Yes, it's good to have the comparison today. But to your point, who knows where it is going is these concerns rise? I saw the Canal
Authority said that these restrictions could be in place for another 10 months. And I know I was looking at it over the weekend that the water
level in one of the two lake ways that supplies water to the canal is at a seven year low.
So even when the raining season starts, that it's not enough of a compensation, how high might these rates get and what's going to be the
knock on impact Peter, perhaps to deliveries, as we head towards the holiday season, I mean, we're close enough now perhaps for that to be a
worry free inventories.
SAND: I think if I made -- , it's a game of two halves, we got this second half of the year, where we're just about to head into the traditional peak
season where a lot of American importers bring in their Christmas goods. So there's definitely a squeeze on rates right now spot as well as long term.
And they may go well it's anybody's guess, right? But we've seen an additional $1,000 being put on them right now we could definitely see
another 1000 there in a few weeks or months and then coming back to the second half of the game because the problem is really that the water
reservoirs are not being filled during the wet season of this year.
And they basically arrives them with too little water to basically for the dry season in the first half of 2024. So that's why the Panama Canal
Authority is announced 10 month of these restrictions. So obviously, all shippers are looking towards alternatives, as they fear rates may go even
higher, as alluded to also, the long term contract rates are now also reaching up for those that seek to make use of that service.
But in the end, there are only 10 big container ships that can transit, the canal every single day for the next 10 months. So if anything in terms of
demand will go up from here. Alternatives will be deployed, whether that's the Suez Canal transit, or whether it's air cargo if you're really in hurry
and the meet.
CHATTERLEY: Yes, all the slack has been taken out. Peter, great to get your insights thank you, we'll keep in touch and you can track progress with us.
Peter Sand Chief Analyst there Xeneta, great to have you on sir once again. Now the United Nations General Antonio Guterres says he's concerned amid
reports of voter intimidation and suspicious arrests.
In Zimbabwe's recent elections, opposition and civil society groups seize the vote was marred by voter intimidation, threats of violence, harassment
and coercion. On Saturday, the Electoral Commission announced the incumbent Emmerson Mnangagwa won with nearly 53 percent of the votes cast.
David McKenzie joins us now live from Johannesburg. David, but how important are these concerns from international observers saying they're
concerned about voter delays, particularly in the capital city and the second city where the strongholds are of the opposition there? It has
economic consequences too surely win the debt negotiations for the country. Where does this leave us?
DAVID MCKENZIE, CNN SENIOR INTERNATIONAL CORRESPONDENT: We still don't know where it leaves at, Julia. But it doesn't seem to be that it leaves
necessarily Zimbabwe in its best position. With all the elections right you have to look at the before, during and after the voting.
But before of the story has been wrongly criticized by outside observers as being marred by violence and intimidation. The during when people actually
voted in Zimbabwe, as you say it was beset with significant delays the opposition saying that the voters role wasn't up to date on the eve of the
voting they didn't receive as they are due to receive the information that allows them to check their tabulations with the official tabulations.
And that voting was stretched on to a second day. And relatively quickly, we got the results, which said that the incumbent Emmerson Mnangagwa had
one another term. The Zimbabwean President saying that it was peaceful, transparent and in broad daylight, and I'm paraphrasing here.
The after of the vote is where we are now. And at this stage observer missions, the limited observers who were there say that there were
significant problems. The opposition is saying that they had different tabulations from several stations and constituency.
They asked him for clarity from the Zimbabwean Electoral Commission where it happens now here's the Leader of the Opposition Nelson Chamisa.
(BEGIN VIDEO CLIP)
NELSON CHAMISA, CITIZENS COALITION FOR CHANGE LEADER: It is clear that we are rejecting the election as a sham, the result. The processes itself were
disregarded and is in line with what the SADC observers have said. We reject this sham result and flawed process based on the disputed figures.
(END VIDEO CLIP)
[09:55:00]
MCKENZIE: I think a critical thing we have to note here is that in his victory speech as it were, or his comments afterwards, the President gave
an olive branch reached out to the opposition party saying he's willing to work with them. I think this isn't necessarily a magnanimous move.
I think this is an assessment of the reality of the situation. You mentioned the debt issues of Zimbabwe. That's one issue. Zimbabwe is still
under multiple different sanctions when it comes to political individuals. And the government is hamstrung because of the way that the country and its
resources are managed in the eyes of the world.
I don't think anyone will change the way to deal with Zimbabwe unless there is a significant power sharing or at least the time between the leadership
and the opposition, but we're not there yet. It's too early to speak about because at this point, I'm sure the opposition will be taking this to
court.
And the latest I hear from sources there is we could expect more information on the perceived irregularities coming out tomorrow, Julia.
CHATTERLEY: Yes, we wait for more, David McKenzie in Johannesburg sir, thank you for that. And that's it for the show. "Connect the World" is up
next. I'll see you tomorrow.
(COMMERCIAL BREAK)
[10:00:00]
END
