:00:04. > :00:14.in Davos for the World Economic Forum. It is time for the latest
:00:14. > :00:21.
:00:21. > :00:26.Welcome to World Business Report. For the first time in 30 years,
:00:26. > :00:36.Japan imports more than it exports, as the economy struggles to recover
:00:36. > :00:38.
:00:38. > :00:41.from Marcia's tsunami mac. President Obama points the finger
:00:41. > :00:45.as China in his State of the Union address.
:00:45. > :00:51.I am at the World Economic Forum in Davos while the world's most
:00:51. > :01:01.powerful people are gathering. Can they design a new economic
:01:01. > :01:06.
:01:06. > :01:10.model to tackle these very We start with Japan. It has
:01:10. > :01:14.announced its first annual trade deficit in more than 30 years. It
:01:14. > :01:22.is a major setback for the third largest economy in the world, known
:01:22. > :01:29.for its exports. Its trade deficit last year was $32 billion. Imports
:01:29. > :01:38.rose 12%, and exports fell 2.7%. The decline was attributed to the
:01:38. > :01:45.devastating earthquake and tsunami mac. We speak to an economist. He
:01:45. > :01:50.is in Tokyo. Thank you for joining us. There was a lot going against
:01:50. > :01:55.Japan last year, like the earthquake, the continued strength
:01:56. > :02:03.of the yen, and the floods in Thailand. Is this a one-off or a
:02:03. > :02:09.trend? You can even add the euro crisis, which has some of the
:02:09. > :02:19.biggest impact on the December figures. Trade in Asia in general
:02:19. > :02:21.
:02:21. > :02:29.has slowed down. The import side, energy parts, is getting worse 2012
:02:29. > :02:38.in 2012. Overall, productivity, Japan is even better than in the
:02:38. > :02:42.old days. It is still producing a lot. That is the shift for Japan,
:02:42. > :02:48.moving a lot of its production outside of Japan. Thailand was one
:02:48. > :02:53.place. China is becoming more important? Absolutely. Thailand is
:02:53. > :03:00.one of Japan's biggest production bases. China is very big. Now we
:03:00. > :03:07.are hoping the America is making a recovery in manufacturing. Apple is
:03:07. > :03:17.using lots of parts it produces in its iPhone best Mac. Profits are
:03:17. > :03:17.
:03:17. > :03:22.there but the difference is now is the debate -- iPhones. Japan is
:03:22. > :03:26.becoming an investor. In terms of the strength of the yen, that is
:03:27. > :03:34.said to be a problem for Japanese producers. But not so much now
:03:34. > :03:40.given they do so much overseas? extremely strong yen and the faster
:03:40. > :03:47.increase in the yen rates has hit profits. That has pushed them to
:03:47. > :03:52.expand their global production plants. The euro crisis is hurting
:03:52. > :03:58.more because there are a few production facilities and many
:03:58. > :04:03.exports are going there. It is the biggest market for China, which is
:04:04. > :04:07.also the biggest market for Japan. Thank you.
:04:07. > :04:12.President Obama delivered his annual State of the Union address
:04:12. > :04:16.to Congress a few hours ago, using one of the biggest political events
:04:16. > :04:24.to focus on job creation. He said more needed to be done to encourage
:04:24. > :04:33.US companies to create a level playing field for trade.
:04:33. > :04:39.It's as not rise when another country when -- it is not right
:04:39. > :04:43.when another country lets people Copyright our movies. Tonight I am
:04:43. > :04:46.announcing the creation of a trade enforcement unit that will be
:04:46. > :04:53.charged with investigating unfair trade practices in countries like
:04:53. > :05:03.China. There will be more inspections... So prevent cancer
:05:03. > :05:09.
:05:09. > :05:18.that or unsafe goods from crossing our orders. -- to prevent
:05:18. > :05:25.counterfeit. If the playing field is level, America will always win.
:05:25. > :05:33.He had a lot to say about trade. In Davos, the future of capitalism
:05:33. > :05:38.itself is under question. There are many weighty issues to be discussed
:05:38. > :05:44.at the World Economic Forum, which kicks off today in Davos. Our
:05:44. > :05:51.reporter is there. This is quite a unique event. It attracts the very
:05:51. > :05:57.rich and powerful from all sides, politics, business, showbusiness.
:05:57. > :06:03.Absolutely. This is where ideas are generated. Not necessarily
:06:03. > :06:10.solutions. Ideas are really what is needed at the moment. It is clear
:06:10. > :06:13.economic policies are not delivering rises in employment.
:06:13. > :06:21.They are not kick-starting economies. The eurozone crisis
:06:21. > :06:25.seems very difficult to solve. There are problems in the world of
:06:25. > :06:33.politics. Democracy still proves elusive in the middle East. One
:06:33. > :06:41.model should we be looking at in the 21st century? Here to answer
:06:41. > :06:46.that and some other questions is our guest, the chairman of Ernest
:06:46. > :06:56.and a young, one of the world's largest professional services funds
:06:56. > :06:59.
:06:59. > :07:05.-- Adonis -- Ernst and Young. are questions that are permeating
:07:05. > :07:15.everywhere. It is like what Churchill said about democracy,
:07:15. > :07:20.
:07:20. > :07:28.capitalism might be the least bad of all the other ideas. We have not
:07:28. > :07:38.seen they quality of earnings. -- we have not seen the quality of
:07:38. > :07:49.
:07:49. > :07:55.earnings. -- equality.
:07:55. > :08:00.100% of jobs creation is often from entrepreneurs, people building
:08:00. > :08:09.ideas, who see it needs in markets. We need to figure out have to
:08:09. > :08:17.better as a poor entrepreneurs to create jobs. This is a desperate
:08:17. > :08:21.need -- how to better support. need to better support
:08:21. > :08:31.entrepreneurship. Protectionism will stop entrepreneur activities
:08:31. > :08:38.
:08:38. > :08:43.in its tracks. We do not need a culture that does not reward risk-
:08:43. > :08:53.taking. Just a sat shop there of some of the difficulties that will
:08:53. > :08:57.be discussed. -- just a snapshot. Angela Merkel is a focal point for
:08:57. > :09:02.people who are concerned that the eurozone crisis still rages on and
:09:02. > :09:10.its impact is still being felt. Thank you. We will see you again
:09:10. > :09:18.soon. Apple has doubled its profits in the three months towards the end
:09:18. > :09:24.of December. It sold 37 million iPhones in the last quarter. That
:09:24. > :09:31.news has boosted the markets in Asia. Apple makes a lot of its