hour, it is shantou in japan with management hammering out there annual deals. we will look at the auto sector, particularly toyota. smokerscigarette lighting up in public. and every little help for employees doing a good job. >> a big good morning to you. economic data out of asia. we have exports coming out. also, shipments down 18%.

the biggest trade deficit on record. that is a concern. japan, three hours to go. record deficit. that is really the impact. we see have a volume and big declines. back to malaysia, few clues as to what happened to the malaysian airlines flight 370. it was headed from kuala lumpur to beijing. our southeast asia correspondent is in kuala lumpur. is up to speed with the latest on what we know so far. >> we know little so far. what we know right now is that searchers have found some degree delete to be a fragment of an

aircraft window. not yet determined if it is from mh370. we also know that there is an oil slick discovered. 48 hours after the disappearance of that airplane, we know very little. the aircraft yet to be itntified, no signs of according to malaysia's transport minister. what we also know is that now more than six nations are involved in the search, including thailand, indonesia, china, said or, as well as the u.s. all parties contributing one way or another. some hardware, ships, planes, even intelligence. experts from boeing are headed to malaysia to m put togetherh the story what happened to 370.

the search, it is concentrated to 20 knot miles. nothing so far. that is the frustration felt by all searchers and family members. >> fingers pointing to perhaps people being radicalized good tell us what authorities are saying. hat information do you have? >> it is probably best it is puzzling -- it is puzzling. passports.stolen but what we are hearing is that it is not just those two passports, but at least four being investigating. the two passports you mentioned, one alone into an italian and the other belonging to an

austrian, they were both stolen in thailand. interpol has made strong criticism. it's said that the passports should have been checked again before passengers were allowed to board. .hat is the issue at this time whether procedures were followed or security lack when it took off. malaysia has called a news conference at noon local time. so that is an hour from now. what about the security in place at kuala lumpur airport? you do fly in and out on a regular basis. this is considered a -- airport.r ward. security systems are in place and want to those we see in

london, in singapore, even the u.s. there are body searches, searches of bags. if you take a look at the systems put in place, they include biometric finger printing. so all the procedures are in place. malaysia is hoping to be an asian aviation hub in the next six to seven years. the problem is where the security procedures were carried night.ting into kl last was not made to go through that system. the question arises again. were procedures carried out? >> thank you very much. >> the mystery surrounding major 370 has been a

topic for our guests this morning. , smith peter king is a member of the u.s. homeland security department and he talked about how to tell whether a ask what is fake or stolen. >> there should be a chip in the passport indicating that it is stolen or invalid. the airport is supposed to have a system in place where they can certainly check against the interpol database to make sure no one has -- no one with a stolen passport gets on the plane. >> independent air safety consultant says the plane has a very good record. is arguablyairplane the most reliable airplane that has ever been built. his record proves that all these years it has been in service and that has had no fatal crash on its own. so the airplane is a very, very

secure robust platform. so that would be the last place that i would think. has lost moreair than he billion dollars in the past three years. the financial situation has had no impact on safety. isin terms of financial, it completely different story altogether. the financial strain has no way impacted its safety track record at all for the past four decades. so there is no correlation with regard to financial mormons at -- financial performance and safety track record. >> there were no known issues with that particular aircraft. but there have been a lot of problems around the airlines business side of things. , three years of

losses, he has to turn that around. this is really just another thing we have to look at. >> and he has politicians on his back because the government does own a big part of that airplane. profit -- >> or lack of it. >> yeah, three straight years of losses during $1.3 billion. we essentially have the biggest loss back in 2011. going towards last year, that has ballooned back to $360 million. let's look at cash flow. this has also been a problem. 227 million dollars as far as the negative operating cash flow's for last year. there has been a lot of pressure for the government to get out of

this business. they have a 69.4% stake. [indiscernible] >> yes. that is the story in 2000 when they came out and yelled out the airline. they bought back 29% of the company, double the current rice. there has -- at the doubletree double thece -- at current price. it just makes more sense for a private investor. they would be able to exert more influence to turn the airline around. what is the root just what is ironic -- what is ironic is the former ceo that was able to turn it around was back in 2006. he is saying that the government should have no business in the airline at all.

>> let's take a look at this with the competition. low-cost carriers have a lower cost base. about full-service carriers, the likes of cathay world?gapore in this >> you have thai airways, philippine air and others. revenue per employee, malaysia airlines is about fit. .- about fifth so they are just about half as far area you mentioned low-cost, that has eroded margins. >> thanks a lot for that. let's look at what we've got coming up next. we have beijing and beyond. [laughter]

out in beijing and beyond, we will look at how it will take more than a changes let -- a change in legislation to stop smoking in china. the country reports its biggest fall in exports in five years. we will have more when we return.

exports unexpectedly fell last month, the biggest drop we've seen since the international crisis. >> economists were expecting a gain -- 7.5%. t. >> japan's deficits, snuggling in january. injapan's deficits doubling

january. business estimates and consumer spending was also weaker than expected. >> employers adding more than expected 175,000 jobs last month . that was 17% better than he on is predict it. -- better than economists predict it -- predicted. >> you have an interesting note talking about families and emerging markets. explain to our viewers. >> essentially what we argued is that, whatever happens in ukraine or turkey or elsewhere are not isolated incidents. this is not driven by local factions. infact, it is a global trend in the next six months, most markets will be entrenched in some sort of political tension,

geopolitical tension. >> is that really an overall truism? it is a thing to say that they will suffer some sort of political problem or economic problem. have then as you don't right gdp numbers, the right of a sharing & the witty, you have revolutions. right numbers, you have revolutions. as soon as you deprive people of stable inflation and of have revolutions start and they usually start in more marginal areas. >> i found it interesting that you singled out five countries. you're saying it is payback time. they were irresponsible earlier. is that what you are suggesting?

>> yes, stalled reforms for about a decade. social economists are talking about, they have created a system that is designed to fail, but in breach of the very few people. and lack of reform and those institutions, plus low liquidity , it is sitting to expose those problems. the only way out of this is by reforms. that's why, if you look at the nine they do. -- they do. there are many risks. the one thing we have to consider is geopolitical problems. is racial problems, cultural, religious, they all come to the fore very quickly. the other sets of problems as sustainability of global recovery.

the same applies to global trade . so far, whatever growth rates we have had were most slickly -- cyclicallye most driven. reforms is the only thing you can do. is your only line of defense. x and repair -- >> and repair the roof while the sun is still shining. is that the reforms can keep the wolves at bay. a lot of people are highlighting vietnam and bangladesh to -- several countries that seem to be embarking on substantially reform. in china, i was this a ride to the a have confirmed 7.5% growth rates because really that cannot be achieved under normal circumstances.

>> they never failed to actually meet the growth target. >> they could. but it is once again a payback. the question then becomes is how much do you discount credit crisis versus delivery of gdp growth rates today? >> what is not big into the markets when it comes to emerging? >> a good thing is that, in emerging markets, i have seen a lot of it already be in your -- they in. where it's not bacon is developed. -- baked in is developed. only 10% to 15% of global and euro demand. today, it is one third.

will an emerging markets just adjust it themselves and you will be fine, you won't be. where would porsche sell their cars? so there will be blowback to market gdp, urgency desk earnings-per-share. the good -- earnings-per-share. >> victor will be joining us after. >> with a rest of the game. getting into gear. >> we have a look at the toyota talks.

>> this period of the year in --an is when talks giveaway talks get underway between management and unions. prime minister shinzo abe wants higher wages to raise spending and to boost the economy. a >> nissan appears to be willing to accept its workers demands. meanwhile, hyundai is considering its employees similar requests. but toyota is holding out. for an are pushing

increase in monthly wages. the company says that demands are surprisingly high. according to the nikkei newspaper, [indiscernible] >> that is some background. let's see how those they talks will lay out -- those pay talks will play out. how does japan's union compared to others in japan? >> toyota's union is a little bit higher than some of the other automakers, which maybe makes sense. the company is on pace for its best year ever for fiscal year profit. the increase in base pay that is being sought is higher than the average. but there has been some pushback on that front. the company has said that the proposal by the union is

surprisingly high. you heard some interesting sort of retorts from the unions in response to that, saying that this is necessary for shinzo abe's push for increases in wages that are really needed to put an end to deflation in japan. >> is really close to $40. what has been the unions reaction and what has been japan's reaction to the unions for ozone -- to the union's proposal? question is about a 1% increase in base wages. it is not a bold demand by the union. i think a bigger number and the one that maybe gives toyota pause would be on the bonus front, which is almost seven months worth the equivalent for a bonus. and that would bring the increase more in line with what abe is looking for.

be in excess of 2% increase in total pay for those workers. >> what happens if each side is not able to some -- to come to some type of resolution? usual to havend disputes between labor and management in japan. that is something that i think is worth watching. strikes are down by 99% from 1970's -- in the new in the mid-1970's. know by later this week, march 12, what the results of the negotiations will be. >> thank you for that. >> the mumbai session started 20

minutes ago. futures were down. that is essentially in line with the wider asia-pacific. the nifty on the singapore issues is up by half. satan is being affected by a equitieser price. falling back about .8%. down.% plus rolling the markets in tokyo, record deficit find out.

>> the search goes on for the malaysian airline that vanished en route to beijing. let's start by hong kong. the u.s. finished last week on a high with a strong jobs figure. that has not been the case so from china to japan. both disappointing. john joins me now from market reaction. >> it is really a big [indiscernible] exports down 18%.

system of the economy is not working and you have capital spending quite high. stuff -- also the second-biggest deficit on record. all these factors again waiting on the chinese terrain. -- chinese situation. 1.3%.ong down up in theare caught of the impact of the chinese economy. every economist said that the first to developed rates -- the biggest decliners are at officially down.

australia really caught up in that one. is the china story. again, go back to the beginning -- every single industry group is experiencing declines. exporters to industry areas, -- of course, the industrials down at the bottom, about 1.5%. of ,ourse, construction starts exporters, 52 stocks are falling.

they have exports falling. of course, the impact of the first ever [indiscernible] on the fault. news forell is bad china. >> let's look at the japan story returning from its lunch. . the nikkei has had a horrid start to the week. chinese story gets tea leoni japanese benchmarks. we had a record deficit again for the period. industrials are falling the most . telecom, consumer goods, financials -- this is impacting

the japanese story. let's look at individual stories. you have the yen and days three stocks for example getting out to 10% to get figures among the company in february up to 12 said. -- 12%. profits on a big push forward. a record trade deficit. eight, the wheels coming off -- indeed, the wheels coming off. far?do we know so there was weaker growth than expected.

there was a current account deficit at a record. >> yes, let's take a look first. it backward looking, but it gives you a sense of momentum coming into this quarter. expansionping to see of 1%. looking because this quarter is expected to be much better with japanese spending to do the heavy lifting before that kicks in next month. the concern right now is a lack of momentum. this frontloading us ending is kind of like why not. by the next next order hits, things like exports, business spending, capital spending -- we talk about the 10 conservative. that is expected to hopefully pick up the slack. but if you look at this spending for example, that was actually to .8%.down from 1.3%

works this is getting to be a little bit worried. i suppose you could put it all down to the energy that japan has because of its nuclear power. >> is ironic. this way, this is three years from the earthquake and tsunami which we all know forced japan to shut its nuclear power facilities and really forced japan to start importing a lot more oil to power the country. and the trade-offs has swung into a deficit is that because of all these oil and boards. -- oil imports. which is why we are staring at quite a large hole as far as the current account deficit. that is really worrying. what japan has on its side right

now is that it does have to finance that hold, to keep doing what it is doing, keep importing a lot of oil. looking at the bond markets, those are owned locally. once it changes, it will have trouble financing that debt to keep importing a lot of oil. .> thank you very much indeed >> a growing headache for china's leaders. the biggest drop since the global financial crisis. economists say that the figure should not be taken at ace value -- at face value and the situation is not as dire as it appears. >> there are two different sets of distortions at play. advancements over invoicing issues last year. that is also a distorted basic

fact. exports of january and february grew about iraq five percent and that is lower than what -- about 5%. that is lower than last year. anz who saidoke to that china needs to ease policy to meet the 7.5% growth target. >> during the course of the year, we may see some more market volatility and the markets probably will expect more policy easing if we don't see the first two quarter gdp growth. that is something we need to watch. china saw its first onshore default. there has been an enormous rise

in risk in china. >> nothing we have seen in china thelast few years have been perception that many bonds out there are backed up by some sort of government. and how this has happened. it has led to a proper -- it will hopefully lead to a repricing of risk. in the last few years, we have had a gigantic missed racing of risk in chinese and -- in china's economy. >> many different reforms are being reported. one that could go up in smoke quite literally. there is a ban on smoking in public. but it would be a hard habit to break. stephen engle has been looking into this and how will they make this happen? he's a going to happen? -- how is it going to happen?

china, it'sings and all in the of the mentation and the enforcement. those are the biggest challenges. the government did start manning smoke -- banning smoking in public places. anyone who was there could see plenty of smoking going on on the steps of the great hall of the people. health andister of family planning says they are actively promoting the creation of a national law against public smoking. drafting of the law began last year. the aim is to have a state counsel possibly issue a van for smoking in indoor places like restaurants and hotel lobbies. why now? health care costs are soaring in

china and many more people are dying of smoking-related diseases. in't take my word for it take a look at the statistics. >> about one million people die each year from tobacco-related illness in china. this could increase to 3 million deaths a year by 2050 if we do not take an action. of the adultn, 40% chinese population smoke. tobacco causes 20% of all cancer deaths and 70% of all lung cancer deaths. these are terrible statistics. day, therend of the is one very powerful group that will deaths that against this. againstbe dead set

this. the tobacco industry won't like this at all. >> china gets more than $95 billion at least in annual tax revenue from tobacco-related sales. association is truly a monopoly. this is the regulator. it also runs the china national tobacco corp. that is a monopoly and it is a regulator. the u.s. has dropped tobacco-related deaths and the same needs to happen here. arethey need reforms that enforceable. it will be easy. industry is strong. and a new law will have to come from the very top.

many of them are smokers, too, i would assume. >> thank you for that. >> still to come on the program, japan's growth slows more than expected. -- can boeheim though they handle the higher taxes on the way?

>> this is "asia edge." families and happy not so happy families in a letter the emerging markets. we are talking about japan. in many ways is a work in progress.

at least japan is changing. the difference between japan and many other countries, population aside, is that change must come. until people make the decision, you can't have the right all it takes. time, people have decided that the politics is right. whether the medicine is right has yet to be seen. >> a tax increase next month, it will go down from april to june. it is the expectation area -- expectation. what tensions on the do? >> very little. --needs to double down area down. in other words, there has to be another dose of daniel is. -- dose of stimulus. just bought a one-way ticket wherever he is going. there is no coming back from their. so there is no way of stopping. central banks are hesitating.

qcd is hesitating. cd is hesitating. boj is hesitating. no structural reforms a company that. >> and that is where you get the next light. -- next lag. and how reforms will be implemented. it is not china. it is not national. it is local. it is interesting that everyone talks about the sales tax rise in april. i think it is more or less priced in. it is not as big an event that people are making out. >> in terms of people's expectations, maybe the answer is yes. so you have to separate the markets from reality.

i think it's priced in. whatuestion then becomes will make you invest more in japan. and what will drive real wages? so far, real wages are falling. they are not rising. without investment and without real wages -- expenditures are not increasing as they should. >> at least what he is doing is moving forward. if that is not going to work, then there is a lovely no proper exit for japan. but at the very least, japan can solve the fault. distribution, inequality and japan is relatively low. so if you were to default, citizenry will suffer equally. so it is far more palatable than in most other places. but right now, what you need to do is try to stimulate investment, try to

stimulate wages. and there is a possibility now that he will succeed whereas two years ago that wouldn't have been the case. >> a lot of these government bonds are owned locally. which is why this current account deficit keeps getting bigger and bigger. but it is a ticking time bomb. idea of thehe whole modern economy is that whatever you borrow you never really expect [laughter] to have it paid back. [laughter] that is just a myth. >> that will be the first year that we have current accounts in negative territory. >> part of the reason that japan is reforming is that savings are now at a point that they are below the investment. as soon as you get to that point, you start generating trade deficits. that is a problem for china. theygs are so high that

are committed to invest 40% of gdp nomad or what. so japan -- so china needs to lower the saving rate where japan needs to inflate out of it. >> how would you rate economics -- rate abenomics? >> the first stage is to confuse evil. [laughter] if you were to promise that everything is going to double and to move inflation, you have a chance to break deflation expectations. in the first stage, he was very successful. the seconds a scummy have to keep on going. you cannot stop. >> that was all talk and hype but there is no product of their. -- product there. argued that japan

had the greatest economy in the world given the yen's strength. that is an esoteric point. incidentushima nuclear or accident the defining moment that perhaps it would begin to faster growth in japan would have to do something? two think japanese face very difficult issues. one of them is geopolitical. that is china. the other issue they are facing is that savings have declined. they can no longer finance themselves. and the third one is what you just described, which is natural disasters. i think those three things coming together changed people's minds. instead of saying you know we are fine as we are a mother is it is action we must change. drops thes what politics in subsequence two or three years.

differenceat is what japan from china. have made that decision, politics looks confused by definition because it is reflecting insecurities of people. that is the strength that abe has. istrong client for japan it's indispensable power. in other words, everything in this room will shut down if japan did not exist. major supplier of complex products, products that go into other products, that make a world take. that will be asked make the worldtake -- make the tick. be where japan has to go. >> still to come on the show, gym membership and a big

paycheck are no longer an option. break, some of the more unusual perks on offer.

>> they battle for top talent, nathan. salary and health care are a given. we go beyond the paycheck.

>> ok, sign me up for this unlimited vacation days. >> just never show up. >> that is what it's all about here and there has been a change of command on the international space station.

a japanese astronaut is taking control for the first time. ,> yes, this is an expedition the 30th expedition headed back to hurt later today -- back to earth later today. >> they will start their work and the new commander is koichi wakata who says he is happy and proud to taking charge -- to take charge. >> congratulations on the amazing that complements. >> we congratulate you as the new commander, the first japanese commander. looking forward to another few months with you. >> unforgettable memories together. theill continue to keep station operations safe and fun.

>> a news conference in malaysia in two minutes from now. >> an ongoing story of their. we will have more details tomorrow when we join you again. have a great rest of the day.

>> the following is a a program. itsopinions and views rested not reflect those of her television its affiliates or its and please. a the following program is paid advertisement for lifelock identity section. >> today on living well with montel. >> something was terribly, terribly wrong. >> 20 fraudulent notion showing up, it was bad. >> i had not apply for any of these things. thehe woman told me that credit cards had been activated from your home phone and >> 30 years ago, she was a hard-working single mom fresh