:00:00. > :00:00.cover`up. Those are the headlines. Let's go to
:00:00. > :00:19.Singapore now. Doing business with China. We will
:00:20. > :00:23.have a look at the German trade ties with the world's second largest
:00:24. > :00:27.economy. A special report on the Indian auto
:00:28. > :00:30.industry and what they want to see from the government in the next
:00:31. > :00:41.Budget. Welcome to Asia Business Report.
:00:42. > :00:45.China is Asia's biggest economy and journey easier's. So surprised that
:00:46. > :00:57.business is at the top of the agenda for Angela Merkel's visit to China
:00:58. > :01:05.this week. `` Germany is Europe. Many German companies are looking to
:01:06. > :01:08.China to their fortunes. Angela Merkel arrived for her
:01:09. > :01:11.seventh visit to China, a measure of the weight she puts on the
:01:12. > :01:14.relationship. In the south`western cities, she toured a Volkwagen
:01:15. > :01:22.factory. A joint`venture with a Chinese company. This visit is about
:01:23. > :01:25.trade. China buys German machinery and the middle`class buys German
:01:26. > :01:33.cars. The German economy is kept ticking over by Chinese orders.
:01:34. > :01:36.Trade is balanced. Germany sold goods worth $91 billion to China
:01:37. > :01:39.last year. China sold goods worth $99 billion. In the past, Chancellor
:01:40. > :01:42.Merkel struck a balance between condemning human rights abuses in
:01:43. > :01:49.China but not wanting to alienate the leadership too much. It is not
:01:50. > :02:00.clear how strongly she will speak out this time. The three`day trip
:02:01. > :02:03.started in Sichuan. It has a population of 80 million people.
:02:04. > :02:09.Just one province but with the same population as Germany. That is how
:02:10. > :02:12.important the Chinese market is. German companies tread carefully.
:02:13. > :02:17.They have complained that Chinese companies just copy their ideas.
:02:18. > :02:22.China wants glossy Western consumer goods and the Chinese market is too
:02:23. > :02:29.big for the West to ignore. Chinese leaders hold a joint session with
:02:30. > :02:30.the German Cabinet later this year. It is a profitable relationship for
:02:31. > :02:40.both sides. That is the background to the
:02:41. > :02:45.business ties between China and Germany. For more of what we can
:02:46. > :02:50.expect from the Chancellor's visit over the next few days, we bring in
:02:51. > :02:54.Martin patients. We know that Angela Merkel began her trip and usually
:02:55. > :03:04.but where is she expected to be today? `` Martin Patience. She was
:03:05. > :03:08.in the south of the country and many would see that as the land of
:03:09. > :03:13.opportunity as China moves the West to open up less developed areas in
:03:14. > :03:17.the country. `` moves westwards. Today is about politics. She will be
:03:18. > :03:23.meeting the Chinese Premier and later today, she will hold talks
:03:24. > :03:28.with she jinking. Trade business will be at the top of the agenda.
:03:29. > :03:35.Unusually for a western country, Germany exports as much to China as
:03:36. > :03:40.it buys back. Many would see that as the main reason that the German
:03:41. > :03:44.economy has staved off some of the problems that we have seen in other
:03:45. > :03:49.European countries. `` she will hold talks with Xi Jinping. The Germans
:03:50. > :03:52.have a lot of concerns about the Chinese market, not least
:03:53. > :03:57.intellectual property. We heard one German intelligence chief warning
:03:58. > :04:04.small and medium`sized firms that they were at risk of industrial
:04:05. > :04:13.espionage by Chinese government agencies. Has there been a response
:04:14. > :04:17.among the delegation? Has not. It is interesting that it has been raised
:04:18. > :04:23.by a German official. What you will often see and hear from China `` in
:04:24. > :04:28.China from Western companies is not a lot. They do not want to be
:04:29. > :04:33.targeted. They are fearful of consequences if they speak out about
:04:34. > :04:37.these issues. There are concerns about industrial espionage.
:04:38. > :04:43.Basically, Chinese companies ripping off technology from joint
:04:44. > :04:47.enterprises. There is, of course, increased competition from Chinese
:04:48. > :04:52.businesses as China moves up the food chain in terms of technology.
:04:53. > :04:57.Western companies are then facing more competition. There are also
:04:58. > :05:04.concerns from small and medium`sized businesses in Germany that they are
:05:05. > :05:08.not being paid in time. That might sound like a small grumble but often
:05:09. > :05:13.it is 3`6 months. Some put that down to the tightening of credit within
:05:14. > :05:22.Chinese tanks. There are issues on the table. `` Chinese banks. Both
:05:23. > :05:28.have stressed that this is mutually beneficial. They are saying that the
:05:29. > :05:35.relationship between China and Germany is at the best in history.
:05:36. > :05:42.In the latest updates on the visit, you can go to the website.
:05:43. > :05:45.High`level British ministers are due in India this week to meet the new
:05:46. > :05:50.Prime Minister. The Foreign Secretary William Hague and finance
:05:51. > :05:55.minister George Osborne will arrive in Mumbai later today for talks with
:05:56. > :05:58.their Indian counterparts. The focus will be on strengthening economic
:05:59. > :06:04.ties. Two way trade between India and the UK has reportedly the past
:06:05. > :06:07.$15 billion. Speaking of the Indian government,
:06:08. > :06:11.they are due to have a busy week because on Thursday, it will unveil
:06:12. > :06:15.its first Budget after coming to power. The new finance minister has
:06:16. > :06:20.already said that the country cannot afford populist policies is expected
:06:21. > :06:24.to announce tax breaks to encourage foreign investment and incentives
:06:25. > :06:26.for individuals to save more. We report on one industry which we will
:06:27. > :06:36.be watching closely. For hours outside of Mumbai, this is
:06:37. > :06:46.a factory at one I's best small car makers. It mainly produces vehicles
:06:47. > :06:50.for sale within India. `` at one of India's best small car makers. It is
:06:51. > :06:53.looking to the government to get the wheels of the business turning
:06:54. > :06:58.again. At the top of the wish list is a simple `` and publication of
:06:59. > :07:04.the tax rules. On the current regime we have does not allow us to
:07:05. > :07:09.optimise costs. `` simplification. It does not allow us to take the
:07:10. > :07:12.right business decisions. Once of the cars or all of the cars roll off
:07:13. > :07:16.the factory line, independent dealers have to sell them. The last
:07:17. > :07:26.three years, they have been suffering. Earlier, it was very
:07:27. > :07:30.affordable. Total has now gone up to almost above $1. That is an
:07:31. > :07:38.important factor which affect our business. `` petrol cost.
:07:39. > :07:47.This is a potential customer. Over the last few months, he has been
:07:48. > :07:54.checking out quite a few cars. With banks charging over 10% to borrow
:07:55. > :07:57.money, he has yet to buy one. The government was voted to power with
:07:58. > :08:02.the huge mandate and the promise of providing the economy. There is no
:08:03. > :08:04.surprise that expectations are running high as the government
:08:05. > :08:09.prepares to announce its first Budget. It will be a speech that
:08:10. > :08:11.everyone, from big business to the man on the street, will watch with a
:08:12. > :08:23.lot of interest. And hope. South East Asia's largest bank hopes
:08:24. > :08:25.to expand even though its chief executive says uncertainty in the
:08:26. > :08:32.global economy could mean lower growth for many countries in Asia. I
:08:33. > :08:37.earlier spoke to one analyst who told the that despite the slowdown,
:08:38. > :08:41.there are sectors seeing headway. The property and construction sector
:08:42. > :08:47.is one. You will see headwinds for the next couple of years. Steel and
:08:48. > :08:54.cement as well. On the other hand, if you look at the exported sector
:08:55. > :09:01.in South China, it is benefiting of the European turnaround from `0.5%
:09:02. > :09:06.to plus 0.5%. It is doing OK. Some portions of manufacturing are doing
:09:07. > :09:11.OK. It is a two speed economy to the next two years. DBS is planning a
:09:12. > :09:14.big regional expansion into Hong Kong, China, India and Indonesia
:09:15. > :09:19.which goes to the polling booths this week to elect the next leader.
:09:20. > :09:24.What do you estimate from that market? Indonesia has the same
:09:25. > :09:28.advantages as China and India. A large population which is very
:09:29. > :09:31.young, younger than other countries and a growing middle class. The
:09:32. > :09:37.Indonesian challenge in the short term is to make sure that it can
:09:38. > :09:42.attract enough investment. Savings and investment pools are critical to
:09:43. > :09:47.Indonesia's group agenda. In that regard, making sure that the economy
:09:48. > :09:53.stays open to the inflow of investment and business investment
:09:54. > :09:58.appetite, that is really important. `` growth agenda. What would be best
:09:59. > :10:02.for the growth of your business? The market as a general theme would look
:10:03. > :10:09.for somebody who is likely to be less nationalistic and more open.
:10:10. > :10:15.From a market standpoint, there is an Mac standpoint that one of
:10:16. > :10:19.ministration might be more open to investment than another. The truth
:10:20. > :10:22.is that it is difficult to really tell from the rhetoric in the last
:10:23. > :10:27.month. A quick look at the markets. They
:10:28. > :10:33.are all flat this Monday morning. A slow start after the US holiday on
:10:34. > :10:34.Friday. That is all for this edition of Asia Business Report. Thank you
:10:35. > :10:44.for watching. You are watching BBC News. These are
:10:45. > :10:47.the headlines: The Palestinian militant group Hamas says at least
:10:48. > :10:51.six of its fighters have been killed in Israeli air strikes on the Gaza
:10:52. > :10:52.Strip. It follows days of rocket attacks against Israel.