07/02/2013 World Business Report


07/02/2013

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Report. A nerve-wracking day for Boeing as US regulators report on

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their safety investigation into the grounded 787 Dreamliner. Plus - the

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Eurozone's new crisis - could the rising Euro scupper the region's

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economic recovery? It's a key concern for the European Central

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Bank as it meets later today. Welcome to World Business Report.

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Also - as the year of the snake looms, the Bank of China prepares

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for the rising demand for cash and pumps billions into the financial

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system. A crucial day for plane maker Boeing. American air safety

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regulators are due to give an update on their investigation into

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the faults with the 787 Dreamliner. All Dreamliners were grounded last

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month after incidents where the on- board batteries caught fire.

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Investigators say overheating is to blame, but can't say exactly where

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the fault lies. On Wednesday, the head of the National Transportation

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Safety Board in the US warned they were probably weeks away from

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completing the probe. Meanwhile, the costs for Boeing continue to

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spiral. These pictures from the air safety investigators in Japan show

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the charred remains of the back foot on board the Dreamliner which

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caught fire when the plane was flying 10,000 metres high. The

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passengers were put through an emergency landing. After this all

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53 miners were grounded. US transport regulators are

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investigating a battery fire which broke out on a Dreamliner at Boston

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airport. They think overheating is to blame but say it could be

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several weeks before they know why it happens. This is ominous for

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blowing. The long it takes to discover the exact cause of the

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batteries overheating and catching fire, it will take a fair amount of

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time to find a solution. If there is a fundamental problem with the

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factories, how long could the Dreamliner of the grounded? If it

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is a fundamental design for a could be very serious. It could stretch

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out to a month. The Dreamliner contains two lithium ion batteries

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chosen for their lightness. One starts the engine and the other

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provides reserve power. Boeing executives have been defending the

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decision to use them. The air have been issues but we have carefully

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analysed everything. Went through the positive certification. We

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believe that is the right choice. We want to find out what happened

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with the batteries. The tree mine has a longer range than any other

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passenger plane and it has won 800 orders. No airline has yet

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cancelled its order but it faces compensation claims running into

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the billions of dollars from carriers who have paid to ground

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the tree miners and from others who have had their planes delivered

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late. Despite some nerves over the last couple of days, the euro has

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been on a roll. The easing of the eurozone debt crisis has sent the

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currency to its highest in more than a year against the dollar and

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the pound and its strongest in almost 3 years against the Japanese

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yen. This return of confidence has raised concerns it's starting to

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make European businesses less competitive and could choke off the

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region's economic recovery. Global markets, then, will be watching

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European Central Bank chief Mario Draghi closely today at his monthly

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policy meeting. Will he try to talk down the euro? Christian Schulz is

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from Berenberg Bank. Do you think he will say anything that might

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ease this problem for European businesses? You get questions at a

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press conference but I do not think he will send any kind of signal,

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whether he is happy or not with the appreciation. I think it is a

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positive thing. It puts confidence in the euro and it could have an

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impact in the long-term for European exports. What about

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interest rates? There are a lot of people thinking that the EU might

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cut rates to support the economy. We think it will not cut rates.

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Economy is improving, that could spill over into deflation. By the

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end of the year, with the economy may be takes off, they might be

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discussing a rate hike rather than a rate cut. In terms of what is

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happening with the euro, it has been strengthening and that has a

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lot to do with other currencies weakening. The pound has weakened a

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lot. Talk to us about that. We get a new central bank governor in the

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UK in July. He is a Canadian and has a North American tradition of

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money printing. He is an expectation he may be more creative

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than the current manager about how to support the economy. They --

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they may include more money printing. Today he is being grilled

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here in London by Members of Parliament about his plans?

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Hopefully, they will ask Camelot of questions about the nominal growth

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target instead of the inflation target the bank has. He has given

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some interesting speeches. These are can sexual questions us

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economists will be looking to follow. But they all will also be

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questions on salaries. What is your take on the eurozone debt crisis in

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general. They have got elections for Italy coming up soon. Lot of

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concern about who may get back into power. We have the Spanish Prime

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Minister under a lot of pressure, calls for him to resign because of

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concerns about corruption. Are you worried about where Europe is

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heeded? We have had a few months of relative calm. We have had a

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consensus with the CBD supports the country's and helps the crisis

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countries reform themselves. The biggest near term risks are the

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Italian elections because they might risk the consensus. If they

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go backwards with reform may make got a consensus we have. That is

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why markets are nervous. The good thing is elections will happen in

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two weeks. So not too much uncertainty there. We think Italy

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will probably return to the fault and we will return to come of

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waters. Germany, a big idea for Germany they have the elections.

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You are faced in Germany. What is the feeling about how Angela Merkel

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is playing the situation. She does have to look at the domestic

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scenario? Europe is very important for her election chances. If she is

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seen as the person who fix the Europe crisis that will help her

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election chances. At the moment, things are looking good. She is

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popular in the polls. But she will need a Coalition partner for

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September even if she wins. Who that will be will be the

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interesting question. Overall, good situation for Angela Merkel and the

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country is returning to growth. Bank of China is anticipating a

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week of big spending during the New Year celebrations and boosting the

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financial system to cope. Rico Hizon is at our Asia Business Hub

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in Singapore with the details. The year of the snake will start with a

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big spending spree? That is what the central bank is hoping. That

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mainland as well splurge. Hopefully on gifts, eating out with family

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and friends and buying new clothes. The Chinese people have this belief

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buying new things and getting rid of old ones sweeps away all the bad

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luck. With these beliefs, the People's Bank is infusing $138

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billion into the financial system. Economists keeping their fingers

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crossed it could give the domestic economy a major boost this quarter.

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When you speak to sceptics, they say the austerity drive launched by

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the new Chinese leadership, coupled by the slowdown could leave

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government departments to scale back new year festivities this year.

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