:00:00. > :00:00.Now for the latest financial news, with Sally Bundock
:00:00. > :00:18.A European car colossus in the making.
:00:19. > :00:21.France's Peugeot Citroen is poised to buy General Motors' European
:00:22. > :00:27.business, including the Opel and Vauxhall brands.
:00:28. > :00:30.China's Premier cuts the economic growth target for this year.
:00:31. > :00:38.We look at the risks to the world's second-largest economy.
:00:39. > :00:41.Welcome to World Business Report, I'm Sally Bundock.
:00:42. > :00:45.Also in the programme: Deutsche Bank plans to raise billions of euros
:00:46. > :00:56.General Motors is set to announce a deal to sell Opel and Vauxhall
:00:57. > :00:59.to PSA Group, the French company that owns Peugeot and Citroen.
:01:00. > :01:01.Both companies are hosting a press conference in Paris
:01:02. > :01:04.Buying GM's loss-making European operations will make PSA
:01:05. > :01:07.the continent's second-biggest car maker, after Volkswagen and ahead
:01:08. > :01:10.of French rival Renault, and it will be a giant.
:01:11. > :01:13.Last year PSA and GM Europe sold a combined 4.3 million vehicles,
:01:14. > :01:15.and posted revenues of 71.6 billion euro.
:01:16. > :01:19.But the deal has already raised fears in the UK the jobs of 4,500
:01:20. > :01:27.workers at Vauxhall's plants could be under threat.
:01:28. > :01:32.In Germany, where two thirds of Opel's 38,000 staff are based,
:01:33. > :01:34.the government has been seeking reassurances the jobs are safe.
:01:35. > :01:37.Opel had hoped to return to profitability by 2016,
:01:38. > :01:40.but the slide in the value of sterling following the EU
:01:41. > :01:43.referendum last June contributed to its 257 million euro annual loss.
:01:44. > :02:04.With me is Jom Holder, editorial director of Autocar.
:02:05. > :02:10.Nice to see you. It is a very anticipated press conference. What
:02:11. > :02:14.do you think they will tell us? I think we won't learn a great deal
:02:15. > :02:20.this morning other than that the deal is going through. There is due
:02:21. > :02:24.diligence to go through afterwards and the car industry is slow-moving
:02:25. > :02:28.and making changes. There is no rush to change so they will play their
:02:29. > :02:31.cards close to their chest. And they will probably have to for political
:02:32. > :02:35.reasons. Where there will be job losses, in Germany, in an election
:02:36. > :02:39.year, in the UK is extremely sensitive with Ford's news about
:02:40. > :02:44.Bridgend last week emerging. What may happen to the various plants
:02:45. > :02:50.around Europe? At around 20 plants potentially affected from the Opel
:02:51. > :02:54.side, and even more from the PSA side. They are in a competitive
:02:55. > :02:57.situation and both companies are underperforming. The factories are
:02:58. > :03:01.not producing enough cars to be profitable on average so the obvious
:03:02. > :03:05.way to start making profits is to start imposing cuts but these
:03:06. > :03:09.factories work on seven to ten year cycles so the bosses of PSA can sit
:03:10. > :03:13.back and see what assurances they are offered by various government
:03:14. > :03:18.and what incentives they are offered in order to keep various factories
:03:19. > :03:23.open. To what extent does Brexit play a part in this story? The fall
:03:24. > :03:28.in the value of sterling has been a problem for European car makers.
:03:29. > :03:32.Absolutely, PSA blamed it for the reason they fell into loss last year
:03:33. > :03:38.and it is a problem because it brings uncertainty to the UK plants
:03:39. > :03:42.that Vauxhall has. It could hinder freedom of movement and ring
:03:43. > :03:45.fluctuations in currency, it could really undermine the certainty PSA
:03:46. > :03:49.is looking for when it wants to commit to these factories. On the
:03:50. > :03:54.plus side, from the point of view of PSA group and what it is doing, it
:03:55. > :03:57.has seen an incredible turnaround in the last couple of years.
:03:58. > :04:01.Absolutely, three years ago it was experiencing multibillion euro
:04:02. > :04:06.losses. It had a new leader who was famed for being able to turn
:04:07. > :04:11.companies around and he has done just that with PSA. He has made them
:04:12. > :04:19.incredibly profitable, higher profit margins than even VW at the moment.
:04:20. > :04:24.Also, GM prevented Vauxhall and Opel from selling in the United States.
:04:25. > :04:28.That could be more in the future. It could unleash Opel in a way it has
:04:29. > :04:33.never been unleashed. We have seen that before with great car
:04:34. > :04:37.companies, big groups like Ford, when it controlled Jaguar, Land
:04:38. > :04:42.Rover, Aston Martin, when it let them go, they all thrived. It could
:04:43. > :04:47.be good on a global scale for Opel. Thank you very much for your time.
:04:48. > :04:51.We expect a press release from PSA group in about 55 minutes time and
:04:52. > :04:52.the press conference is later. We will keep you up-to-date with the
:04:53. > :04:54.announcements come through. China's National People's Congress
:04:55. > :04:56.convened this weekend in Beijing's Great
:04:57. > :04:58.Hall of the People. The 3,000-strong event is staged
:04:59. > :05:03.each year by the party, and is usually a forum
:05:04. > :05:06.to rubber-stamp legislature But China's economy is in trouble,
:05:07. > :05:10.and yesterday Premier Li Keqiang's annual report gave some clues
:05:11. > :05:13.about the state of the economy in the year ahead, and there
:05:14. > :05:16.are a lot of problems ahead. Economic growth is expected
:05:17. > :05:20.to be unchanged from last That is one of the slowest growth
:05:21. > :05:24.rates for more than a quarter This growth rate has complicated
:05:25. > :05:28.Chinese government efforts to shift from an economic model based
:05:29. > :05:30.on debt-fuelled investment and exports, towards
:05:31. > :05:31.a consumer-driven one. The government also wants to trim
:05:32. > :05:37.bloated state-owned government industries, while tackling
:05:38. > :05:40.the slumping currency. And at the same time it needs
:05:41. > :05:44.to halt the massive capital flight from Chinese enterprises seeking
:05:45. > :05:46.better returns abroad, and also deal with fears
:05:47. > :05:49.about a housing bubble Joining me now from Beijing
:05:50. > :06:07.is Stephen McDonell. So the outlook for the economy has
:06:08. > :06:11.been cut, but it is not a significant cut any means. 6.5%,
:06:12. > :06:16.give us a sense of what people are saying about that. Well, therefore I
:06:17. > :06:20.talk about the figures I suppose I should put a brief caveat on it that
:06:21. > :06:25.some analysts think that you can't trust China's GDP figures at all
:06:26. > :06:28.because in recent times we have seen provinces lying about their GDP
:06:29. > :06:33.figures to either inflate the performance, they are supposedly
:06:34. > :06:38.having, or to attract support from the Central government. But for the
:06:39. > :06:44.purposes of this discussion let's just say that the figures are
:06:45. > :06:49.ridgy-didge, as you might say in Australia, so 6.5% of GDP is down
:06:50. > :06:55.from 6.7% achieved last year. But the Chinese government and Premier
:06:56. > :06:59.Li Keqiang would say this is part of the plan, that we have to wean China
:07:00. > :07:05.of this breakneck growth to achieve more sustainable, better growth into
:07:06. > :07:11.the future. And you mentioned what they are trying to do. It is not to
:07:12. > :07:15.rely so much on exports, in favour of domestic led consumption. Do not
:07:16. > :07:19.rely so much on making shoes and things like that, and to get more
:07:20. > :07:24.into hi-tech goods. What they would really like to do is to thrust China
:07:25. > :07:30.into a world along the lines of the way South Korea did, or Taiwan did
:07:31. > :07:35.in the past, to make this the next generator of... The new computers,
:07:36. > :07:41.the new apps, the new hi-tech goods that the world is going to need. And
:07:42. > :07:45.to do that, big changes are needed here. And is there any other key
:07:46. > :07:49.elements that they have said so far, or revealed so far, that could
:07:50. > :07:58.affect the Chinese economy in the coming year? Well, you also
:07:59. > :08:03.mentioned the need to change SOEs and the role they are playing. It
:08:04. > :08:06.has been a slow change there, because people who watch China will
:08:07. > :08:12.know that steel, televisions, all these big industries, they are all
:08:13. > :08:16.still controlled by state owned enterprises and some would say that
:08:17. > :08:20.that is fine. It just depends what you want to achieve in your economy.
:08:21. > :08:24.But there have been problems with, for example, they are trying to
:08:25. > :08:30.crack down on what is called shadow banking because there is a big
:08:31. > :08:33.problem with debt. Now, these SOEs that I mentioned get preferential
:08:34. > :08:37.treatment in terms of loans from banks so smaller enterprises have
:08:38. > :08:41.found it hard to get a loan so now they are trying to free up some of
:08:42. > :08:46.the money needed for those businesses to get a loan, I guess to
:08:47. > :08:52.take that money away from those SOEs. Thank you very much indeed.
:08:53. > :08:55.In other news: Deutsche Bank will be offering new shares to raise
:08:56. > :08:59.Germany's biggest bank plans to float part of its asset
:09:00. > :09:00.management business, but will keep Postbank,
:09:01. > :09:03.the retail banking business it had been expected to sell.
:09:04. > :09:06.The shake-up follows huge losses and a $16 billion legal bill imposed
:09:07. > :09:12.The US is suspending a fast-track service often used by technology
:09:13. > :09:14.companies to recruit foreign skilled workers.
:09:15. > :09:17.The H-1B visa is issued to tens of thousands of highly skilled
:09:18. > :09:21.Currently, companies can pay extra to get the visas approved within 15
:09:22. > :09:24.days, but starting in April, this process will be stopped
:09:25. > :09:42.Looking briefly at markets, let's show you how things are faring in
:09:43. > :09:46.Asia. The news coming from North Korea did hit sentiment, certainly
:09:47. > :09:51.in Japan. We see the yen strengthening in response to North
:09:52. > :09:54.Korea's launch of four ballistic missile this morning. Obviously any
:09:55. > :09:59.sort of geopolitical risk causes people to pull out of anything they
:10:00. > :10:03.feel is of risk so the yen is strengthening as a safe haven and
:10:04. > :10:09.some stocks like financials and exporters losing ground in Tokyo.
:10:10. > :10:11.That's it for me for the moment, I will see you soon for the News
:10:12. > :10:13.review.