18/12/2012 World Business Report

emergency shelters -- of Fiji. Now for the latest financial news,

Fellow. You're with World Business Report. -- hello. Pressure grows on

China to take action on long- standing trade restrictions with

the US, as crucial trade talks get under way. I'm Rico Hizon in

Singapore, Asian stock IRE kids are mostly higher boosted by US the

Scot progress. -- stock markets. -- fiscal progress. The latest

inflation numbers are once again expected to be above the

Government's own target. But does it matter? Speculation mounts the

targets could be removed altogether. The United States will press senior

Chinese officials for action to tackle long-standing trade problems

between the countries. A Chinese delegation, led by vice-premier, is

in Washington today and tomorrow for talks with US Trade

Representative Ron Kirk. He is expected to push China to drop

restrictions on US livestock and farm products, and take stronger

action to stop counterfeiting and piracy of American goods. After the

war of words we have seen in the recent past, are we now in a new

era of talking and diplomacy? I'm joined by Daniel, CEO of Kitum

advisers, and asset management company that advises hedge funds.

Thank you for joining us. We have a presidency that does not have to be

re-elected and a new leadership in China. Is this the time for them to

try and find more middle ground? These talks are not set up to

necessarily have clear results, they are men for more high-level

trade representatives to talk about issues -- meant for. This time

around we will look for tone, is there a change because of the new

leadership in China unless political pressure on Obama or not

needing re-election? We will see if there is some change around some of

the tone in these issues that they have been coming back to year after

year without much resolution. it comes to the issues, I have

mentioned a few of them, there's also the issue of the Chinese

currency of course. What is most important for both sides? At the

top of the list for the US, there's the currency issue. You have seen

the Chinese one increase 10% since the government has come in. The US

government still said it is undervalued and that is harming US

exports. This year you will see the US Chinese trade deficit at an all-

time high. From the Chinese perspective, they have a big

immediate issue interest in the fiscal cliff discussion because of

their large holdings of the federal debt. At the same time they have

some continued concerns they have had for many years around

restricting things like restrictions of high-technology

goods, in China, as well as political pressure around some of

their investments in the US. When it comes to who has got the upper

hand, can we say? As you say from China's point of view, they hold a

lot of US debt, an awful lot, so you would imagine they have got a

trump card for that reason. But from the United States's point of

view, the biggest on economy in the world, global leadership etc, who

has got the upper hand? On the DET idea, sometimes it is overblown

about the political weight that gives China in Washington. You see

Japan has increased its Security Holdings and could overtake China

as the largest holder of US foreign debt some time early next year. But

that said, this is the US's main global competitor. So it is pretty

much a discussion our money equals money -- of money equals money.

Thank you for joining us. We will keep you up-to-date on any

developments we hear about. Let's look at Asia now, shares across the

board are gaining quite a bit of ground following a strong trading

day in the US. It looks like politicians in Washington have made

some progress in solving their differences over how to fix the

fiscal cliff, the automatic spending cuts and tax hikes that

are due to kick in in America on the 1st January. Let's go to Asia

and speed to Rico Hizon. Nice to see you. It is the kind of story we

want to hear at the moment, isn't it? -- speak to. They are finding a

way of resolving this problem. have been hearing this story for

the past month and a half, Sally. That's why Asian share markets have

been dry rating with progress and on progress of these ongoing fiscal

talks in the US -- John 'M' rating. Investors here are still on edge --

John 'M' rating 0. The US is a key trading partner of the region. Asia

cars, machinery, garments, consumer electronics, to the consumer hungry

nation. That's not the only factor pushing regional stocks higher

today, local issues are improving sentiment. Japan is doing well with

the Nikkei up by 1.2 % today due to that last night's victory of the

LDP party, which is pushing for more monetary easing and a weaker

yen. Tokyo is closely followed Australian shares after the iron-

ore prices got to a 5%. So far a good day for Asian markets. Thank

you for joining us. Inflation in the UK is expected to fall slightly

when figures are released later to 2.6 % in November. The price fall

will be welcome news, but it is still a long way from the UK

Government's own target of 2%. Many economists are now considering a

future without inflation targets to aim for. In fact the Governor of

the Bank of England has raised the idea of scrapping them altogether.

The cost of The cost ofn Britain has been rising faster than planned for

much of the last five years. The Bank of England asked to explain

itself to the government if inflation consistently tops 2% --

past two. It has missed that target in 42 out of the last 62 months. --

Hastoe. We're living in quite extraordinary times. Over the last

10 or so years the Governor of the Bank of England will tell you we

have been within a fairly narrow range of the 2% target on average.

But in the last few years we have been further away than normal. With

any luck, all of these were the shots and oil price spikes and wars

are a temporary thing and we can go back to -- and whether shots.

current governor of the Bank of Canada is set to become the new

head of the Bank of England in June. During a speech in Toronto he

hinted that banks might have to look at new ways to help boost the

economy. That fuelled speculation he may support scrapping inflation

targets altogether, instead focusing on boosting the economy.

Even the current governor of the Bank of England, Mervyn King, has

admitted out while targets are important, it's crucial to consider

the bigger picture, not just short- term targets. There may be

circumstances in which it is justified to aim off the inflation

target for a while in order to moderate the risk of financial

crisis. Monetary policy cannot just mop up after a crisis. Risks must

be dealt with before hand. I do not see this as inconsistent with

inflation targeting. Speculation that inflation targets may be

scrapped has divided top economists. Some believe it makes sense to

explore new options. But others think the move could damage the

credibility of the Bank of England. Either way there does not seem to

be a quick fix to either keeping a lid on inflation, or boosting

growth in the economy. Some other business stories, Morgan Stanley

has agreed to pay a fine of $5,000,000.20 securities regulators

in the US state of Massachusetts for withholding with information

prior to the launch of Facebook. Morgan Stanley did not admit any

killed but agreed to be censored and pay the fine. -- did not admit

any guilt. A US judge has denied Apple's request for a permanent

injunction against Samsung's smart phones. A one $1 billion in damages

in August after a jury found Samsung had copied critical

features of the eye at home and I sad -- iPhone and iPad -- they won

$1 billion. Any injunction could potentially have been extended to

Samsung's new LA Galaxy products, but US District Judge Lucy Cope

said Apple had not presented a enough evidence to show its

patented Features drove consumer demand for the entire iPhone.

European Union fisheries ministers are meeting for two days of talks

to set new annual fishing quotas. The UK is concerned about plans to

cut cod quotas in the North Sea even though numbers are increasing.