25/01/2012 World Business Report

in Davos for the World Economic Forum. It is time for the latest

Welcome to World Business Report. For the first time in 30 years,

Japan imports more than it exports, as the economy struggles to recover

from Marcia's tsunami mac. President Obama points the finger

as China in his State of the Union address.

I am at the World Economic Forum in Davos while the world's most

powerful people are gathering. Can they design a new economic

model to tackle these very We start with Japan. It has

announced its first annual trade deficit in more than 30 years. It

is a major setback for the third largest economy in the world, known

for its exports. Its trade deficit last year was $32 billion. Imports

rose 12%, and exports fell 2.7%. The decline was attributed to the

devastating earthquake and tsunami mac. We speak to an economist. He

is in Tokyo. Thank you for joining us. There was a lot going against

Japan last year, like the earthquake, the continued strength

of the yen, and the floods in Thailand. Is this a one-off or a

trend? You can even add the euro crisis, which has some of the

biggest impact on the December figures. Trade in Asia in general

has slowed down. The import side, energy parts, is getting worse 2012

in 2012. Overall, productivity, Japan is even better than in the

old days. It is still producing a lot. That is the shift for Japan,

moving a lot of its production outside of Japan. Thailand was one

place. China is becoming more important? Absolutely. Thailand is

one of Japan's biggest production bases. China is very big. Now we

are hoping the America is making a recovery in manufacturing. Apple is

using lots of parts it produces in its iPhone best Mac. Profits are

there but the difference is now is the debate -- iPhones. Japan is

becoming an investor. In terms of the strength of the yen, that is

said to be a problem for Japanese producers. But not so much now

given they do so much overseas? extremely strong yen and the faster

increase in the yen rates has hit profits. That has pushed them to

expand their global production plants. The euro crisis is hurting

more because there are a few production facilities and many

exports are going there. It is the biggest market for China, which is

also the biggest market for Japan. Thank you.

President Obama delivered his annual State of the Union address

to Congress a few hours ago, using one of the biggest political events

to focus on job creation. He said more needed to be done to encourage

US companies to create a level playing field for trade.

It's as not rise when another country when -- it is not right

when another country lets people Copyright our movies. Tonight I am

announcing the creation of a trade enforcement unit that will be

charged with investigating unfair trade practices in countries like

China. There will be more inspections... So prevent cancer

that or unsafe goods from crossing our orders. -- to prevent

counterfeit. If the playing field is level, America will always win.

He had a lot to say about trade. In Davos, the future of capitalism

itself is under question. There are many weighty issues to be discussed

at the World Economic Forum, which kicks off today in Davos. Our

reporter is there. This is quite a unique event. It attracts the very

rich and powerful from all sides, politics, business, showbusiness.

Absolutely. This is where ideas are generated. Not necessarily

solutions. Ideas are really what is needed at the moment. It is clear

economic policies are not delivering rises in employment.

They are not kick-starting economies. The eurozone crisis

seems very difficult to solve. There are problems in the world of

politics. Democracy still proves elusive in the middle East. One

model should we be looking at in the 21st century? Here to answer

that and some other questions is our guest, the chairman of Ernest

and a young, one of the world's largest professional services funds

-- Adonis -- Ernst and Young. are questions that are permeating

everywhere. It is like what Churchill said about democracy,

capitalism might be the least bad of all the other ideas. We have not

seen they quality of earnings. -- we have not seen the quality of

earnings. -- equality.

100% of jobs creation is often from entrepreneurs, people building

ideas, who see it needs in markets. We need to figure out have to

better as a poor entrepreneurs to create jobs. This is a desperate

need -- how to better support. need to better support

entrepreneurship. Protectionism will stop entrepreneur activities

in its tracks. We do not need a culture that does not reward risk-

taking. Just a sat shop there of some of the difficulties that will

be discussed. -- just a snapshot. Angela Merkel is a focal point for

people who are concerned that the eurozone crisis still rages on and

its impact is still being felt. Thank you. We will see you again

soon. Apple has doubled its profits in the three months towards the end

of December. It sold 37 million iPhones in the last quarter. That

news has boosted the markets in Asia. Apple makes a lot of its