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QUEST MEANS BUSINESS
Crisis in Ukraine; Ukraine Economic Fears; Estonia's Experience With EU; European Markets Down; Dow Dips Below 16,000; Healthcare.org Recovering; Global Health Care Disparities; Larry Summers on Health Care Solutions; Cyber Monday; Mobile Dominance; Amazon Delivery Drones
Aired December 3, 2013 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(NEW YORK STOCK EXCHANGE CLOSING BELL)
MAGGIE LAKE, HOST: So long 16,000. Stocks on Wall Street have taken a tumble. It's Tuesday, December the 3rd.
Concern in Kiev. Investors and protesters fear for Ukraine's political future.
From central banking to the doctor of surgery. Larry Summers offers a cure for global health care.
And tiger parents rejoice. China's schools rise to the top of the class.
I'm Maggie Lake. This is QUEST MEANS BUSINESS.
Good evening. Protests rage on in Kiev tonight as the government clings to power and the president leaves on a business trip. These demonstrators are digging in, determined to stay in the city's main square, despite the freezing temperatures.
These are live pictures you're looking at. They are blockading the entrances to the government's main building. In Ukraine's parliament, opposition lawmakers attempted to topple the government and failed. The protests were sparked by the government's refusal to sign a major trade deal with the EU last week.
UK -- Ukraine's president, Viktor Yanukovych, left the country today for China on a trip to secure loans and investments. The move sparked anger from many, including opposition leader Arseniy Yatseniuk.
(BEGIN VIDEO CLIP)
ARSENIY YATSENIUK, UKRAINIAN OPPOSITION LEADER (through translator): We call on President Viktor Yanukovych to immediately cancel his visit to China. The future of Ukraine is not being decided in China right now. The president is obliged to stay in Ukraine.
We call upon him immediately to sign the resignation of the government and to start a criminal investigation against the minister of interior affairs, Zakharchenko, and other persons involved in the violent scenario. We call upon him to stop the economic crisis.
(END VIDEO CLIP)
LAKE: Phil Black filed this report from Kiev.
PHIL BLACK, CNN INTERNATIONAL CORRESPONDENT: There is a huge crowd, thousands of people have been here, cheering them on, calling for revolution, calling for the government to resign. You can see there is also a very large security presence.
The mood here is pretty tense. It is outside government buildings like this in recent days where the sharpest violence has taken place between security forces and protesters. The police have been pleading with the crowd over speaker systems to remain quiet and peaceful.
They have done so far, and in general, they're pretty happy while calling for revolution. But they have also cheered loudest while listening to a live feed of parliamentary proceedings, and especially when it was announced that several members of the president's own ruling party have decided to defect from that party to the opposition.
Phil Black, CNN, Kiev.
LAKE: Scenes like those have investors fearing for the future of Ukraine's economy. President Yanukovych is faced with more than $15 billion of debt maturing over the next few years, and his options are increasingly limited. Ukraine's borrowing costs are at record highs with a yield of nearly 20 percent on the country's one-year bond.
And as the turmoil continues in the streets, more and more investors are betting against Kiev. The cost of credit default swaps, which effectively insure bondholders against a Ukranian default, has soared over the past few days. In a special taped statement released on Monday, the central bank governor urged the public not to panic.
(BEGIN VIDEO CLIP)
IHOR SORKIN, GOVERNOR OF THE NATIONAL BANK OF UKRAINE (through translator): I am calling on everyone to be sure in the work of the banking system and the security of their savings. I am sure that today in the Ukrainian society, there is nobody who would be interested in the destabilization of the economic situation.
(END VIDEO CLIP)
LAKE: Jill Dougherty has been following the situation, and she joins us live in Washington right now. Jill, we see those large demonstrations on the streets, peaceful so far. But this is a country that is divided in whether they should side and follow the path of the EU or Russia.
JILL DOUGHERTY, CNN WORLD AFFAIRS CORRESPONDENT: Yes, definitely. It's divided in so many different ways. Geographically, even before this started, the west is much more in tune with Western Europe. The east, much more sympathetic to Russia. That's one divide.
There's a political divide, as you an see. And then, the president is really torn, in a way, between both sides. He knows that with this crackdown, there is more and more revolutionary and angry feeling on the streets.
And yet, he has the pressure coming from Russia not to move toward Europe, warning them -- warning Ukraine -- that prices for gas could continue to be very high, Russia offering to give lower prices for gas that's very -- could be very attractive for Ukraine right now.
And Maggie, another thing. One of their big exports is steel, and if you look at prices for steel around the world, they are much lower. So, Ukraine is in a very difficult economic situation, and now obviously, politically.
LAKE: And to focus on the economic issues, Jill, you point out the carrot that Russia is dangling, but we're seeing investors starting to pull out Ukraine. There are huge financial costs associated with this as well on the other side of the ledger, aren't there?
DOUGHERTY: Absolutely. And it's interesting that the president is going to China, continuing with that trip, in the midst of all of this, because after all, you'd almost say, why not stay home and deal with this problem? But he really does need investment, he needs some help from China, and he's looking for it.
But right now, there's no easy answer for him because even if he were prepared at this point to move toward Europe, there's one thing that's significant, and that is there really is kind of a price that has to be paid in their economy short-term for blending with Europe. It's difficult. Their economy is not totally set up on European standards, so there's a short-term price.
Long term, many would argue, it would be very good for Ukraine to unite with the EU. But there are some costs, and some of them are even political, not to mention economic.
LAKE: That's right. And Jill, you and I were talking earlier about whether the EU had done enough on their side in terms of putting incentive on the table for Ukraine. I want to -- we have live pictures coming in about those protesters that are in the square.
What do we expect to happen over the next 24 hours? This seems that this is culminating, although how you get a resolution when the two sides are so deeply divided is very difficult to say. The president has said he wants a dialogue. What should we expect over the next 24 hours?
DOUGHERTY: Well, if I knew that -- if anybody knew that at this point, but I think the main concern would be if you look back, remember the Orange Revolution in 2004. Very well organized, there were huge demonstrations on the street.
But right now, it's a more divided opposition, there are many different groups that are on that street. Some of them are more radicalized than they were a few years ago. So the main thing right now, and Secretary Kerry -- Secretary of State Kerry was just calling this afternoon for an end to the violence. NATO also is concerned, many people are concerned. So to stop that violence, stop any type of violent crackdown.
But the problem is, the people do not want to leave until they have political change, and the government is not ready to do that. And that's one of the dilemmas.
LAKE: At a crossroads right now. Jill Dougherty for us in Washington. Thank you so much, Jill.
Well, one country that did thrash out a similar trade deal with the EU is Estonia. CNN's Isa Soares spoke to its president, who told her that closer ties with Europe would benefit Ukraine.
TOOMAS HENDRIK ILVES, PRESIDENT OF ESTONIA: They've gotten themselves into quite a pickle with their indebtedness. Now, just to keep things in perspective, because they're blown out of perspective everywhere, the association agreement that Ukraine has negotiated for these years, it's an agreement that my country negotiated in the early 90s and signed in June of 1995, almost 20 years ago. It is not EU membership.
It is basically a free trade agreement that gives a lot of access to Ukrainian goods to the European market. It's a step forward, but it really is far, far, far short of membership. It took us nine years from when we signed the association agreement until we joined.
In between, we had to be assessed as to whether we were good enough to join the EU, and we then had to proceed a negotiating session. So, it's really being blown out of proportion by some of our friends on the Russian side.
ISA SOARES, CNN INTERNATIONAL CORRESPONDENT: Do you believe that closer ties with Europe would actually help them economically?
ILVES: Absolutely. Because the -- bringing rule of law into business. You want contracts to be observed, you want to reduce corruption, which is a very large problem in that country. So, greater transparency, transparency rules, having court systems that can be counted upon to judge equitably.
All of those things make for a much healthier economic environment, and those are things that would come with the European Union and adopting European laws and standards.
LAKE: And you can hear the full interview with Estonia's president later this week. Tune into "Marketplace Europe." That's on Thursday at 6:45 PM in London, 7:45 PM in central Europe.
European markets ended the trading day lower on fears that the US Fed may decide to wind down its bond-buying program this month. The Paris CAC 40 tumbled the most.
New eurozone data showed that producer prices fell by half a percent in October. That drop was larger than expected and sparked fears about deflationary pressures in the currency union. The European Central Bank and the Bank of England's monetary policy decisions are due this Thursday.
Wall Street looked wary today. The rally faded and the Dow dipped back below 16,000. Alison Kosik joins us from the New York Stock Exchange. Allison, we know those round numbers go as quickly as they come, but what was the mood like today? Was this profit-taking, or was there something else going on?
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: It was something else, talk of the taper, Maggie, and that talk is what drove the market today right into the red. It's still all about what the Federal Reserve might or might not do with its stimulus, and traders took the opportunity to raise the flag again on a sooner-than-expected taper.
Yesterday, we got a better-than-expected read on manufacturing, so that's raising worries that the Fed could taper the large-scale bond-buying as soon as December, its meeting happening in two weeks.
Of course, much is really going to depend on the employment report coming out on Friday. The government is expected to report a gain of 188,000 jobs last month. We want to see this job growth, Maggie, but the concern is, at least through the market, that if it's too strong, that it will be a clear signal for the Fed to pull back. Maggie?
LAKE: Good news is bad news. Here we go. Alison, thank you so much.
Still to come, the greatest threat facing the US economy right now, it's secular stagnation. Larry Summers will explain what he means by that next.
LAKE: Healthcare.org is recovering after its disastrous launch. President Obama says he's encouraged that more than 1 million new visitors checked out the website on Monday.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The bottom line is, this law is working and will work into the future. People want the financial stability of health insurance, and we're going to keep on working to fix whatever problems come up.
In any start-up, any launch of a project this big that has an impact on one-sixth of our economy, whatever comes up, we're going to just fix it.
(END VIDEO CLIP)
LAKE: Health disparities between nations could be eliminated within a generation. That's the claim made by 25 top health experts and economists in a report chaired by former US treasury secretary Larry Summers.
The authors say the plan is ambitious, but feasible. Current global investment in R&D needs to be doubled from $3 billion to $6 billion a year by 2020. Spending should be prioritized to tackle HIV/AIDS, TB, Malaria, and maternal and child health conditions.
CNN's Becky Anderson sat down with Larry Summers in London today. She asked him if health disparities can really be eliminated within a generation.
LARRY SUMMERS, CHAIR, GLOBAL HEALTH 2035 COMMISSION: We see it as literally a once-in-human-history opportunity. We used to have life expectancy and health experiences very similar around the world, but really dismal results. And then, in the last century or two with progress in the industrial world, we've seen enormous variations.
And now we have a chance to see reconvergence, only this time with performance converged at a high level rather than at a low level. And that's something that, if you think about it, should only happen once in human history, because once you've converged, it's then a rather a different situation of making progress together.
BECKY ANDERSON, CNN INTERNATIONAL CORRESPONDENT: You wouldn't expect me to be talking global health care today without me alluding to Obamacare in the States. How important is Obamacare in terms of the US economy, and how damaging has the failed rollout been?
SUMMERS: I think Obamacare is important morally, and I think it's important practically. It's important morally because the United States shouldn't be the only industrial country in the world that doesn't have universal health care.
It's important practically because there are a lot of people who are going to live rather than die because of the access to Obamacare that -- to health care that didn't exist before. It's important practically because there are a lot of families that were going to be bankrupted meeting medical bills that now aren't going to be bankrupted.
And it's important because Obamacare is a framework in which cost reduction is going to be possible. In fact, over the last three years, we've seen the lowest growth in US health care costs in the last 50, and that's not something that people expected, and it's not all due, certainly, to Obamacare.
It's not even entirely clear why it happened, but it certainly suggests that those who thought Obamacare was going to blow through budgets and destroy the country's competitiveness weren't just wrong, but were directionally wrong.
Because across America, employers are able to compete better because their health insurance costs did not go up as fast as they thought. Workers are able to be paid more because less of what would have been their wages are siphoned into health care costs. These are real achievements.
ANDERSON: You've knocked me back on the damaging question here. How damaging has this failed rollout been, both politically and economically?
SUMMERS: It hasn't been damaging economically yet. Politically, in the near-term, it's been a terrible blow to the president's popularity and to confidence in what government can do. But the wheel turns, and just as it seemed that the Republicans were completely down for the count after the budget fiascos of just two months ago, the wheel has a way of turning.
And so if -- and I'm not in the position to make a prediction -- if the website comes back, if people are able to enroll, if premiums don't grow too rapidly, I think there's at least a real prospect that five years from now, this will be remembered as a rocky patch.
ANDERSON: Obama doesn't have five years, of course. His legacy will go on and on, so if it works, it works, and it'll work for his legacy. But the economy, of course, does have five years. It has a short, medium, and a long term.
You shook things up a week or so ago in Washington when at the IMF you argued that a much more urgent threat to every American interest than anything about social security in 2035 was long-term economic stagnation. "Secular stagnation." Explain what you mean and why you are so concerned about the US economy going forward.
SUMMERS: You know, we had largely solved the financial panic four years ago. Credit spreads were normal, there was no longer any panic in the air. And since that time, our economy's grown slower than its potential. Since that time, the share of adult Americans who are working has barely budged upwards.
And that has to give concern that somehow we're not able to get back to what we had always thought of as our potential. And that's what I mean when I refer to "secular stagnation." And my judgment would be that almost all problems are solvable with a rapidly-growing American economy.
ANDERSON: You do --
SUMMERS: More tax revenue for the government, more opportunity for young people, more scope for environmental protection. But almost no problems are solvable in a stagnant society that's not producing more resources. And that's why I put such emphasis on the importance of spurring growth.
LAKE: Mobile Monday makes its mark on the retail calendar. It's an online shopping frenzy, and it's bigger than ever.
LAKE: Forget Black Friday, it was all about Cyber Monday this year. Based on IBM's findings, the Monday after Thanksgiving was the biggest shopping day online in history. Online sales jumped by 20.6 percent from a year ago. That is a huge number.
The stand-out? Mobile sales exceeded 17 percent of that total of online sales. That is an increase of 55 percent from a year ago. David Goldman is technology editor for CNN Money. He joins us now. David, we knew that tablets and SmartPhones were changing our life, but this is a game-changer for the tech sector, isn't it?
DAVID GOLDMAN, CNN MONEY TECHNOLOGY EDITOR: Yes, that's right. We've never seen numbers like this, and it really shows us that mobile is the "it" product right now. PCs had their day, but now everything is SmartPhones and tablets. And it seems like it's going to be that way at least for the next several years.
LAKE: So that means clearly that there are going to be winners and losers here. These numbers sort of validate what everyone's been saying, that these products are in. No matter how bad the economy is, we're willing to pay up with them, we can't live without them. Presumably good news for Apple and Samsung. What's that mean for the old guard, though?
GOLDMAN: Well, right now, they're struggling. Microsoft, HP, and Dell, those are all companies that have been kind of down in the dumps recently in terms of profits and sales. But actually, their stocks are mostly up this year. Dell went private, but HP and Microsoft are having good years.
I think that's because investors are looking towards the future. Both of these companies, and other companies that have been predominantly PC- based companies, are looking at wearable technology and other kinds of products that are going to be the next generation.
GOLDMAN: They're already skipping the mobile part.
LAKE: Because they missed the boat there. So if you can't catch up and you're not going to gain market share, which looks to be the case, you want to sort of try to leapfrog. But the skeptic in me is going to say, do these companies have the culture, have the innovation to make it work?
GOLDMAN: It's a great question. I think the way I'd answer it is no one thought that Yahoo! would be a cool company two years ago, but they hired Marissa Mayer, they've got some really interesting talent, they've got the Katie Couric news just a week ago.
Now, this is a place where engineers and the brightest people want to be. The same could be true for Microsoft. They're going to hire a new CEO maybe even as soon as this week. HP hired Meg Whitman, who's certainly a star in the tech sector.
LAKE: And knows a thing -- eBay knows a thing or two about mobile. But these are big ships to turn, aren't they? And it is true that there's talent, but there's a race for it. There's a shortage of it.
What else are investors -- I'm presuming that they don't have an enormous timeline for this. You're going to have to execute at some point. These companies do have cash, though, to throw at talent, don't they?
GOLDMAN: Oh, yes. And big, big research and development budgets. So for sure, they've got plenty of time to make this work, and investors are giving them a little bit of leeway here.
LAKE: That could be the story of 2014. And they also have big relationships, long-standing relationships with IT departments, which some people think are going to pay off, especially with the demise of BlackBerry. All right, David Goldman from CNN Money, thank you so much.
Well, online retailers have all kinds of new ideas to ship their products, and none has made more of an impact than Amazon. You've probably seen it. It's testing unmanned drones to deliver packages. Laurie Segall reports.
LAURIE SEGALL, CNN MONEY CORRESPONDENT (voice-over): Amazon wants to bring your DVDs, your Kindle Fire, and maybe your razors by drone. Yes, drone.
UNIDENTIFIED MALE: These are octocopters.
UNIDENTIFIED MALE: Yes?
UNIDENTIFIED MALE: These are, effectively, drones, but there's no reason that they can't be used as delivery vehicles.
SEGALL: In an announcement on CBS's "60 Minutes," they said this was their plan for the future. Here's how it works. You order online and a fully autonomous drone will fly the goods to your home in 30 minutes. Now, that's if you're within ten miles of one of their fulfillment centers.
But expect a bit of a flight delay before Amazon's Prime Air can actually take off. Now, there are a few things the company will need to build.
MARK HEYNEN, VP, SKYCATCH: One would be a -- some way for the packages to be dropped off securely without threat of physical issues with the UAVs hitting people, without the risk of theft, where someone steals the UAV, without the risk of vandalism, where someone compromises the UAV.
SEGALL: As of right now, the FAA regulations wouldn't even allow these kind of drone deliveries.
CHRIS ANDERSON, FOUNDER, 3D ROBOTICS: Congress has mandated the FAA allow commercial use of drones in the national airspace, which is the air over our skies in a 2015 context. But that's not the end of the process, that's the beginning.
So, basically at that point, they now have a way for certain kinds of drones, largely kind of larger commercial ones, to be certified and allowed into the airspace under certain conditions. That's a long way from what we're describing now, with the notion of service of small drones in a residential context.
SEGALL: And for those of you who live in crowded cities, it may be sometime before your headphones are delivered by drone.
ANDERSON: I think that we'll see -- outside the United States, we're seeing it already, some experiments in places like Africa and Australia. I think you'll start to see some commercial experiments, business-to-business in relatively safe areas, away from people, you'll see that in sort of the 2016 context.
SEGALL: Drone delivery isn't a new concept. Domino's tested out a pizza drone in July. Now, they were also used for disaster relief in Fukushima, for search and rescue in destroyed buildings, and hackers are constantly finding new and interesting applications for drone technology, which to date, has seemed pretty futuristic. But experts say a company like Amazon could turn this far-fetched idea into a reality.
ANDERSON: For a company like Amazon to endorse this space is huge. The very fact that they're willing to say this is worth pursuing, this is cool, this can happen, technology is ready, is going to ensure that it does happen sooner.
SEGALL: Laurie Segall, CNN Money, New York.
LAKE: It's a bold new world. When we come back, China is the epicenter of political and economic meetings this week, and it's not just Prime Minister Cameron who's traveling there. The world's second-largest economy is one of the hottest destinations for quite a few world leaders.
LAKE: Welcome back. I'm Maggie Lake. These are the top news headlines we're following this hour.
Protests rage on in Kiev as the government clings to power. And attempt by the Ukrainian opposition to topple the government failed in the parliament today. Still, demonstrators are calling for those in power to step down. The protests were sparked by the government's refusal to sign a major trade deal with the EU last week.
A suicide bomber hit the capital of Syria earlier today, killing four people and wounding more than a dozen others, according to Syrian state television. Soldiers prevented a CNN crew from filming at the scene in Damascus and told them to leave.
French forensic scientists -- tests, rather, conclude that Yasser Arafat was not poisoned to death by polonium, according to French media. The Palestinian leader died in November -- on November 20th a month after falling ill after a meal. Last month's Swiss forensic experts said tests from samples taken from Arafat's personal effects were consistent with polonium poisoning.
South Korean intelligence says a powerful uncle of North Korean leader Kim Jong-un has been removed from his position. Two aids to Kim's uncle have also reportedly been executed. CNN has not been able to independently confirm these reports. The uncle has often been seen at Kim's side and is believed to have held considerable influence in North Korea's hierarchy.
The star dancer of the Bolshoi Ballet has been sentenced to six years in prison for masterminding an acid attack against the artistic director. And accomplice was sentenced to ten years, while a driver got four years. The director, Sergei Filin, was nearly blinded in the attack.
Whether it's countries in the midst of a popular uprising or an economic recovery, all roads appear to lead to China. World leaders from across the globe are headed there for diplomatic and economic talks. Protests continue on the streets of Kiev as Ukraine's president has landed in China for a planned state visit. Viktor Yanukovych is making the trip as his cash-strapped government seeks loans and investments. As you heard, one opposition leader has cautioned against the president leaving Ukraine at this pivotal moment.
U.S. president Joe Biden will visit China this week. He'll meet with several top Chinese officials including President Xi Jinping. Biden promises to press the country's leaders on the ongoing airspace dispute with Japan. British prime minister David Cameron is in the middle of a trade mission to China. He had to defend the trip in the wake of criticism at home and abroad.
Mr. Cameron posed for a selfie with Alibaba CEO Jack Ma during his three-day trip to China. According to the "The Wall Street Journal," the two discussed ways to boost British brands on China's biggest e-commerce site and strategies for increasing trade between China and the U.K. The prime minister tweeted this photo which he said he promised to share. Take a look at the hashtag ukchina. Cameron's trip hasn't been all fun and games. A Chinese state-run newspaper wrote that the U.K. is not a big power in the eyes of the Chinese. It called the U.K. "just an old European country that's good for visits and studies abroad."
I spoke with Julian Jessop of the Senior Global Economist at Capital Economics earlier. I asked him if China was right.
JULIAN JESSOP, CHIEF GLOBAL ECONOMIST, CAPITAL ECONOMICS: Well people are often quite quick to dismiss the U.K. as a relatively small island, but of course as far as the size of the economy is concerned, it's actually pretty big. And the U.K. is also a specialist in lots of areas where China would like to gain more expertise so that's financial services or communications or many other things, not least of course the knowledge- based economy that the U.K. already has. So, U.K. actually has a lot to offer China and equally China has a lot to offer the U.K., not least in that very large pool of investable capital. Admittedly, politics is always going to play a big part in this. It's been noticeable how the relations between China and the U.K. have depended very much on the U.K.'s own relations with Tibet and whether or not the prime minister is willing to meet the Dalai Lama. So China is partly approaching this as a political project as well as an economic one. But in economic and financial terms, both sides clearly have a lot to gain from better relations.
LAKE: There's been a lot of talk surrounding the economic reform. Do you think that Chinese officials are going to be able to deliver on some of those promised changes?
JESSOP: Well the track record of China on delivering on change is actually pretty good. I mean, this is one respect in which a lack of democracy might actually be a good thing while there's no short-term political pressures on the -- on the government. They can afford to take a long-term view, and that's something that China has done extremely successfully. I think there is a recognition in Beijing that the old model -- the export-led model, the investment led model -- is not sustainable. It may well have produced double-digit growth rates but it's created a lot of pollution, it hasn't created a lot of consumer spending which is ultimately the best thing for social stability. So I think the Chinese policymakers are serious about rebalancing away from that model towards something that might produce slower growth but more sustainable growth which is good for China and for the rest of the world.
LAKE: One of the things that they're -- they say they want to do is make China more inviting to foreign businesses. But whether you're talking about intellectual property issues or crackdowns on corruption, it's been pretty tough for foreign companies operating in China. Is China going to be a better place or an easier place to do business?
JESSOP: Well I think it's always going to be difficult. Obviously China is in the driving seat here -- it can very much decide who has access to its economy. And inevitably those companies that do trade with China will be on the back foot quite a lot. On the other hand, there are plenty of things that people in the rest of the world do better than China itself does, in particular higher value added consumer goods, financial services and so on. So there are definitely areas where overseas companies have a big competitive advantage in China, and there's only so high the barriers can be that China might put up. Otherwise, it won't get that trade in the first place. So, it's going to continue to be a difficult game, but I think there'll be winners on both sides.
LAKE: Some Chinese cities are outshining the world in the classroom according to the OECD. Its PISA survey compared skills of thousands of 15- year-olds around the world. So just like on graduation day, let's hand out some prizes and have a bit of a pep talk. The star student was Shanghai, it came top for math, reading and science. In math, nearly three years of schooling ahead of OECD average. It also has the largest proportion of students performing at the very top level, more than 54 percent in fact. Next, the improving students who get a prize for effort. Poland increased its share of stop performers and also reduced the number of low performers in all three subject areas -- math, reading and science. Italy did the same in science and math. Now, if any countries need some motivation to improve, the survey says if all students attain level two -- that's the basic level in math -- then it would add 200 trillion to the economic output of OECD countries, proof that it pays to hit the books once in a while.
Let's talk about why Shanghai outstripped the rest. Junheng Li is a Shanghai native and the author of "Tiger Woman on Wall Street" and she joins me here live in the studio. Thank you so much for being with us. You have a unique perspective having experience sort of on both sides. Do you agree with this study? Is the Chinese method superior to the rest of the world? Is there something we should all be learning?
JUNHENG LI, AUTHOR, "TIGER WOMAN ON WALL STREET": I think each system has its own merit, and in the ideal world it's the best to have the combination of both. China's education system is more-so (inaudible) on the knowledge base versus America is more, you know, methodology -- sort of ask and not only the 'what' but also the 'how' and the 'why.' So, I mean I think you know sort of what the popular book such as Amy Chua's "Tiger Mom" really tailors into not only which education system is better -- preferable but also the American decline-ism because you know East has been developing so fast recently and the Western civilization seems to be a on a decline and my book is really sort of a read (inaudible) to that theory because you know there's so many problems and challenges and risks and they are not widely discussed.
LAKE: Right, we sort of focus on what's working not so much. But it's interesting because -- especially because of the sort of stagnation with employment we have here. You talk in your book -- "Tiger Woman on Wall Street" -- about your very tough upbringing. Some people would use you as an example why that's the way to go -- it obviously helped you succeed -- you're making your way on Wall Street which is a very tough place to be successful.
LI: Yes, my upbringing is tiger parenting sort of on steroids -- it's definitely not even ordinary by China's standards and by Western standards it's absolutely the extreme and it does have the merit to it. And you know it left me the legacy of you know high drive, extremely you know focused and drive and diligence and discipline. But American education really give me sort of the courage to think out of the box -- being innovative, being sort of a leader as opposed just execute and the follower. So, there's sort of a dark side of being singular focused on work --
LI: -- on career success at the expense of sort of professional growth and -
LAKE: And we don't get to talk about that too much. You do say a lot when we're looking at China that a lot of the commentary is too simplified. What do you think investors should know if they're looking at China and wanting to invest in China? What's the story that's not being told?
LI: So, when Westerners go to China, they tend to go to large cities -- Shanghai, Beijing and they're duly impressed with the hyper-growth of infrastructure such as the brand new airports, the high speed which makes Amtrak look like a joke -- a third-world country. But what they do not see is underlying sort of the weakness in a civil society -- still a lot of lack of choices -- independence, media, lack of religion freedom, etc. So human capital in addition is also a challenge. It all goes back again to you know the school system -- the education.
So when kids are brought up in sort of by the textbook they're so full of ideology when they grow up they're not able to challenge the traditional thinking and they're not able to invent. Chinese are very good at innovation. But innovation should not be confused with invention. Inventions refer to the (inaudible) generation. Innovation is you know commercialization of ideas. So the traditional economic growth model has run to the end of its life. Now we need to have innovative, small you know entrepreneurial-driven sort of private sector to take up and play a large role and we need a human capital to support that.
LAKE: So it's going to be essential as they try to transition to the next period and a lot of this documented in your book. Thank you so much for coming on and joining us. "Tiger Woman on Wall Street" Junheng Li. Thank you so much.
Red wine may provide one answer to Spain's economic crisis -- not just any red wine. This is a very special vintage. We'll visit one of the countries winemakers when we come back.
LAKE: In Spain a rise in exports helped dig the country out of a two- year recession in the third quarter. As the country tries to get back on its feet, experts say companies should try to distinguish their products on an international level. So, Al Goodman went to sample one of those products.
AL GOODMAN, MADRID CORRESPONDENT: Deep inside this cellar in this large cask is a precious commodity in the making -- a red wine that is among the very best in the world.
In the entire wine cellar, this is really the pride and joy, right?
Male: The real queen -- absolutely.
GOODMAN: It's called L'Ermita, and winemaker Alvaro Palacios even lets me taste it.
ALVARO PALACIOS, SPANISH WINEMAKER: See the perfume -- so delicate.
Delicate but very distinguished as is the price. This is approximately $1,000 a bottle, right?
PALACIOS: (Inaudible) a full cask for the price.
GOODMAN: Is this going to solve Spain's economic crisis -- this wine?
PALACIOS: Well, that would be a nice help.
GOODMAN: Palacios is a fifth-generation winemaker but also an astute businessman. He looked to markets abroad 20 years ago, long before the crisis struck at home. And he says others in Spain need to do the same.
PALACIOS: I tell my friends to attempt to hasten (inaudible) that they must get internationalized because if you are a sole global, everything happens so fast.
GOODMAN: Palacios has built a $16 million business in three Spanish wine regions, scouring the nation for just the right vineyards -- this one about two hours southwest of Barcelona grows grapes for the thousand dollar wine. L'Ermita is named for the hermitage atop the hill. This is not a wine-producing bulk, a maximum of just 2,000 bottles a year.
PALACIOS: The wine is really, really good, so especial and the demand sometimes make the price higher.
GOODMAN: Most of Palacios wines cost a lot less -- under $18 a bottle. But that's the point. He's producing the marquis vintage and the wine that's accessible to regular consumers.
PALACIOS: You have to make the best product possible because consumers are very smart, very clever. So, great quality and then export, you have to also sell in your country. So it's both things together.
GOODMAN: France, Italy and Spain are the world's largest wine- producing countries, but the first two -- France and Italy -- enjoy more renown across the board for their wines than Spain. Alvaro Palacios has been working to change that. That means being innovative, even quirky. He uses mules to plow prime vineyard on hills too steep for tractors, and he doesn't have a website for the business.
PALACIOS: I don't' need a website to drink the best wines of the world. I just know -- I know where they are -- just ask.
GOODMAN: Above all, Alvaro Palacios is ready to take risks and seek out uncharted territory. Many Spanish businesses are not so good at that he says.
PALACIOS: They are not internationalized, they don't speak good English, they're not travel. I don't think it's laziness, but to be frightened -- I mean, to be afraid of -- we don't know how to do it, you're not ready to do it.
GOODMAN: But he thinks there is a silver lining in Spain's long recession.
PALACIOS: I think that this (inaudible) is making young generations, new generations' understanding that the concept is to guarantee a market in the international trade.
GOODMAN: So that the best Spain has to offer can be appreciated the world over. Al Goodman, CNN (Inaudible), Spain.
LAKE: Time to check in on your weather. Jenny Harrison is at the CNN International Weather Center. And, Jenny, understand some problems with fog.
JENNY HARRISON, WEATHER ANCHOR FOR CNN INTERNATIONAL: Yes, there's been widespread fog, Maggie, as we've really started this weekend in particular on this Tuesday morning. There was three separate very nasty accidents in Belgium and of course you can see here on the satellite, (inaudible) clear but don't let that fool you because high pressure is in control and that means very often this time of year some very light winds that set the air gets trapped beneath that and then we have this fog. Just a couple of pictures to show you -- so there are three separate pile ups. Over 100 vehicles were involved, at least one person has died. There were 54 people injured in total and 16 of those are seriously injured. And we can see pictures like this. It is not surprising why, and of course the fog was very thick at the time and the usual -- unfortunately people driving too quickly and too close together.
Now you can see the temperatures right now very, very cold, particularly the wind factored in -7 in Kiev, -4 in Berlin, 2 in London, Paris is down to freezing. So, again, more likely low patches of cloud and fog probably as we go through the night. This is high pressure, we've got rain in the south. The high pressure eventually moving further towards the east but staying very cold across this portion of Europe. But then there's a bit of a change on the (inaudible) that's coming into the northwest.
This next area of low pressure, some very, very strong winds indeed. Gusts over 100 kilometers an hour is bringing rain and snow with it because of course the air is so cold that a lot of this moisture turning to snow and very widespread too. This is really going to take place Wednesday on into Thursday and Friday and look at some of these winds. There's 117 kilometer gusts there in Aberdeen across into Copenhagen 126 -- that's late on Thursday night local time and so it continues. So also (sudden) could be an issue across west-facing coast also down the east of the U.K. along the North Sea as well because of these high tides with these very strong winds.
And then look at the temperatures -- so it's going to dramatically cool off, particularly by Friday. Glasgow just 1 Celsius, the average is 7, London that's 4, the average is 8 and of course the overnight temperatures even lower than that. Widespread snow blanketing much of Northern and Eastern Europe, so just be prepared again as you go through the week. The problems traveling, Maggie, they turn from fog to very strong winds and then likely snow and ice causing delays as we head towards the end of the week.
LAKE: Yes -- none of those good scenarios if you're traveling around -
HARRISON: Not good, no.
LAKE: We will check in again. Thank you so much, Jenny Harrison. Coming up, malice at dawn. Azerbaijan and Iran are in a dispute over the true origin of a century's old game. Now the United Nations has stepped in to help.
LAKE: THE United Nations is getting involved with the dispute over the origins of polo, one of the oldest-known competitive team sports. Azerbaijan has asked to be registered as the country where the horseback game originated. But across the border in Iran, they claim polo was invented in ancient Persia. Reza Sayah has more from Tehran.
REZA SAYAH, CNN CAIRO-BASED INTERNATIONAL CORRESPONDENT: On a polo field in Tehran the thundering gallop of horses, the crack of the polo stick and the sound of men fighting for a win in one of the world's oldest competitive sports.
Male: It gets very intense.
SAYAH: But here in Iran another intense battle is brewing off the polo field about the origins of this ancient sport. Many Iranians say polo or chowgan as they call it here originated in ancient Persia which is present-day Iran. But just north of the border, Iran's neighbor, the Republic of Azerbaijan says polo is their sport. Behruz Nabiyev, an Azeri official, says it was Azerbaijan that preserved and developed this game.
The clash over the origins of polo really got heated this year when the government of Azerbaijan asked the U.N. to officially declare polo Azerbaijan's indigenous in-home-grown sport. Many Iranians were incensed.
Male: It's ridiculous.
Male: For me it's unacceptable.
SAYAH: Perhaps none more than Iranian publisher Sadegh Samii --
SADEGH SAMII, KETAB SARA PUBLISHERS: I didn't believe it. I said they're talking utterly nonsense.
SAYAH: -- who's about to release a book on the history of polo.
SAMII: It just like I register scotch whiskey as an Iranian national. Can I do that? Of course not.
SAYAH: Samii says ancient Iranian art and literature, some dating back more than 2,000 years are filled with references to polo.
SAMII: Polo, which we call it chowgan definitely, categorically, emphatically an Iranian game. Samii, activist groups and the Iranian government have petitioned the U.N. to reject Azerbaijan's request and instead declare polo an international sport.
SAYAH: So when and where did polo actually originate? Historians say it's hard to tell because it probably started even before history was properly recorded. But many agree it was probably being played as far back as 2,500 years ago throughout the Persian empire. But here's the problem - - 2,500 years ago, much of this entire region was the Persian empire, including present-day Azerbaijan and Iran. With polo lovers in China, India and Afghanistan also claiming this sport is their own, it's easy to see why historians say the true origins of polo may forever be in dispute. Reza Sayah, CNN Tehran.
LAKE: Coming up, it looks like a dress straight out of a fairytale but it's real and belonged to Princess Diana, and today it has a new owner.
LAKE: A dress which belonged to Princess Diana has been sold at auction. The romantic fairytale dress was said to be one of Diana's favorites. It was designed by David and Elizabeth Emanuel who also created the late princess' wedding dress. The ball gown is made of white organza and is adorned with gold sequins, crystals and pearl beads. It was purchased by a (Museum Amid Siers Bidding). The price tag? Not so dreamy at around $167,000 for one dress.
One last check on U.S. markets. We had some selling going on there. The rally on Wall Street paused on Tuesday, the Dow Jones Industrial average as you can see dropped below 16,000. The S&P 500 and the NASDAQ also slipped. Investors are awaiting economic reports this week for clues to the Federal Reserve's timing on when to scale back on economic stimulus.
And that's "Quest Means Business." I'm Maggie Lake in New York. We'll see you again tomorrow.