01/04/2014 World Business Report

BBC World News. Now for the latest financial news with World Business

Report. A controversial hike in sales tax

hits shoppers in Japan today, but will it help or hinder the economy?

In the hot seat, Mary Barra the CEO of General Motors faces a grilling

on Capital Hill about the car maker's fatal mistakes.

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

programme, markets wobble in Asia as the latest news on manufacturing in

China is released. Rico Hizon in Singapore will have the details for

us. Today is the 1st of April and the start of a new financial year in

Japan. Continued weakness in China's manufacturing sector. The

government's purchasing managers index shows slight growth in March

but a separate survey by HSBC shows a fall in activity. To make sense of

the numbers lets go to our Asia business hub and speak to Rico

Hizon. Tell us more about this latest news from China.

Disappointing economic reports from the mainland and if you speak to

economists, they see this report implies that the first quarter of

economic growth numbers will likely fall below the 7.5% rate that

Chinese leaders have targeted, and we will know the whole picture when

the growth numbers from January to March are released in about two

weeks. Economists and largely expect the government to take steps to

boost the economy but most have ruled out a stimulus package at this

point. Last week we had the Chinese premier reassuring global investors

that Beijing was indeed ready to support the economy saying they had

the necessary policies in place to kick`start slowing growth. The

mounting science of financial risk have seen the mainland's growth

outlook on top of government action, even a mini stimulus initiative to

shore up growth, and among these measures are speeding up basic

construction of infrastructure including railways and highways and

water conservation projects in central and western China, as well

as boosting trade and cutting financing costs, so we are hoping we

will see this stimulus initiative being put into place sooner rather

than later to support this economic growth that China wants to keep at

7.5%. We will have to wait and see if this is implemented. Hull have

the markets reacted? From my point of view I see a slight shift in

sentiment but no major reaction? Absolutely. When the producing index

came out we saw a rise in markets particularly Australian, but when it

came out below 50, just above 40, a contraction in factory output, we

saw sentiment shift back into negative territory, so at this point

many investors are trying to digests what will really happen to the

Chinese economy going forward, and they are basically looking, the

Chinese premier and his leadership, to try to put in place a stimulus

initiative to support the mainland economy. So that it does not fall

below the 7.5% benchmark we are looking at for this year. Thank you

very much indeed. We will see you again soon. General

Motors' chief executive Mary Barra will tell Congress the car maker

plans to do the right thing when she answers questions about why it took

so long to recall cars with faulty ignition switches. Her appearance on

Capitol Hill comes as GM recalled another one point three million cars

to fix power steering issues. And as Michelle Fleury reports from

Washington, its not just lawmakers who want answers. So do the families

who've lost loved ones. Amber and marry was 16 when she died in a

crash in 2005 in a General Motors car. This woman was 19 when she

passed away in 2009. For the families, the young age makes the

loss even harder to be aired and many of the victims are General

Motors were first`time buyers. I never got to say goodbye or touch

her hand. There's just all confirms everything. The pain I have been

going through. For them, General Motors's recall of the cars is not

enough. They want these vehicles off the road so nobody else is at risk.

It's got to stop now. No more deaths and fatalities. These are young

people, our future who wanted a gay life. `` great life. What do you

want to hear when she testifies before Congress? We want answers, we

want to know what happened, and I want to know specifically how they

can prevent this from happening again. Any statement the company

said... This is for her, for all of our

children. We are here for them, and for us, but we are representing them

because they cannot represent themselves. When the General Motors

Bourse testifies before Congress, she will apologise to the families

who have lost loved ones in crashes linked to faulty ignition switches,

but the all General Motors has promised to do the right thing, for

them it is too little, too late. And we'll be across Mary Barra's

appearance in Congress for you on BBC World News later. Today is the

1st of April and the start of the new Japanese financial year. It also

marks a rise in the country's sales tax. Until now it has been 5%, but

as of today Japanese people will feel a substantial hit in their

pockets as it goes up to 8%. It's hoped the move will stem Japan's

public debt which is the highest in the developed world. It is the first

change in sales tax there for 17 years. And the last time Japan

increased its sales tax the country fell into recession, and there are

fears this latest move will put off domestic shoppers, hurt growth and

derail prime minister Abe's ambitious plans to boost the

Japanese economy. Let's get a view on this from Doctor Seijiro

Takeshita, who runs the British arm of Japan's Mizuho. Tell us your

thoughts on how effective this tax will be on tackling the issues faced

by the Japanese economy. It will first be seen as a sign they are

trying to put some discipline in place and gradually they will be

trying to raise tax going forward because they need to achieve 10% by

October 2015, and using the deflationary years, there was no way

they could raise this, so if they do not do that now they will never do

it. What about the impact on the shoppers, the psychology of it than

the fact they are feeling heart in their pockets. Is that a big impact

or not? We will see the negative whiplash. We will see the decline in

private consumption, but we feel that from July onwards, things will

be back to normal, because we are seeing the fundamentals of the

Japanese economy coming back nicely, so the wages are probably going to

rise quite nicely so from that point of view I do not think it will be as

bad as some people expect. In your view is his strategy working? I

think the first era has worked and it is a structural transitions which

will take a lot longer. What about trying to keep the Japanese yen

week? That has been a big part in this recovery but you cannot play

around with the markets for ever. It is being collected and Japan is very

flexible. The bank of Japan is very different from a couple of years ago

and they will be flexible enough to comply with any emergency issues

that could arise. We appreciate your time, good to get some analysis on

that sales tax going up today. Stay with us to review the papers in a

few moments. There is a warning that shutting

half of the animal health surveillance facilities in England

could leaders at a greater risk of diseases such as