01/12/2015 Asia Business Report

A vote of confidence for China's currency as the IMF adds the yuan to

its elite global club. Sweetening the deal or sour grapes?

We look at the winners and losers in Beijing's trade deal with Australia.

Good morning, Asia. Hello, world. Glad you could join us for this

Tuesday edition of Asia Business Report. We begin with International

Monetary Fund, and this multilateral organisation has decided to include

the Chinese yuan as one of the five currencies it uses to value the

price of emergency loans. The yuan joins an elite company which

includes the US dollar, the British pound, the euro and the Japanese

yen. It won't have much of an impact on global markets but it is seen as

a powerful symbol of the reforms taking place in the Chinese economy.

The addition and inclusion of the yuan in the basket of currencies is

recognition of the significant reforms that have been conducted, of

the significant opening up of the Chinese economy, of the financial,

more market-driven principles that are being used by the Chinese

authorities going forward. That is clearly symbolic, in a way, of all

those reforms, which is why I associated the yuan's inclusion with

the reforms conducted and to be continued.

What will be coming a reserve currency mean for the Chinese yuan?

So, they did it. The International Monetary Fund has included China in

its elite basket of special currencies, and this could open the

door for the Chinese yuan to be used far more widely on international

markets. Keep in mind that currently the Chinese yuan is only used in

around 2% of international transactions. Compare that to the US

dollar, which makes up around two thirds of the global transactions in

terms of how much money changes hands every day around the world. So

you can see why China was so keen to be part of this special club of

international currencies. Being a part of this basket means that it

may become much cheaper for China to borrow money, and, as more countries

start to use the Chinese yuan as their reserve currency, it can help

to stabilise the currency. But at the same time, even though this is

unlikely to go into effect until sometime next year, analysts already

warning that the global economy will become far more exposed to what is

happening in China than it ever has been before.

News just in at this hour: New data from China shows manufacturing

output shrinking more than expected in November. The official

manufacturing managers index now stands at 49.6. Anything below 50

indicates contraction. The sector has now been shrinking for four

months in a row. India is now outpacing China,

particularly in domestic demand and manufacturing activity. Its economy

expanded by 7.4% between July and September, and that is compared to

the same period a year ago, and that is better than expected.

Japan's largest media group has completed its purchase of the

Financial Times for 1.3 billion US dollars. It is the biggest

international acquisition by Japanese media organisation. The top

executives of companies have been talking, and Nikkei's executive said

its intention was to go global and digital. Online prescriptions now

account for 70% of the iconic newspaper's readership while

questions have been raised about independence. But their CEO says

it's a good thing. We've obviously thought very hard about it. Nikkei

made it clear that editorial independence and integrity will

remain unchanged. They've written a number of very clear and robust

letters reassuring us about that. I've known Nikkei for many years in

my time in Asia and I'm clear they will keep that commitment. There's

so many players, the competition is very fierce, so when you have a

trusted guide like the FT and like Nikkei, that's very powerful. People

turn to those trusted guides and brands when there's so much

information. So they are clearly the dominant business news media brand

in Japan. Obviously more broadly in Asia, too, and we see ourselves

playing that role internationally. South Korean farmers and activists

have protested against the free trade deal which has now been

approved by the government. The agreement removes billions of

dollars of tariffs but demonstrators, as you can see right

here, blamed the government's policies for a dramatic dip in the

price of rice and vegetables. As the Chinese central bank meets

today to discuss monetary policy, it's expected to keep them hold

despite the slowing economy, and one way Australia is trying to kickstart

growth is through a free trade agreement with its largest trading

partner, China. The deal cuts tariffs on many Australian exports

but in return Chinese companies and workers will get greater access to

Australia. Phil Mercer reports from Sydney.

Demand from China has helped Australia to power through troubled

economic waters. A Free Trade Agreement is promising a great

opportunity, and one Australian industry that's hoping to take

advantage of the deal is showcasing its wares on an island on Sydney.

Last year, Australia sold wine worth $160 million to China, and exporters

hope that figure could double or even triple in years to come.

Australia makes some of the best wine in the world, and increased

sales to China are the big prize. Under the trade agreement, tariffs

on imported Australian wine will be phased out, and produces here on

Wine Island and beyond will be hoping to cash in. I think this is a

mixed golden era for Australian wine. We've been in the doldrums, no

doubt, and this will help drag us to where we should be and have been.

But trade unions fear the deal could cost thousands of Australians their

jobs and drive down wages because imported labour could be paid less.

There are concerns, too, that their skills might not be up to local

standards. The agreement will allow more Chinese migrants, including

those with trades, to work in Australia on temporary permits.

There are about 170,000 foreign workers currently here on the most

commonly used 457 visas. That number is expected to increase, much to the

alarm of the unions. We support free trade agreements but what we don't

support is those agreements that undermine and a road existing

standards and conditions, and the fact that Australian workers should

be the first in the line when it comes to jobs. Despite more than 30

years of experience, and attrition Graham Paterson says he and his

colleagues fear the worst. -- electricity. They are worried about

their jobs. It's not helping that a Free Trade Agreement, which is going

to bring workers from overseas with supposedly the same qualifications

with us, we'll come and take our jobs. But politicians say the deal

with China is critical for Australian jobs in the future. The

deal took a decade to negotiate but its consequences, both positive and

negative, will be felt for years to come.

Global leaders meeting at a major climate change summit in Paris have

vowed to wrap up a deal to reduce greenhouse gas emissions and

overcome the divisive issue of financing, but it's not just

political leaders trying to navigate the way forward. Business leaders

are there as well, assessing the financial and environmental

consequences of whatever is agreed. Tanya Beckett explains.

As the Paris talks begin, the question is, what is the cost of

climate change on businesses? Citigroup says inactivity could

prove expensive. It estimates the cost of doing nothing at $44

trillion by 2060. If sea temperatures rise by five Celsius,

then up to $7 trillion worth of assets could be lost. That's more

than the total market capitalisation of all the companies listed on the

London stock exchange. The White House says in action would cost the

US economy $150 billion a year. 90% of companies on the S over 100

index identify climate risk, such as extreme storms, flooding and

drought, as a current or future threat to business. Insurance

company Munich really had to pay out $130 billion on climate change

related losses in 2012. That is expected to rise in coming years.

But climate change risks continue to be very difficult to quantify.

Currently very few companies let them influence their business

decisions. Is it time that changed? That report from Tanya Beckett.

Let's have a brief look right now at the markets:

Thank you so much for investing your time with us. I'm Rico Hizon. Sport

Today is up next. MPs will vote on Wednesday

on plans to extend British