31/03/2014 World Business Report

Those are the latest headlines from BBC News. Now for the latest

financial news, with Sally Bundock and World Business Report.

The Bank of England's poised to sign a deal with China that will see

London become a hub for trading in the yuan, but has Frankfurt stolen

the march? And find out why entrepreneurs are

choosing to launch their start`ups in India.

Welcome to World Business Report, I'm Sally Bundock. Also in the

programme, industrial production sinks in Japan. We digest the news

on the eve of the introduction of a controversial sales tax.

Let's talk about the Chinese currency. The yuan used to be a

closed shop as it was tradable only in mainland China. But that is

rapidly changing and soon it is expected to rival the Euro and US

dollar in terms of traded volumes. No surprise that con `` petition has

been stiff. The German Bundesbank and the People's Bank of China

signed a deal on Friday to facilitate transactions in the

Chinese currency in Frankfurt. Today, London will enter the frame

`` the fray, with a memorandum finally being signed, establishing

London as another hub for Chinese currency dealing. Oliver Barron is

head of China research at NSBO and joins me now from Beijing. London

wanted to be in prime position to offer yuan trade business in Europe.

It is playing second fiddle to Frankfurt, or is it? Tell us about

the latest move. I think Frankfurt certainly came first bite, in terms

of Frankfurt and China, there are clear trade benefits. `` came first.

I don't think it will overtake London. London will still be the

natural settling place because it is already the centre for currency

transactions globally, accounting for over 40% of global transactions.

Many people say the yuan will become as big a traded currency as the Euro

or US dollar. I read that in my introduction. `` euro. When will

that start to happen? Merret currently we are in a situation

where the yuan is already one of the largest traded currencies. But in

terms of taking over the euro or US dollar, we have a long way to go.

Investors need to be comfortable with investing in its financial

system. We need to see reform. Opening up of the currency,

liberalising of the capital account, before it can rival them. In terms

of the constant accusation towards China about the fact that its

currency doesn't float freely in the same way that other currencies like

the US dollar does, where does this take China? This next step, doing

deals with fractured and London, for the Chinese currency to be a freely

floating currency? China likes to do things step by step. It has

gradually expanded the countries with which it does trade settlement.

It has swapped lines `` swap lines and is expanding markets. I think it

is going to continue to grow. The offshore markets will keep growing.

But it will be a step`by`step process, until we see more progress

and other reform. Thank you for joining us. That deal, as and when

it is announced, we will update you hear on World Business Report.

This time next week Indians will be heading to the polls as the world's

biggest democracy votes for a new leader and whoever gets the job kick

starting economic growth will be top priority. But despite the slowdown

over the past couple of years, the number of start`ups has been growing

in India. And it's not just domestic entrepreneurs setting up new

businesses. Some expatriates have decided this is the place to try and

launch a new idea. Sameer Hashmi reports from Bangalore.

This might look like a car park but in fact it is the home of one of the

first companies in India that lets you hire a car and then drive it

yourself. Unlike most developed countries, until recently anyone

wanting to rent a vehicle here to hire a driver as well. We thought,

we don't have show first so it will be cheaper... It is the creation of

these two friends. The quick universities in the UK and US to

move to Bangalore and start the company. A brave move because,

wherever you are, launching a business is never easy. But being

foreigners in India makes it tricky. A lot of people thought, these white

Americans, they think they are going to come here and start a company.

But as soon as things turn tough, they are going to run right back to

good job opportunities in San Francisco and New York. Investors

were initially reluctant for that reason. Now we have been in business

for almost one year, we have proven wrong. There is really no official

figure but it is estimated that over one million new small and

medium`sized firms are launched in India every year. According to the

World Bank, this is one of the toughest places to start a business.

Mark's journey in India began six years ago when he and his wife

decided to move here from the UK to start a branding and corporate

communications company. I do think India is an attractive market. You

have to take a long`term view on India. The next five `10 years could

be very exciting in India. We remain pretty bullish about it. But clearly

not without its challenges. And it's not only individuals who are

optimistic about start`ups here. But investors as well. Last year,

backers put $1.6 billion, US, into Indian start`ups with the e`commerce

sector most popular. It's good to see this reverse kind of migration

happening. It's good because you suddenly have very open, very

entrepreneurial thinking, where many of us in India don't have that

openness of mind. Making it easier for ex`patriots to start a business

here is something the government has been talking about for a while. And,

if that happens, that might tempt more foreigners like Mark to come

here, not just to sample the culture, sights and food but to have

a go at being an Indian entrepreneur.

Its very important week for the Japanese economy, with a brand`new

sales tax starting tomorrow. Today we had surprisingly bad news about

the economy. In feathery, the industrial production went down by

2.3%. A month on month fall. Slipping after a near 4% rise in

January. Economists were expecting growth. Rico Hizon is in our Asia

Business hub in Singapore. Tell us, what's going on Japan? A very big

disappointment with this `` these industrial production numbers. The

key industries showed very low numbers, especially automakers,

manufacturers of mobile phones, personal computers and heavy

machinery. Weakened factory output. You also have to add to the equation

unusually cold conditions and snowstorms weighing on production.

This data comes the day before the controversial national sales tax. It

will be rising to 8% from 5%. Analysts say there is a possible

sign that benefits from last`minute demand before the implementation may

have run their course. Companies may have also curbed reduction to keep

inventories low, fearing oversupply because they may be worried that

demand could be weaker after this sales tax hike. Ahead of this

insurgents, the Prime Minister is looking out for the bank of Japan?

Key survey which will be out on the 1st of April, tomorrow. That could

offer what impact the sales tax hike could have on business sentiment.

Economists say the numbers suggest the economy might not rebound

quickly and the burden might fall on the central bank, as the government

has already committed to fiscal stimulus spending. Everything really

is very tentative on what might happen to the Japanese economy going

forward, with the implementation of this new tax rate from 5% ` 8%.

Thank you. In other news, Italian police have

arrested two men who were allegedly trying to deposit trillions of euros

in fake bonds in the Vatican bank. The pair, an American and a Dutch

national, claimed they had an appointment with bank officials to

gain entry but were handed over to police. Fake bonds with a face value

of three trillion euros, that's $4.1trillion, were found in their

briefcase. The suspects were reportedly hoping to open a line of

credit at the bank. The Greek parliament has narrowly

approved a big reform package that will open more retail sectors to

competition. The measures are part of a deal between Greece and its

international lenders. They faced stiff criticism from the opposition,

and some government deputies, who said the reforms will lead to more

imports and damage the country's economy.

It's a new trading week in Asia. Let's look at how things are shaping

up. The next big star `` picture emerging. These other currencies:

I will be back shortly to talk through the papers. Stay with us.

Strapped`for`cash child protection agencies are acting as nothing more

than an emergency service, according to a children's charity. The NSPCC

says this is due to an increase in the number of abuse complaints

following the Jimmy Savile