17/03/2017 Asia Business Report


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17/03/2017

Live from Singapore, the essential business news as it breaks and a look ahead to the news that will shape the business day.


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on getting a good Brexit deal for all the UK.

:00:00.:00:00.

Now on BBC News, all the latest business news live from Singapore.

:00:00.:00:12.

$65 billion, the size of the deal Saudi Arabia is closing with China.

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We look at what is in it for both sides. And what will happen to US

:00:22.:00:26.

companies doing business with China if Trump follows through on his

:00:27.:00:38.

campaign promises? It is Friday, everyone. Good morning, Asia, hello,

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world, glad you could join us for this edition of Asia Business

:00:44.:00:48.

Report. I am Rico Hizon. We start off with Saudi Arabia's King Salman,

:00:49.:00:52.

he is visiting Beijing and hasn't come empty-handed. The world's

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largest oil-producing state has signed deals worth up to $65 billion

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to cement ties to the world's second largest economy. That is a

:01:02.:01:04.

significant amount but where is the money going to? That is a question I

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posed earlier to an analyst. It is a big number indeed, but there are no

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details behind it. What we do know is that a lot of that was letters of

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intent, MoUs, a sickly are very preliminary understanding. Very

:01:21.:01:23.

preliminary deals. We don't know if all of them will pan out. I think

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what the underlying message here is, the bigger one, is that Saudi Arabia

:01:28.:01:33.

has money to invest in this region. Despite low oil prices, now hovering

:01:34.:01:38.

at $50 a barrel? Yes, so they have been struggling as well. We have

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seen bonds issued by the Saudi government but relatively they still

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have deep pockets and I think it is very important for them to cement

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their relationship with really important crude customers in this

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part of the world. But when do you think will these so-called letters

:01:54.:01:58.

of intent, these agreements, come to fruition, if ever? Yes, that is very

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difficult to see. But I think what is very obvious is that it is a very

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natural, important relationship between the world's biggest crude

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exporter and now China as the world's biggest crude importer. Now

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Chinese demand is not going to continue growing as strongly as it

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has in the past decade but this relationship as to evolve from being

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just a crude supplier, Saudi Arabia now want to get into refining,

:02:28.:02:31.

petrochemicals, both at home and abroad and certainly in Asia. As the

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US Secretary of State prepares to arrive in Beijing this weekend, the

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prospect of a trade war between the world's two largest economies is

:02:43.:02:45.

lingering. But any move by Washington to increase tax on

:02:46.:02:51.

imports to try to protect US jobs would almost certainly mean

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retaliation from Beijing. US companies sell just about everything

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to China, from cars to fruit. A Shanghai correspondent has more.

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Best robbery, fresh, sweet, and maybe the next weapon in a

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transpacific trade war. -- the strawberry. China's ever expanding

:03:12.:03:14.

middle-class love fresh fruit, so much so that US firms like Driscolls

:03:15.:03:21.

have set up to grow in China. There is also a place for its California

:03:22.:03:29.

strawberries. They will be flown in and they will be pricey. China adds

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14% on fresh strawberries from the US. The prospect of a hike any time

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soon could squash sales. Certainly we would be concerned from the

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standpoint of how our product may be affected any type trade issues

:03:44.:03:49.

between our two countries. But certainly for us, what we can do is

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we can continue to focus on premium, that is the best thing we can do to

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ensure that consumers are willing to pay. It is not just the china

:03:59.:04:03.

ambitions of fresh fruit that could be at stake. Ford could face a bump

:04:04.:04:07.

on the road for one of its iconic brands. Made in America but on sale

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for a few years now in China, this is make or break for Lincoln. It has

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been a bit of a fading brand in the Ford portfolio, although recently

:04:17.:04:20.

sales have ticked up in the State. But if these drivers here in China

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don't embrace Lincoln, then it could be the end of the road for the car

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that has carried presidents. This giant is made in Kentucky then

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shipped to China. It costs twice as much here. Part of the reason for

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that is the import tax, 25%. On the prospect of an increase, Lincoln's

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parent company, Ford, told the BBC it would evaluate the situation

:04:44.:04:46.

should the need arise, but it would not comment on speculation. I

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believe that most American companies feel that, both in Beijing and

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Washington, that the two leaders of the two governments appreciate that

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the stakes are too high, and this would be harmful and unproductive

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for either country, so the expectation of a trade war, you

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know, is quite low if not non-existent. What about china's

:05:05.:05:10.

consumers? Are they swayed by price, provenance, politics? Why? Because I

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like the taste, delicious. You think American ones are better? Yes. I

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don't think so. What if your leaders said to you to buy American fruit,

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you should buy locally? Does that matter? We can choose by ourselves.

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Trade war or no trade war, china sometimes plays by its own rules.

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The US -based chocolate manufacturer Hershey 's has had a factory here

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shutdown, all because of a complex dramatic row with South Korea over a

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missile defence system -- diplomatic row. It is an ominous sign that

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China doesn't always need to take a chunk and tax to make its point.

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Finance leaders in the world's top economies are meeting in Germany

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this weekend. However, the trip will most likely not be a relaxing one.

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The us now has a president who believes trade should be fair, not

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free, at other G20 members are not interested in abandoning the path

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towards globalisation. So how will it all pan out? I asked a

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representative from the bank of Singapore. I think everybody is

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really talking about what on earth is the new American administration

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going to be doing? They seem to view trade as a zero-sum game and there

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seems to be a big change in policy, of the anti- protectionism which has

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been underpinning G20 statements for years. So much rhetoric over the

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past month and during the campaign period from Donald Trump,

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complaining about China, but still no concrete policy. Well, no

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policies yet, I think partly because they haven't had the people in

:06:58.:07:00.

place. You have had delayed confirmations. As they go in, his

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hands are free at to pursue a more aggressive approach towards China

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and he has been consistently hostile towards China throughout the

:07:12.:07:13.

campaign, as has his trade appointments. So you have to think

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something is going to be going on there. But during the National

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People's Congress you had the Premier, Li Keqiang, trying to be

:07:22.:07:27.

conciliatory with the US President, saying that China and the US have to

:07:28.:07:32.

create opportunities rather than trouble. Yes, they have been

:07:33.:07:41.

conciliatory. Mainly they realise they have the most to lose. It must

:07:42.:07:45.

be that Asia is vulnerable if America starts to put up the

:07:46.:07:49.

barriers. But what would you like to come out from that meeting of Mr Xi

:07:50.:07:56.

and Mr Trump in April? Do you think we are going to see both sides at

:07:57.:08:00.

loggerheads, or could we see some kind of reconciliation? Well, he

:08:01.:08:05.

seems to find it very easy to talk hard on his Twitter account, or to

:08:06.:08:11.

domestic audiences, but when he meets people he seems to have a

:08:12.:08:15.

personal warmth. It is very hard to predict what comes out of this. We

:08:16.:08:18.

haven't seen any flareups in the past few months. Admittedly he has

:08:19.:08:21.

mainly been focused on domestic policy rather than external

:08:22.:08:25.

policies, but so far there has been surprisingly little trouble. The

:08:26.:08:31.

British government has referred Rupert Murdoch's plan to take over

:08:32.:08:38.

Sky the regulators to decide if the deal is indeed in the public

:08:39.:08:46.

interest. Mr Murdoch's US television interest 21st Century Fox already

:08:47.:08:49.

owns a stake in Sky. Critics have expressed fears the deal would give

:08:50.:08:53.

Mr Murdoch too much control of the UK media. Japanese carmaker Toyota

:08:54.:09:00.

is investing nearly $300 million to upgrade its main facility located in

:09:01.:09:04.

central England and there will be additional investment from the

:09:05.:09:07.

government as well. My UK colleagues sent this report from the Toyota

:09:08.:09:15.

factory in Burnaston. Toyota will invest ?240 million to upgrade the

:09:16.:09:20.

Burnaston plant. In return the government is providing ?21 million

:09:21.:09:23.

for training and research. It is all good news for the 2500 workers at

:09:24.:09:27.

the site. The truth is, this plant needed to be upgraded simply to be

:09:28.:09:31.

able to compete with Toyota's plans around the world to build new cars.

:09:32.:09:37.

Now, they currently make cars here. A decision on whether to make a new

:09:38.:09:42.

vehicle at this plant is expected in the next year or two. This

:09:43.:09:46.

investment could make all the difference. But, as we leave the EU,

:09:47.:09:49.

all UK car manufacturers faced the prospect of higher cost, with

:09:50.:09:53.

tariffs on the components they import and on the cars they export.

:09:54.:09:57.

Despite assurances from the government, Nissan has warned it

:09:58.:10:05.

will re-evaluate its UK operations once the final Brexit deal is known.

:10:06.:10:10.

Let's have a quick look at the markets before we go. As you can

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see, a mixed bag for Asia. The Nikkei 225 down 55 points due to the

:10:15.:10:19.

strength of the Japanese yen against the US dollar -- 59 points. Hang

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Seng in the All Ordinaries also in positive territory. Have a great

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weekend, everyone. Sport Today is up next.

:10:29.:10:30.