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QUEST MEANS BUSINESS
Professor Outlines The Dire Economic Impacts Of Obama`s Health Reform; Google Pulls Out Of Mainland China, Sets Up Servers In Hong Kong
Aired March 22, 2010 - 15:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, CNN INT`L. ANCHOR, QUEST MEANS BUSINESS: Yes, he can. President Obama pushes health care reform through Congress. The bill comes at a cost.
A successful strike, but for whom, BA and strikers both claim they had the upper hand.
And they talk money. Was it a crime? Man in Shanghai, they are on trial.
I`m Richard Quest, the start of a new week, where I mean business.
It was at times a bitter battle. The outcome, according to the Democrats, was historic. President Barack Obama has got his health care reform the U.S. Congress. Some people are calling it the president`s first big win since taking office. It comes at a cost for his administration and what a cost indeed. The speaker of the House said it was the great unfinished business of our society, the American society. Now it is just one day away from becoming the law.
Health care reform, depending on your point of view is either about extending treatment to millions of less well-off Americans or it is the denial of individual choice and potentially ruinous cost. And all of it depends on whether you are talking to the supporters or the opponents of the Obama plan. The battle is not over yet. A bill to enlarge Sunday`s health care legislation is due for a final vote in the U.S. Senate in the next few days.
But you need to know, really, how it affects you or how it affects the global economy. And for that we need to look at the detail of it, of what its all about. Now, bare in mind the vastness of it. We`ll come to this one in just a minute, but keep that number in the back of your mind.
What this plan does is extend coverage; 32 million more Americans will be-of the uninsured, will be covered the next 10 years. The law will require these people to buy insurance, and if they don`t buy insurance, then they risk being fined. For those who can`t afford to buy the insurance then, of course, there are government programs put in place to pay for that. So, that is the cornerstone to increase the number of people who are covered by health insurance. And this will be done by the private sector, not by some entity set up by the U.S. government for the purpose.
The cost, 10 years, will be just about $900 billion. That is basically if the passage-basically by the time all is said and done, it will be the best part of $1 trillion.
Now who pays? The money comes from a variety of sources. For instance, there are extra costs on the Medicare, for those who earn over $200,000. There is the Cadillac tax, for those who got a Rolls Royce of health care insurance. And crucially, the CBO points out, the Congressional Budget Office, that there will be savings on the existing Medicare bill. So, a lot of this $875 billion it is believed may well actually be discounted by the revenue enhancers.
All in all, though, the president recognized, never mind the details, the policy principle was historic.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: At a time when the pundits said it was no longer possible, we rose above the weight of our politics. We pushed back on the undue influence of special interests, we didn`t give in to mistrust or to cynicism, or to fear. Instead we proved that we are still a people capable of doing big things, and tackling our biggest challenges. We proved that this government, a government of the people and by the people, still works for the people.
(END VIDEO CLIP)
QUEST: Well, so far, so good. Except the Republicans, in opposition, say they`ll fight against this legislation tooth and nail, right the way through and even after it has been passed. They are even threatening to retaliate and repeal the legislation if they win the majorities in the November midterm elections. It is bitter. It is deep. And it is long-lasting.
(BEGIN VIDEO CLIP)
REP. JOHN BOEHNER, (R) MINORITY LEADER: Can you go home and tell your senior citizens that these cuts in Medicare will not limit their access to doctors or further weaken the program, instead of strengthening it? No, you cannot. Can you go home and tell your constituents with confidence that this bill respects the sanctity of all human life and that it won`t allow for taxpayer funding of abortions for the first time in 30 years.
HOUSE CHAMBER: No!
BOEHNER: No, you cannot.
(END VIDEO CLIP)
QUEST: So, why are we telling you so much detail tonight, about the piece of U.S. domestic legislation, and the significance of it? Peter Morici, professor of international business at the University of Maryland. \
As always, Peter, lovely to see you. The fact is, this may be a piece of U.S. domestic legislation, but it has wide ramifications for the U.S. economy, doesn`t it?
PETER MORICI, PROF. OF INT`L. BUSINESS, UNIV. OF MARYLAND: Absolutely. The president proposes to spend nearly another trillion dollars on health care in a society that already spends far more than the Europeans do on health care. He says he`s going to raise it with taxes and with spending cuts on health care. But all of that is vague, especially on the spending side. It isn`t clear at all that the Americans aren`t going to end up borrowing this and flooding global markets with bonds.
QUEST: Right. Now, if you go down that road, though. Let`s take Medicare, which is the plan for the elderly in the United States. That was just as viciously fought about, in the Johnson administration, it was passed by a small majority. Now it is unthinkable that anybody would even tinker or get rid of Medicare. So, is this not the same, and if not, tell me why I am wrong?
MORICI: Well, it is not the same because Medicare was a very small program in terms of its dollar cost and its impact on the economy. Medical costs were just lower in those days. Americans spend about 18 percent of their gross domestic product on health care. Whereas Britain, it is 9 percent.
MORICI: Health care costs are about double here. You`ve got everybody covered, we don`t.
QUEST: Right. Hang on. Hang on.
MORICIA: Now, if you expand coverage.
QUEST: Let me interrupt you, because I know what our viewers are asking tonight. Are viewers are saying tonight, but hang on a second, Morici, what about the fact of universal health care, which is perceived to be a universal right in most mature democracies, is denied in the United States, until this piece of legislation?
MORICI: Oh, I`m all for universal health care, my gripe with this bill was not that we were doing it. I`m no Republican. But that we weren`t taking on the drug companies, the insurance companies, the tort lawyers and so forth. Taming the dragon-killing the dragon! The way the British have. You know, I`ve got a lot of British colleagues, and they are not-you know who complains about British health care? Americans that don`t want universal coverage. The British don`t complain to me about British health care.
QUEST: Well, we`ll see what they say about that in the forthcoming general election which takes place in four, five or six weeks, whenever.
MORICI: It can always be better.
QUEST: Absolutely. And I think that is one of the truisms of any health care provision. It, quote, "can always be better." But, Peter, let us come back to the economics and the business.
QUEST: The drug companies, it is believed that a lot of this is going to be made up by drug companies savings, but Medicare savings, by that extra tax. You`ve got to admit it is very hard to defend not increasing taxes on those earning $200,000 a year.
MORICI: Well, you have two issues there. Increasing taxes, we probably need more taxes in the United States, but the president has used up, now, all the levers. All the easy levers, between this and what was proposed in his budget, and we still, without this, this health package, would have a $1.5-trillion deficit for the next four or five years. Now, if the costs savings, that he has promised don`t happen.
And these are Medicare cuts that were proposed in the past and never came to fruition, and they are proposing them again. If they don`t happen, the deficit goes to $2 trillion, the taxes are already much higher, we`re headed for a world where we are taxed like the French, but we still have to buy private health insurance and we still have to pay for university education. Americans are getting the worst of all possible worlds.
QUEST: I need to-because I`m going to ask this question in my "Profitable Moment" right at the end of the program. And do you think the closeness of the vote, but the fact that it was passed, is President Obama`s strengthened tonight, or weakened?
MORICI: It is his weakness. He wasn`t able to convince anybody that they really should have this thing. Most Americans were very negative on this proposal. They agreed with you about health care reform, they just didn`t like this package, because the more they looked at it the more they realized the costs cuts are wishes and promises. They want the president to roll up his sleeves and really do business with the drug companies, the tort lawyers, and so forth. And he`s not willing to do it.
QUEST: Peter, many thanks, indeed. Peter Morici joining us as always. Good to have you. You make sense. And we like having you on the program. Peter Morici joining us from Washington.
The Big Board and how it traded, because this is interesting, if you at what actually took place. The Dow Jones up nearly 50 points, just again, up nearly half of a percent. We are so stuck in that range, of 10,700, to 10,800. We don`t seem to break out of that much at all. But it would-what`s interesting there, of course, is the lack of, if you like, movement, as a result of-this mammoth health care. It doesn`t seem to- we`ll talk about pharmaceutical stocks later.
You need to know how the European markets traded. This is what happened in the Euro bourses. The markets all closed, pretty much flat, after spending the day in the red. Commodity prices did have an effect. So, for example, the London FTSE was barely changed, slightly lower. Energy stocks took most of the points off the index. The price of crude oil came off from an earlier low. They were-I would say, it was all commodity and bank related. Look at the Xetra DAX, I mean, slightly higher. It has been down more than 1 percent. Commerze Bank and Deutsche finished lower. Bank stocks were slipping.
Oh, now, this is interesting. The IMF official, John Lipsky, good friend of this program-John Lipsky, deputy managing director of the IMF, has been talking about the difficulties of major economies to deal with their budget deficits. Now, when Mr. Lipsky speaks, we all listen. And I think that was one of the impacts on banking stocks.
You know, we could make a great deal about this, but frankly the numbers tell their own story. If you look, Paris was very little changed; Greece, of course, much in the news once again. Moving on we see-oh, well, that tells its own story. On a day when the Xetra DAX was just up a little bit, Greece is down. And the reason this happened was very simple. There is still no resolution into the Greek deficit problem. And worse than that, rumors that Angela Merkel, of Germany, is actually now very firmly against any form of bailout for Greece. That`s the way the markets traded.
Now, the news headlines, you are up to date with the business world. Fionnuala is at the CNN News Desk.
ANNOUNCER: This is CNN Breaking News.
QUEST: To breaking news now, and the report of course, on Google, which has announced the company will shift, or has shifted, its search engine for China from the mainland to off the mainland and into Hong Kong. Google is balancing the stance, the company stance against censorship with its desire to profit from the growing Chinese market. Now, you`ll be well aware that Google, for a couple of months now, has been at loggerheads with the Chinese government over hacking into the search engine. It has also been, at various different disputes over levels of censorship and it has threatened to pull out of China.
Well, now if you go to Google`s Chinese web site, according to the Associate Press-this I believe is what you should be looking at, Google.CN. It is basically there, directing you-Google.CN directs you to the other server, which is now in Hong Kong, which is-it is described as Google Search in China`s New Home.
Google will maintain a technology office and a sales office in China, in mainland China, which it will use to form, to actually do business and to sell advertising on its English language spaces. All right, we`ll have more on Google later in the program.
In just a moment BA, Lufthansa, Icelandic Air, Alitalia, is there an airline that isn`t on strike? In a moment Jim Boulden is looking at the escalating war of words in the battle between BA and its cabin crew.
QUEST: British Airways cabin crew are warning the airline this was just for starters. The striking air stewards and stewardesses will return to work on Tuesday following their three-day walk out. They`ll be out again on Saturday and this time the strike will last four days. Unite is trying to force BA to drop staff changes that the union says threatens jobs and pay.
The airline says it has operated more flights than it expected. And the union says that many of the planes that did get off the ground weren`t carrying any passengers. And talking of passengers, you are not even safe if you avoid British Airways all together. Iceland air flights were off today, as mechanics went on strike over pay. In Italy Alitalia canceled flights because of delays-to delayed others. Pilots, flight attendants and baggage handlers were staging a four-hour walk out at the restructuring. Baggage staff were also trying to force the airline to give them a contract.
Oh, and there is more misery. Lufthansa pilots say they are going on strike next month. It will be four days. It starts on April 13 and it all follows the one-day stoppage in February. The German union said talks have failed with the airline to produce an agreement.
So, let`s just talk about the big one of today. BA estimates the strike of the last three days has cost it $32 million. And that is the first stage of the planned disruption. Jim Boulden looks at how the strike panned out.
JIM BOULDEN, CNN INT`L. CORRESPONDENT (voice over): A three-day strike and three days of defiant rallies held by Unite, the union for the majority of British Airways cabin crew.
UNIDENTIFIED MALE: Willie, Willie, Willie!
PROTESTORS: Out, out, out.
BOULDEN: And it has gotten personal. With many cabin crew and union leaders accusing BA CEO Willie Walsh of wanting to break the union.
TONY WOODLEY, UNITE UNION: This is one of the most serious disputes that we`ve seen in the United Kingdom for decades. I mean, we have a company that unfortunately doesn`t want to negotiate, really. I think it wants a war with our people, and a war with our union. And that`s disappointing.
BOULDEN: Woodley spent several days last week locked in talks with Walsh. They could not agree on a way to stop the strike. Woodley said BA was not negotiating, but imposing a poor deal for the cabin crew.
Observers note that BA`s fixed costs are much higher than more nimble rivals. And see this dispute as a major stand by Walsh to cut costs in ways previous management did not.
As you might expect the two sides have vastly different views on how effective the strikes has been.
(On camera): The union says it still has very strong support from its members with thousands of cabin crew on strike, and hundreds manning four picket lines around the airport. BA says a little more than 50 percent of cabin crew reported for work over the weekend. So that some of the staff who volunteered to fill in were sent home. That allowed the airline to reinstate some of the flights that were originally canceled.
WILLIE WALSH, CEO, BRITISH AIRWAYS: It`s great to see them walking through the terminal wearing their uniform, wearing it with pride, and they are turning up to keep BA flying.
BOULDEN: Also, BA says there were no signs of flights being disrupted by unions around the world acting in sympathy. BA now estimates that the three-day strike will cost it roughly $30 million. Less than first feared. Another blow for the airline, people booking away from BA out of fear of further strikes; there is a four-day strike starting this Saturday. More strikes to come after Easter. Jim Boulden, CNN, London.
QUEST: So, it is now official, Google is pulling out of its servers in China and moving them to Hong Kong. What did this mean for what could have been a beautiful relationship between the worlds most power search engine and the world`s most populous country? We`ll talk about that in just a moment. QUEST MEANS BUSINESS, good evening to you.
QUEST: Google says it is still providing services to user in Mainland China and Monday it stopped censoring search results in defiance of the Chinese authorities. The web company has just announced its cooperate blog, that user of its Chinese language, Google.CN, are now being redirected to the Hong Kong web site. AP says that it will shift its search engine for China off the mainland to Hong Kong. All part of what it believes is a compromise. The confrontation of the past few months pitted the world`s most power Internet company against the world`s most populous country.
The row between the two have been adding friction to already strained relations, mainly, of course, over trade and currency and the appreciation or failure of the Chinese currency. There is a lot at stake here. China is the world`s biggest Internet market. There are 380 million users and more crucially, Google has a third of Chinese search revenues.
But when it comes to doing business in China, Google is not the first well-known company to challenge Beijing-at its cost. Levi Strauss stopped contracting its manufacturing to Chinese factories in the 1990s. The company said it was acting because of human rights abuses and violations. In 2008, it did return to China, saying it hoped to make a difference and actually improve things.
Time Warner, let`s go there. Now, this is a company we know something about. Time Warner is the parent of CNN. It backed out of a project to invest in cinemas in 2006. And cited some strict tight restrictions.
For the online company, eBay, now there, this is an interesting one. Tough competition, some said unfair competition; eBay had a fast start in 2003. It was outmaneuvered by a rival auction site. So, 2006, packed up and left.
For more insight, John Palfrey joins me. Professor at Harvard Law School, author of "Access Denied: The Practice and Politics of Internet Filtering". John, the professor, joins me now.
John, was it inevitable that Google would take the steps that it has done? And if it has done, has it shot itself in the foot?
JOHN PALFREY, PROF. HARVARD LAW SCHOOL: I don`t think this was inevitable at all. It is actually quite a remarkable decision by Google. The recent trajectory though, over the last few months, has been toward a clash of this sort. And I actually think this may prove to be an elegant solution for Google in terms of how it can operate and how it can access the world`s largest and fast-growing Internet marketplace in the world.
QUEST: But help me understand. Have they dressed up principle- search for profit as principle. Was it really that bad, what they were being asked to do? The questions of censorship, or the questions of hacking, or the environment that they were facing?
PALFREY: I think there were two very important competing concerns here within Google. One was accessing this market, another was how do they reconcile the kinds of thing they were being asked to do with their corporate motto, with their corporate ethos. I don`t think there is any dressing up here. I think this is actually a struggle playing out in real time. And I think it is actually a very interesting out come.
QUEST: Right, but if you are right. And I don`t doubt what you say, then it is inevitable that this will be repeated. It is merely a question of how mendacious any company, or how hypocritical any company wishes to be.
PALFREY: I do agree that this is not the last we`re hearing of this story, not with respect to Google, not with respect to other big companies, like Microsoft and others. I would look to the Global Network Initiative, which is an effort of several companies, Google, Microsoft, Yahoo, to figure out how to reconcile these concerns. And it is not just China. This is happening in dozens of countries around the world where censorship and surveillance by the government are putting pressure on these companies when they seek to operate there.
QUEST: The nice solution of resting in Hong Kong, but also then giving that access via the Google.CN. Do you think that is a satisfactory solution? Or is it just a clever way around?
PALFREY: It certainly sounds clever, and the best form of it is, it is and elegant solution to the problem. I think, on the other hand, China has to be looking at do they really want to have all of their companies that are seeking to do business from elsewhere locating outside of mainline China, in Hong Kong, in order to access their mainland market. That doesn`t seem to me likely to be tenable. But I think for an interim step it will be interesting to see how it plays out, and kudos to Google for finding this way to proceed.
QUEST: A simple question. Will China care that Google`s taken this step?
PALFREY: I think China cares a great deal. I think that the notion of operating an uncensored search engine in Beijing was really a slap in the face to the Chinese government. They were not, I don`t think, responding in a way that made it sound like they were really happy about it. So, I think they needed Google to make some kind of concession. I don`t think, though, that the Chinese government wanted Google to pull out all together.
I think there is an extent to which this is an issue of economic engagement and it could be come a big trade issue. So, I think it is possible that this allows the Chinese to save face and allows Google to have a way to operate in this large market. That`s the best-case scenario here.
QUEST: But there is a-you know, you say tom-a-toes, I say tomaato, type thing. They are talking different languages. We come back this basic point, whether it is Google, Yahoo, eBay, Levi, Time Warner, it doesn`t matter. They are all seem to be destined for dispute.
PALFREY: I think this is an issue of globalization. And the notion of operating in a global marketplace, where there are very different views about human rights. And Google, to be clear, thinks of this as human rights issues, speech, surveillance, privacy and so forth. And I think the challenge here is how can you operate in a couple of hundred countries in the world using the same service. I don`t think it is possible to do that. But I do think it is possible to walk the line. And I think it will take this kind of back and forth with the Chinese government to make it possible. And I think this is actually a very positive step forward in that respect.
QUEST: Professor, many thanks, indeed. Come back again. You are most welcome to help us understand these really difficult issues. And we appreciate your time. Many thanks, indeed, Professor John Palfrey, joining me from Washington.
Now, we weren`t going to do Twitter or we weren`t going to do e- mails, but it is well worth it. This has happened while we`re on air. What do you think about Google`s decision, at RichardQuest. I`ll show you the actual full address in a moment. At RichardQuest in Twitter, Quest@cnn.com, for the e-mail address. We`ll show you it after the break.
When we come back in just a moment, on trial, of charges of bribery and industrial espionage. Now there are four employees of Rio Tinto, surprising admissions. It was the first day in court. This is QUEST MEANS BUSINESS. Good evening to you.
QUEST: Good evening I`m Richard Quest, QUEST MEANS BUSINESS. This is CNN.
There is more drama in China at the Shanghais trial of four Rio Tinto employees. They are charged with bribery and stealing commercial secret. You`ll know that much from recent reporting.
An attorney for one of the men says, they have acknowledge taking money and this is the proof of it. They are saying it was a gift or a loan and not a bribe. Therein of course lies the details of this case.
Let`s have some background to bring you up to date. Last July 2, three Chinese nationals were initially detained on suspicion, of stealing state secrets. Now later on those charges, they were changed to bribery and infringing commercial secrets. That of course raised the ante quite considerably. The men have been held for months. They`ve had no access to lawyers or family before they were formally arrested in August.
Charges were then filed in February. China has warned against politicizing the case. And has said its strained relations between Beijing and Sydney in Australia. CNN`s Emily Chang is in China and she has the story.
(BEGIN VIDEO CLIP)
EMILY CHANG, CNN INTERNATIONAL CORRESPONDENT (voice-over): Australian officials head into a Chinese court house for the long awaited trial of four Rio Tinto employees. Australian executive Stern Hu and three Chinese nationals are charged with bribery and stealing commercial secrets.
VICTOR GAO, CHINA EXPERT: Apparently in all the charges involved very hefty amount of bribery in two way traffic.
CHANG: A lawyer for one of the Chinese defendents admits to taking money. But he says it was a gift or a loan, not a bribe. While a few Chinese journalist were given to access, international media was turned away. The case has been shrowded in secrecy since the arrest last July which happen just after mining giant Rio Tinto rejected a major investment from Ginalco, China`s state owned aluminum company. And iron ore price talks with Chinese steel makers fell through.
It shocked the multinational business community in China and strained China-Australian relations. China says the case shouldn`t be politicized. Prime Minister Kevin Rudd had this response.
KEVIN RUDD, AUSTRALIAN PRIME MINISTER: China`s legal system is different to the China legal system. The sad thing besides this the world will be watching how this particular court case is conducted.
CHANG: While his colleagues are on trial in Shanghai, Rio Tinto CEO Tom Albanese is in Beijing, attending the China development forum. It`s an opportunity for business leaders to get face time with Chinese government officials. He said this about the trials.
TOM ALBANESE, CEO, RIO TINTO: This issue is obviously of great importance to us. There is as any company operating in China. I can only say that we respectfully await the outcome of the Chinese legal progress.
CHANG (on camera): Rio Tinto has said its employees did nothing wrong. But the company is making obvious efforts to rebuild its relationship with China. Recently appointing a new China head with long term experience in the country. And forming a joint venture with Ginalco to jointly develop an iron ore reserve in Africa.
CHANG (voice-over): The Rio Tinto trials could be over within days though the verdict could take much longer, most Chinese prosecutions and in conviction. An analyst say they believe this case won`t be any different, Emily Chang, CNN, Beijing.
(END VIDEO CLIP)
QUEST: A rather major story tonight, health care reform has now been passed by the U.S. Congress. The question of course is the cost. Who pays for it? What it does for the deficit, we`ll talk about that after the break.
QUEST: At last and probably glad that we can`t go into this anymore detail, with such an enormous amount. CNNmoney.com with Poppy Harlow has a huge amount of detail on this. Many thanks, Poppy, for getting to grips with the vast sums on this.
The -- you may be wanting to know how pharmaceuticals and insurance stocks have reacted. After all, surely they must be affected -- it has more health care, it has more health care provision, Alison Kosik joins us now live from New York.
When we talk about the insurance company and the drug companies, what was the movement of them today and if so, why?
ALISON KOSIK, CNN CORRESPONDENT: I`ll tell you what, Richard, for insurers and drug makers, the bottom line for them is that it means is more business for them. This bill is going to bring them more customers and investors on Wall Street are definitely seeing that as we watch shares of big pharma companies. They are climbing after the passage of that health care reform bill that you are talking about.
I`m watching Bristo Myers, Merck, and Pfizer are all to the up side right now on this hope that expanded health care is going to lead to more customers and more profits.
Here`s an example for you Richard. The bill should increase sales by expanding drug insurance coverage, making these company`s medications available to more people.
KOSIK: And on top of that, this bill is going to extend to 12 years, the period of what`s connote as market exclusivity for makers of what are called biologic therapy. These are the substantially more expensive therapies that manufacture the traditional medicines. It means that there is that patent protection that is going to last a lot longer which means more money for these drug makers. Richard.
QUEST: But the drug makers, some -- they bare some of the cost of all of this as well as part of this whole plan?
KOSIK: They will they are going to wind up paying more fees of their profits. But then again this is a big win for pharma in many ways. I mean if they are able to protect their patents for that much longer before these drugs go to generic, that`s big money. And this is something big pharma has fought for for a long time.
QUEST: So, Alison, pull some strings together for the dear viewer who might be somewhat confused by all of this now. Is the general feeling and I`m not asking you to take sides in this, but is the general feeling on Wall Street that this bill is a good thing for corporate America or not?
KOSIK: You know it would be too early to really take a stand just now. I mean investors actually were really worried this morning. We saw a futures down over a 100 points for the DOW. Now obviously we are in the green but I think they`ve had time, investors, meaning have had time to digest this.
KOSIK: And figure okay, it`s going to be all right. But I mean the proof is really going to be Richard, in a few years. When all of this sort of starts being put into play and we see how things really shake out. But right now investors seem to be pretty okay with it. But you --
QUEST: Alison, many thanks indeed you made sense and helped us understand this difficult issue. Many thanks indeed. We need to turn our attention back to China.
Where Google says its providing services to use in mainland China. And it is doing this via itself, it is now in Hong Kong. The word company just announced on its corporate blog that uses of the Chinese language Google.cn will be directed to the Hong Kong Web site. We`ve woken up John Vause in the middle of the night where it is at the moment in Beijing, good morning to you John, this was expected. But it is still nonetheless pretty dramatic for a company to take this action.
JOHN VAUSE, CNN CORRESPONDENT (on phone): Yes absolutely. It shows just how serious Google is taking this issue. Let`s go back to where all of this started, January 12, Google made this bombshell announcement that it would stop censoring the search results because it says the gmail accounts of human rights activist and the company itself has been the victim of cyber attacks originating from within China. They never said the government was responsible for that, no one has ever made that link. Although people did. But that was never proven.
And so now they have these negotiations for the last couple of weeks. They`ve been going with -- they`ve been going back and forth with the Chinese government. At times the Chinese government denied doing any negotiations. And when they finally come down to this arrangements which they have now -- effectively Google.cn, which was providing the search rebuilt by the servers. By the company servers here in Mainland China, well that is gone. Everything is going to Google.com.hk.
And that means that end of that users, be that they are using Chinese characters or English or whatever can actually get --
VAUSE: Uncensored search results via Google.com.hk. Let`s see how long that last. We do a quick check a couple of minutes ago, we are getting uncensored results here via .com.hk. That`s never happen before. It seems that this may have caught the authorities here a little by surprise. But it won`t take long before they start censoring those results. Richard.
QUEST: Right, and they will do that of course from .com.hk via the .cnn -- I`m just wondering though, Google`s competitors, in China -- there are several of them, they are extremely powerful. And to some extent, they have to repent. They must be absolutely delighted at this turn of events.
VAUSE: Well the one in particular that`s delighted would be Baidu. That is the local leading search engine here in China in mainland China. It is a home grown search engine and since January 12 when Google first made this announcement, Baidu shares have gone up almost 50 percent. The advantage (ph) that Baidu now has over Google is that Baidu is now trying to go international. It`s trying to expand its business overseas and what it can now offer is a complete and total package to anybody who wants to do business around the world, including mainland China.
Google can no longer really offer that. They say they`ll keep a sales office here, but it does not have any servers, any search providing facilities within mainland China. Baidu does, so Baidu over time, now has a distinct advantage over Google when it comes to try and put together some kind of international sales package if you like when it includes mainland China. There`s almost 400 million Internet users on mainland China, so it is the biggest and it is the fastest growing Internet market right now Richard.
QUEST: All right, finally, John, trying to work out what time it is for you in the morning. What time is it?
VAUSE: Quarter to four Richard, always lovely to speak to you at quarter to four in the morning.
QUEST: I promise you John, we won`t make a habit of it. John Vause, I wish I could say go back to bed, but your news gathering duties requires you to stay for some hours to come. Listen, Guillermo Arduino is at the world`s weather center, John Vause in Beijing, Guillermo, John starting instead (ph) our weather has warmed up very nicely in Europe. What have you got for us?
QUEST: Many thanks. Guillermo is at the world weather center, many thanks Guillermo. I was just quickly looking at one e-mail to firstname.lastname@example.org from (INAUDIBLE) say on the Google question, it has certainly positioned Google as a truly ethic company amongst a bunch of companies who are considered greedy and selfish. I`ll try and get to some of your twitters in just a moment.
When we come back, the woman who people turn to in need, not because they need it, but because their pets. In a moment, a world at work.
QUEST: Health care a huge political issue. We talked about it on this program tonight, who`s got it, what happens when you haven`t (ph). Tamsin Durston doesn`t approach it from a political standpoint. Well, she just provides the care people want when they have nowhere else to go. Now, I`m not talking about those pesky humans who get in the way. I`m talking about health care for pets. When it comes to looking after the furry creatures, (INAUDIBLE) world at work.
TAMSIN DURSTON, NURSE MANAGER, THE BLUE CROSS: Every day is different. You don`t know what (INAUDIBLE) at the beginning of the day. You might get an emergency and you`ve got to just adapt (INAUDIBLE) comes in and just do your best (INAUDIBLE) dealing with at the time knowing that there`s a whole sort of (INAUDIBLE) people desperate for their animal to have successful treatment.
Really we`re not just here for animals, but people as well, because they love (ph) animals and they basically want to help them and that`s the really important part that our clients give (ph). This is (INAUDIBLE) He`s a lovely cat but he (INAUDIBLE) lesions, skin lesions on his ears so we decided the best option for him was (INAUDIBLE) both of the ears.
I think a veterinary nurse is a physically demanding job and it is very emotionally challenging, particularly because some of the things we see can be very upsetting. You do have to keep some kind of detachment from it so that you can successfully nurse them. It`s nice to see him healing really well and going home and looking (INAUDIBLE) because he`s a lucky little man.
This is our cat kennel and this is where a cat stays when they`re in hospital and we usually just have day patients here, surgical patients so all of these guys here are in for their procedures. (INAUDIBLE) years old and he`s here to have some dental surgery today. We`re there to give that patient everything it needs from the minute it walks in the door to the minute it leaves.
So, that would include any diagnostic tests, preparing that animal for surgery, giving it any medicine it needs while it`s here, monitoring the anesthetic to make sure it`s safe throughout the surgery, all these different areas. It`s such a (INAUDIBLE) have to know about everything.
You`ve got to be able to apply yourself practically to different species and different kinds of animals as well. If one animal is very stressed, you have to change the way you behave with that patient. (INAUDIBLE) slight heart murmur and we`re carrying out this scan just now just to make sure that there`s nothing, there`s no reason why we shouldn`t go ahead with the anesthetic.
We want to make it as safe as possible. Veterinary nursing is a hugely rewarding job. It`s (INAUDIBLE) You`re nursing something back to health, I think you -- I mean (INAUDIBLE) when they get better and they go home and back to their families, back to being the pet who`s in that family, it`s wonderful.
QUEST: And around the world, they all said ah. Now a profitable moment after the break.
QUEST: Tonight`s profitable moment, much of our day here at QUEST MEANS BUSINESS has been spent discussing the U.S. health care vote and its importance as you`ve heard us talk about at length tonight, especially when it`s seen from outside the United States. Did the closeness of the vote affect President Obama`s perception of power.
Well, you heard Peter Morici (ph) say that he thought it showed the weakness. But bear in mind, Obama won, which suggests strength, only just, which argues for weakness. You can rapidly see, I can make a coherent argument with you for either answer. But what does it say about the country that is only now putting in place universal health care, decades after many countries like Canada and those in the EU had such protections? Well, we leave the politics to others on this program.
On the business front, it`s a major overhaul to a significant part of the economy. According to the OECD, the U.S. spends more than 60 percent on health care but changes here will be felt by drug companies, hospitals, insurance companies, far and wide in the years ahead. This will be feeding into the economic change which everywhere you look at it, it was a momentous move.
And that`s QUEST MEANS BUSINESS for tonight. I`m Richard Quest, whatever you`re up to in the hours ahead, I hope it`s profitable. AMANPOUR is after the headlines.
HALA GORANI, CNN CORRESPONDENT: I`m Hala Gorani at the CNN center and coming into the International Desk here are your headlines. Google is making a big shift in China. The company has just announced that users visiting its google.cn site are being redirected to Hong Kong-based servers. Google says this offers an uncensored search in (INAUDIBLE) Chinese physically designed for users in mainland China. There`s been no official reaction from the Chinese government.
U.S. President Barack Obama is planning to hit the road later this week to promote the new health care reform act. Mr. Obama is expected to sign the measure into law tomorrow at the White House. The U.S. House of Representatives passed the bill Sunday after a long and often bitter debate.
The Roman Catholic church is facing more embarrassment following new allegations of sexual abuse in Germany. Lawyers say there are hundreds of cases across the country. The most recent involved six clergy members from the pope`s home state of Bavaria.
U.S. Secretary of State Hillary Clinton says America`s support of Israel is quote rock solid, but speaking before the country`s biggest pro-Israeli lobby today, she defended the U.S. call for Israel to halt construction in largely Arab east Jerusalem. Clinton is meeting with Israeli Prime Minister Benjamin Netanyahu who is to visit President Barack Obama at the White House tomorrow, Tuesday.