this is the business briefing. i'm sally bundock. a new year with fresh hope on trade — will positive comments from the us and china translate to a resolution to the conflict between the world's two biggest economies? china insists its belt and road initiative is purely an infrastructure programme to boost trade and prosperity. but critics are warning of, quote, "debt—trap diplomacy". and on the markets: this is the first day of trading 2019. the japanese market is closed today but there is a mixed picture in asia. the new year is beginning with new hope for us—china trade war.

the leaders of the world's two biggest economies have both made positive noises in recent days. president trump went as far as to say "big progress" was being made over the stand off that is at the top of investors' minds. last year the united states slapped tariffs on $253 billion of imports from china amid president trump's concerns over trade barriers, subsidies and alleged technology theft. china retaliated with taxes on $110 billion of us goods — including soybeans, liquefied natural gas, chemicals and some food items. but with the two countries in the middle of talks the us suspended an increase in tariffs that would have seen the levy on $200 billion of goods go up from 10% to 25%. let's get more on this story.

aidan yao, china economist at axa investment managers joins me now from hong kong. welcome. what is your reaction to the comments we have had over the last few days from the us and china. how positive can we be?” last few days from the us and china. how positive can we be? i think it is very much turning into a binary eventin is very much turning into a binary event in respect to the outcome of trade negotiations over the next few days. the two most likely outcome is a bad there is a permanent ceasefire with tariffs of the table but that is contingent on negotiations over the next three months. the alternative outcome is a further escalation from 10% to 25% on tariffs. the chance of those two outcomes are even. it is very much

in ourview outcomes are even. it is very much in our view unpredictable. since the gee 20, the large and is —— latest information allows us asked to provide positive predictions. but looking at the potential outcome, it has all been symbolic and cosmetic in nature whereas the substance of trade negotiations are yet to be developed over the next 90 days. at this point we have not changed our base wine view that the tariff will rise but the odds of an all—out trade war have reduced. in the meantime, what impact is having? focusing on china, the latest manufacturing data is still wea kest the latest manufacturing data is still weakest in 2017. can we draw

conclusions that this is all about trade tariffs? not really. the chinese economy has slowed since the second half of 2018 and if you look into the detail, most of that is domestic. i would argue that essentially on the back of a tightening of the monetary policy as ageing has been using as a leveraging campaign since 2016. that is now starting to bite on the real economy. the trade tariff does not have that much economic impact. china's trade with the us has continued to increase because the us has been frontloading there are exports trying to eat the imposition of tariff. so far we have seen the trade war impacting financial markets and hurting investment sentiment but not so much on the

economy. i think it will be very different in 2019. eventually these ta riffs different in 2019. eventually these tariffs will start to bite the real economy and we expect that trade will drag on chinese growth going forward. thank you so much for your views today. one flashpoint in us—chinese relations is beijing's massive overseas investment under its belt and road initiative. china insists it's purely an infrastructure programme to boost trade and prosperity. but critics are warning of "debt—trap diplomacy" with us secretary of state mike pompeo accusing china of "predatory economic activity". the biggest project under the bri banner is the china—pakistan economic corridor, involving $62 billion of infrastructure spending. but as secunder kermani reports from islamabad, questions are increasingly being raised about the level of debt cash—strapped pakistan is building up as a result. this is the main road connecting

pakistan to china. it is nearly 1000 kilometres long but single lanes are often clogged with traffic. to reduce journey often clogged with traffic. to reducejourney times, a new highway is being built along this stretch with the help of a loan from china. it is part of a broader series of chinese funded infrastructure and energy projects. but china pakistan economic corridor. for both countries, the advantages are clear. through this new road network, china will be able to access the arabian sea and the pakistani post, cutting import—export time. but pakistan is getting much needed investment. these projects are worth over $60 billion total and there are concerns about how the country could ever pay

that money back. the chinese relationship... speaking on hardtalk, the pakistani finance minister said he was not worried by the level of chinese debt. less than 10% of pakistan's foreign debt is owned by the chinese right now. 90% is non— chinese. why has this question never been asked about which saucer which country has lent money to pakistan? why is it suddenly a source of interest, how much money has come from china? but the cost has helped to drive pakistan's trade deficit and there are still doubts about how viable projects will be. the focal point of chinese attention is this port that lies ina chinese attention is this port that lies in a province suffering a low—level insurgency. meanwhile, some pakistani visit —— businesses

have their own fears. they had been concerned about the fact that there could be special economic zones where chinese producers with the same goods produced by a pakistani couldn't calm and force competition. pakistan says it wants to revive the project. there are also calls to increase transparency over the terms of previous deals. we all know 2018 wasn't great for shares. it was rather grim when you look at the statistics. what is in store for 2019? let's go to our asia business hub and rico hizon. happy new year, rico! hgppy happy new year to you! nice to see

you. what have people been saying to you. what have people been saying to you about the year ahead? the big question is if it will be more of the same? fears of the meshing prospect, rising interest rates, tariff worries. earlier today i spoke to someone, jim rogers, and askedif spoke to someone, jim rogers, and asked if the strait conflict will be resolved. good news is going to come. but then later in the year, donald trump will go back to protectionism is. at heart he is a protectionist. the people around now a protectionist and they think the trade wars are good. they are not. at mrtrump—kim trade wars are good. they are not. at mr trump—kim fears smarter so he will come back later in the year. —— however mr trump thinks he is smarter. there are worries that the us economy could suffer. why the end of the year we will be in trouble and we will have the worst financial

problems in my lifetime. bigger than 2008. there was big problems than. since then big debts... it has gone skyhigh. it will be worth. the debt is so much higher. the american central bank alone has increased its debt by 500% in ten years. central bank alone has increased its debt by 50096 in ten years. and crypto currencies that were stellar performers in the first half of last year but folded in the second half. this is what he had to say about crypto currencies. i think they will disappear. zero of them. governments will not lose control. government... is crypto currency guys think they are smarter than the government and they are our but the government has they are our but the government has the power. and he's a non—traditional investor. this is where he is putting his money on 2019. agriculture, russia, china, chinese stocks. those are cheap

things. but in 2006 he famously foretold the 2008 is financial crisis. millions of commuters will see the cost of their rail ticket rise from today, following a price hike of more than 3%. passenger groups have criticised the government for not freezing fares after a year of disruption through timetable changes, strikes and upgrades. latest figures show cancellations and long delays are at their highest rate in 17 years. our transport correspondent tom burridge has this report. passengers in the north of england

suffered the most in 2018. but across britain, delays and cancellations have risen to their highest level in 17 years. fares are now going up again and passenger groups say we are not getting value for money. it is much easier to swallow a price increase if you get value and at the moment there are still too many trains too late. people are late getting to work on getting home, there are cancellations and i think it is hard to talk about a fare increase when not getting what you pay for. from today, tickets increased by roughly 396 in today, tickets increased by roughly 3% in england and wales. it is slightly smaller in scotland. it means that an annual season ticket from bradford to leeds will cost £32 more. someone commuting from renting to london will pay an extra £140. the rail industry says that 98p of

every pound spent on the ticket is invested back into the railways. todayit invested back into the railways. today it has launched a new rail ca rd today it has launched a new rail card for those aged 26—30 and he wa nts card for those aged 26—30 and he wants the government to act so it can bea wants the government to act so it can be a simpler ticketing system for everyone. the union described the railways is a grossly mismanaged rip—off. government has said that says could rise in line with the law index of inflation if unions agree the rail workers raises —— wages should also increase ata at a lower rate. we will have more on that story in at first. that is with charlie ambler wheezed today. —— story in breakfast. this is the briefing from bbc news. the latest headlines: brazil's new populist president has used his inaugural address to say he'll rule the country with an iron fist. with divisive policies, jair bolsonaro is dubbed the trump of the tropics by some. he's made cracking down on corruption a top priority. here in the uk, a man suspected of stabbing three

people in manchester on new year's eve has been detained under the mental health act. the 25—year—old was arrested on suspicion of attempted murder after the attack at the city's victoria railway station. police said a counter terrorism investigation was ongoing. let's talk about what the global media is grappling with today. now, it's time to look at the stories that are making headlines across the world. we begin with brazil's top—selling paper, folha de sao paulo. it has extensive coverage of the inauguration of the country's new leaderjair bolsonaro. the president says it's time for brazil to free itself from socialism. the financial times takes a closer look at the recent trade and market turmoil. in the commentary section, martin wolf argues the future might not belong to china and, infact, india may take

the global economic lead. the uk's independent newspaper has a picture of the new horizons probe team high—fiving each other. the celebrations kicked off after it was confirmed the space probe had successfully completed a fly past of the icy rock ultima thule. mumbai's business standard has an important mental health story. it claims facebook has been quietly alerting the police if one of its users makes a suicidal post. it comes on the heels of criticism of the company for not doing enough to help those in need. finally, social media went into a bit of a frenzy, according to the south china morning post. the paper says cathay pacific may have had a ticket glitch, which meant that it sold first—class seats for economy prices.