05/03/2018 Asia Business Report


05/03/2018

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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the UK. The athletics world has been

paying tribute to Sir Roger

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Bannister, the first man to run a

mile in under four minutes. Now for

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business news from Singapore.

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China is set to make sweeping

changes that will give President Xi

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Jinping more power and consolidate

control over its regular trip

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policies. And one Indian carmaker

makes inroads into the US by

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building a massive auto assembly

part in America's car capital. Good

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morning and welcome to Asia Business

Report live from Singapore with me.

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As we can see, China's National's

People's Congress has kicked off and

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is well in Beijing. Leaders began by

setting 2018 GDP growth at 6.5% the

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same as last year and an increase in

military spending of 8%. They are

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also expected to rubberstamp several

sweeping pieces of legislation

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including removing term women for

the President. Lawmakers are also

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expected to create a powerful

anticorruption agency and approve a

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major overhaul of its banking and

insurance sectors, putting them

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under the supervision of one

government bureau. All this while

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there is a transition in leadership

at the central bank and the People's

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bank of China. These changes are

crucial to President Xi Jinping's

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efforts to bring down debt levels in

Chinese companies while the economy

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cools down. Growth has dropped from

10% in 2010 to just under 7% last

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year and the International Monetary

Fund says that will slow down to

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below 6% by 2020 to. Earlier I spoke

to an equities expert in Hong Kong

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about what putting an end to

presidential term limits will move

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the Chinese economy. Over the medium

term there is likely to be very

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little impact. In some ways what it

does reduce the uncertainty that we

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may have otherwise seen. From a

market perspective over the short to

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medium term I don't think there is

an issue. There will be those who

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say if the policies are not the way

that one would want over the longer

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term, this may reduce the ability

for that to be changed in the

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future. If we go back and look at

the US, around World War Two, we had

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presidents was over two terms as

well. I think it comes down to the

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policies and the individual

involved. Another massive issue is

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that this anticorruption agency. How

is it different to the fact that the

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government there has been cracking

down on corruption for several

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years?

One of the things that we are

seeing at the moment is power being

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centralised. If you think about some

of the policies we seen in China, be

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it anti- graft or protecting the

environment, simplifying the

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financial system, what we are seeing

is that being brought more and more

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into more of a Beijing focused.

Historically we have seen that done

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at a more provincial level. But is a

definite trend we have seen.

And is

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the cooling economy and is a high

level of debt, are they a big

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challenge for the President going

forward?

Every economy as it grows

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and the Chinese economy has become

quite large now and as a result of

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that, growth will slow down. From a

market perspective I think Beijing

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is too focused on growth. We have

seen a correlation between stock

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market return and growth, it is non-

existent. If you look at the US

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market and its growth relative to

China, it is likely will expand. The

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key here is what most people are

looking for is an improvement in a

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type of growth. Not just about jobs

for the sake of jobs, it is about

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better jobs, advancing the economy,

about bringing industry forward. I

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think that will be a key focus.

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Donald Trump has begun a local game

of tit-for-tat when he said the US

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will slap a tariff on imported steel

and aluminium. The EU struck back

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saying they would target products

like jeans, bourbon and

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Harley-Davidson is. But what could

this mean for India? I'm joined now

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by our correspondent. Will this

affect Indian steel producers?

Not

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directly. Just 2% of Indian steel is

exported to the United States. What

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is causing concern here is the

damping of cheap imports from

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countries that would have sold to

the US market, countries like Korea,

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Japan and Russia. The Indian

government last year introduced

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anti-dumping charges, increased

tariffs on imports and that helped

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Indian producers of steel. The

problem is that those charges have

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now become lower than market rates,

because of the price of raw material

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rising, so Indian producers are

still concerned that these tariffs

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could affect them.

We heard from the

European Union, we heard from

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Canada. What does the Indian

government say about this?

India's

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steel Secretary says it is not an

immediate cause for concern.

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However, as I mentioned, the

anti-dumping concerns that will

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affect companies which rely on

export and also Tata steel which has

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European operations secretary also

mentioned that the article Donald

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Trump is using to justify these

tariffs is slightly stretched. That

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is that the US has the right to

investigate any import that is a

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threat to national security.

Thank

you so much for that update. As we

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wait to see how steel and aluminium

tariffs will play out over the next

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few days, Michigan in the American

midwest has long been the capital of

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the US auto industry. After the

financial crisis, some of the

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biggest car companies headquartered

there filed for the. Industry in the

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area went on a downward spiral and

has only just started to recover.

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This revival is being aided by an

Indian carmaker which has set up a

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factory there and rolled out its

first set of cars last week.

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The first new car factory to be

opened in the area in 25 years.

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Billed as the torch bearer of the

resurgence of Detroit, it belongs to

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an Indian company that has its eyes

set on the US market.

I want to be

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part of the next generation of auto

development.

The industry is about

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to be rocked. The American boss

tells me why the area was an obvious

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choice for them.

If you put a centre

outside of your home country, the

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best place is probably destroyed. --

Detroit. The EPA is here, there are

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test labs and wind tunnels... It is

one stock shop to locate and

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engineering centre in this area.

Lawmakers and politicians attended

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the launch and were all keen to show

that this droid's worst is behind

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it. This massive abandoned car

factory has long been a symbol of

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the downfall of the droid's auto

industry. And where most of the US

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manufacturers have headquartered

here have made a comeback, the city

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itself is still a long way from the

boom time it wants experienced.

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Still, many who have seen the twist

and turns and it does come in the

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droid story are breathing easily.

For decades, this plant made car

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seats sold to big auto makers in the

area. When some of those companies

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purely bankrupt after the financial

crisis, this factory almost did not

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make it.

I can very clearly recall

discussions back in 2007, 2008 about

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whether we would be able to keep

this facility open, whether the heat

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to the industry and the customer we

serve here was so severe that we

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would not have sufficient business

volume to keep the operation in this

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location.

Competition is stiff from

other parts of the US. However

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nowhere is the success of the auto

industry more important than in this

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town. Were almost everyone has a

personal connection to it.

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In other business news, the Federal

police of India have made four more

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arrests involving the state lender,

widening the investigation of the

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biggest ranking fraud in the history

of the country. Over a dozen people

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have been arrested by India's

Central bureau of investigations

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since the fraud came to light in

January. A quick look at the week

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ahead. On Tuesday we will see of

Austria's central bank keeps its

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neutral is dance and holds interest

rates at a historic low of 1.5%. One

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day later we will have an update on

the health of Australia's economy

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when it releases its latest growth

figures. And Japan's central bank

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will also hold its monetary policy

meeting at the end of the week. And

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investors will be looking for signs

of inflation when the US reports its

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latest payroll numbers. Having a

look at the markets before we go.

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All Asian markets are lower.

Investors are still concerned about

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the potential trade war. On Friday

we saw a sharp fall in Asian markets

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although Wall Street did recover

somewhat on Friday. We will continue

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to monitor that and in currencies

were watching the dollar and also

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the bureau after result of exit

polls for Italy's elections. That is

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it for this edition of Asia Business

Report. Thank you for watching.

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