30/03/2016 Asia Business Report

China's major banks report earnings this week. What will their balance

sheets reveal? And we visit the region of Japan that is fighting for

a bigger slice of the tourist pie. Welcome to Asia Business Report.

Over the next two days, China's big four state-run banks are set to

report their annual earnings, and it is not expected to be good news.

Profits are forecast to be flat as a surge in bad loans continues against

a backdrop of slower economic growth.

Good to see you, the bank of China, China Construction Bank, and the

Agricultural Bank, they are likely to report a subdued picture, aren't

they? That is right. We have had a taster of what it might look like.

We have heard from the fifth-largest bank, the Bank of Communications,

which released its net profit last night, growing by 1%. It was the

fourth consecutive year of slowing growth, and we are likely to see

similar results at the big four state-owned banks. These are banks

that are owned by the Chinese government and the main borrowers

and customers are state-owned companies. They are sort of an

extension of government policy, and in the past 18 months or so the

Chinese government has cut interest rates by five times. That limits the

amount they can make in terms of net profit. That squeezes their margins,

but what about bad debts. They are meant to be at a ten year high, how

much of the problem are they? There is a roaring debate going on over

exactly the level of default among customers in China, exactly over

what this means for the Chinese economy. We have heard officially

from the Chinese banking regulator that non-performing loans stood at

$195 million, that is the highest level in about ten years. And that

implies an non-performing ratio of 1.7%. That seems to be below average

by global standards, but it is important to note that China has

different way of calculating defaults and calculating the ratio.

And analysts say they have no real idea of how bad the defaults could

be. Those who go through publicly filed listing papers of Chinese

listed companies say the true figure could be as high as eight or 9%,

which is quite high, and has implications on economic growth in

future. Thank you for talking to us. In other business news, Japan's

industrial outlet fell 2.6% in February, marking the biggest

decline since March 2011. The devastating earthquake in Japan ten

crippled the supply chain. The drop followed a 3.7% gain in January,

which was the first increase in three months. Indian steel giant

Tata steel has flagged up a shakeup of its subsidiaries, including a

possible withdrawal from its loss-making UK operation. It could

put thousands of jobs under threat. The news comes as Narendra Modi

heads to Brussels to discuss and India/EU free trade deal. The UK is

India's biggest trading partner in Europe, so it is likely that the

referendum on EU membership will loom large. What impact could a

British exit from the EU have on India?

Finishing off garments headed for the UK high street. The textiles

industry is India's second biggest employer. This firm alone employs

nearly 100,000 people, and about a third of its business is with

Britain. Its boss worry that if the UK exits the EU, the company could

suffer. Everybody I know, they are quite afraid and anxious. They are

very concerned. We have seen the UK like a rock. If the rock starts to

move, whether go? He is not alone. One of India's largest industrial

bodies has already said that the British exit from the EU could

injure the flow of investment and people by diminishing Britain's role

in providing access to Europe. Narendra Modi has said Britain is an

entry point of the EU for many Indian companies. Marks Spencer

has gone the other way. A famous British name now in India with 54

stores, more than any other country outside the UK. The boss of its

India joint-venture says the so-called Brexit is complex but

thinks there may be benefits if the UK was free to negotiate its own

trade agreements. Relationship Britain has that India has

definitely been one factor that has helped us to grow our business. That

will certainly continue to stand us in good stead going forward as well.

The UK attracts more Indian investment in the rest of the EU put

together, so would Brexit make a difference? India UK trade over the

past few decades has stood apart anyway from the EU. It has largely

occurred on trade and investment side, on a bilateral level. To a

certain extent you could argue that it won't have a significant impact

either way, because the relationship is already there. Whatever happens

in late June, India, with its growing population and rising

spending power is a country that vote the UK and the EU will be keen

to do business with. If you were to drop on a train in Tokyo and travel

for four-hour south-west, you would end up on a railway line like this.

This place is on the coast and a fair way from the capital, but it

has been chosen to play host to ministers from the seven major

economies in the world, as the G7 rolls into this town in May.

Attracting visitors is key to the growth of the area. We look at the

role of tourism in helping to jumpstart Japan.

Looking for delicacies that Mother Nature offers. They are the women of

the sea, who have been doing this for thousands of years. But their

number is shrinking, along with demand for the catch. In the late

1940s, there were over 6000 of these divers in this area alone. Today

there are fewer than 1000. This 64-year-old has been diving for

nearly half a century. She runs at traditional inn where she serves the

catch. TRANSLATION: You used to be able to make a living just diving.

Now she relies on more visitors staying at home. For some, business

is good. Carruthers, it is not. For us, it is bad. -- for others. Some

divers are turning themselves into a tourist attraction in anticipation

of more visitors from overseas. This has long been a popular tourist

destination for Japanese visitors. Its shrine is the most important in

the national religion of Japan, Shinto. Now, the government wants to

put it on the international map. In two months, this region will play

host leaders from the seven major economies of the world. Ahead of it,

it is already seeing a sharp rise in foreign visitors. That is expected

to give a huge boost to the economy. TRANSLATION: A local think tank has

estimated it will bring in over $1 billion to the prefecture in the

next five years. We are changing all the signs to English and other

foreign languages. We hope to see a continuing boost to the economy not

just from the summit, but also from the Olympics in 2020. Another dying

profession that originates here is a Ninja, which has always fascinated

international audiences. Today, only their tourism performance remains,

and unless foreign visitors can truly benefit the entire community,

not just big businesses, the divers could also become just another

tourist attraction. Let's have a look at the markets.

You can see the markets that are open in Asia, Japan and Australia.

The Nikkei is down just over half a percent, and the All Ordinaries up

half a percent. That is after US stocks moved into positive territory

after Janet Yellen said a cautious approach was likely to more

interest-rate hikes.