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QUEST MEANS BUSINESS

China's Q2 GDP Outpaces Japan; Worker Strike Could Close Six U.K. Airports

Aired August 16, 2010 - 14:00:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


RICHARD QUEST, HOST, QUEST MEANS BUSINESS: Good evening.

Two pieces of economic news this Monday from Asia, and they are both closely related. Japan is slowing down and China becoming more important. It is poised to take Japan's place as the second largest economy in the world. By the total value of goods and services produced, China now outguns Japan in the three months to the end of the June. Beijing says GDP came to $1.4 trillion, overshadowing the Land of the Rising Sun.

Japan remains the bigger economy. If you look at the numbers overall, for the first half of 2010, by the end of the year, the balance will probably have swung in China's favor. At least that is what people believe is going to happen. China will have a stronger second and third and fourth quarter of the year which will reverse the balance. At its current pace of expansion China could even overtake the U.S. as number one in a decade or so, but that is still some way off.

As you'll see if you join me over here, in the library. The numbers from China seem all the more remarkable when you remember the government is actually trying to cool down the pace of growth. Here is how the IMF thinks things will stand by the end of the year. China at 5.-I beg, your pardon-China is $5.4 trillion, size of the economy, Japan 5.4 trillion, size of the economy, the IMF GDP forecast gives you an idea. And if that is indeed the way it is going to fall out. Then that goes to number two. Behind the United States, massive difference the U.S. has an economy of $14 trillion last year.

The GDP per capita, this perhaps puts a little more perspective. As a developing nation its population is 1.3 billion. Now, if we strip this out and take this as 1960 right the way through here. That has been a sizable increase. But nothing compared to the vast export-led growth that we've seen from Japan, in terms of GDP. So China still ranks as a 127th behind countries like Angola, Azerbaijan, and such like. A difference of about, this is about 34,000 to 40,000, per capita. That is just about 6,000 to 8,000.

But the growth, this tells us why we need to be so concerned about this tonight. China will experience growth in future of 10.3, Japan now down at 10.2 on an annualized basis, 10.4, the U.S. is 2.4.

So now you start to see exactly why this is so important. Japan-and why the news that Japan's economic growth had slowed considerably has given great cause for concern. I was joined by Andrew Stevens, from Hong Kong, to talk about these numbers, which were disappointing at best and very worrying at worst.

(BEGIN VIDEOTAPE)

ANDREW STEVENS, CNN CORRESPONDENT: Yes, very worrying, Richard. This was a number that came in way below expectations. Most people were thinking of an annualized growth, growth over the full year of around about 2.3 percent. It came in at less than a 0.5 of 1 percent. And the reason for that mainly is there is a real fear in Japan that the government is going to try and impose a higher tax, a valued added tax, which is basically stopping the consumers from spending, waiting to see what is going to happen. So, you have no consumer spending, or very little consumer spending. Add to that the strong yen, which is killing off the export market in Japan. And really there is just nothing moving in the Japanese economy at the moment.

QUEST: Is the talk now of real double-dip in Japan?

STEVENS: Yes, there is a real feeling, of the people I've been speaking to that a double dip recession would be, probably, and this is just a straw poll of people I've been talking to. I would say 50/50, Richard. Because there is no promising outlook at the moment.

Japan's-one of Japan's biggest export markets is actually now China, as you know the Chinese economy is slowing. The U.S. is in the doldrums and getting weaker. And as I said before there are a few internal problems about extra taxes in Japan. Add to that the government can't actually spend a lot of money on extra stimulus, because it has such a big national debt at the moment. So, very difficult to see Japan going anyway other than flat, or even dipping into negative growth again.

QUEST: The other news out of Asia, is of course that China is now the second largest economy in the world, it has flipped flopped its position with Japan. But is that just a bit of sophistry with the numbers? Because China-I mean, the GDP per capita is much lower than Japan.

STEVENS: Yes, you are absolutely right. The GDP of Japan is something about $40,000 per person, compared with China, which is less than $4,000. So, on that measure of affluence and wealth, Japan is clearly ahead. But this isn't just about numbers, because it clearly showing that the growth, the rapid growth of the Chinese economy. It is now number two based on total value of the economic output. It was expected, Richard, we can't-(AUDIO GAP)

(END VIDEOTAPE)

QUEST: That was Andrew Steven in Hong Kong.

Now, more seriously perhaps, from the Japanese point of view, is why the economy there slipped back to minus 0.2 of a percent in Q2. Is Japan heading for a double-dip recession? It certainly seems like it on the basis of the latest numbers. Seijiro Takeshita is a senior strategist at the investment bank, Mizuho International. He told me there were a few reasons for Japan's sudden lurch into the slow lane.

(BEGIN VIDEOTAPE)

SEIJIRO TAKESHITA, SR. STRATEGIST, MIZUHO INTERNATIONAL: Well, there was one reaction to the incentives that were given to the Japanese public, particularly on consumable goods in the electronic side. Many people blame on that. But that certainly isn't the only factor. Of course, exports to Asian nations weren't as good as many had expected. And I think the bottom line is that private consumption really hasn't taken place.

We had our cash income increase but, again, it goes back to the fact that for the Japanese to spend more than cash income you need to security in jobs. That is what has to be clear for the Japanese.

QUEST: But was it an aberration? Was it a one-off, that quarter?

TAKESHITA: No, I don't think so. Of course, again, July-September figures will be good. But I think the bridging isn't strong enough. The scenario of the Japanese government was that the per capita expenditure will be strong enough to bridge through private consumption next year. But I think that will be a very difficult task.

QUEST: The new government has warned about the need to address the government's-not just budget deficit, but total government deficit to GDP.

TAKESHITA: Hmm.

QUEST: If there was any scintilla of a chance of addressing that, then the number will get worse. The economic growth will get worse. So surely the Japanese government is in no position to start dealing with debt to GDP.

TAKESHITA: Well, in saying that, their methodology is twofold. One is to tackle this and try to transform the focal point in the Japanese domestic expansion. Now it is easier said than done, I know fiscally it is almost impossible. But at least they are starting to mention this. This is a start. For 15 years, they haven't been doing this. They have not even mentioned it because it would be against their election poll. But for the first time I think the Japanese public are finally starting to realize, after all these candidates giving policy, which is all short-term, they start to realize that they have to go through structural transformation or else.

QUEST: What sort of structural transformation do you think needs to take place?

TAKESHITA: Of course, our strength is on exports, and we should keep that. But what they needed to do was transform into the Japanese domestic demand side. There is-

QUEST: I'm sorry to interrupt you, because you and I have been talking about this for more years than perhaps either of us would like to remember. But what policies can be introduced that will get people to buy, when culturally they are not inclined do so?

TAKESHITA: Firstly, revival of employment practices, especially on the corporate side. That is why cap ex has to revive first in Japan. Again, this is the only country in the world where you find jobless rates and suicide rates correlated. In other words, you need to find sustainable good security in job place, before the Japanese public to spend. That is the first thing they have to do, and in order to do that, it is not only export driven. They have to transform themselves into creating new jobs in the Japanese domestic sphere.

QUEST: When President Obama warned that America, the United States, could no longer be the purchaser of last resort for the rest of the world. That warning goes to Japan and it goes to China, doesn't it?

TAKESHITA: Yes, and in fact, Japan and China are not rivals. They are working together. Yes, as of today we know that China has surpassed Japan. But for Japan, China is much more of a partner, and you are right in that sense. The U.S. reliance has been far too strong. That is one of the problems the Japanese companies have. And that is why they are trying to transform themselves into a little bit more focus into Asia.

QUEST: As we bring this to close, so much has been made of the fact that China's economy is now larger than Japan's on the basis of the last quarterly numbers. But that ping pongs backwards and forwards. Is that just a red herring, in the sense that Japan, per capita, on every other metric, is a far more powerful economic player?

TAKESHITA: I think a different type of economic player, in the sense that China is very similar to what Japan was in the 1960s and `70s. Japan is maturing into the type of economy where Europe is, where it is right now. However, that transitions stages are not going very well, because of a lack of leadership on the political scene, lack of willingness not to change, by the Japanese corporates, particularly, the strategic apex. And that is what the problem really is, I think, in Japan.

(END VIDEOTAPE)

QUEST: That was Seijiro Takeshita joining me to talk about Japan.

Here in Britain a strike threatens to keep travelers grounded at the height of the summer holiday season. We're live at Heathrow where management and unions are looking for a deal to make sure the planes keep flying.

(COMMERCIAL BREAK)

QUEST: Airlines are holding their breath. Union members and the company that runs most of Britain's major airports are holding talks to try and avert a strike. The walkout, if it happens, would shut down six airports that belong to BAA, a subsidiary, of course, of the Spanish company Ferrovial. These are the ones, Glasgow and Edinburgh in Scotland, Stansted (ph), the big low-cost carrier airport just north or northeast of London; Southampton in the south, but of course, the one that is most concerning, of course, is Heathrow airport, which still remains the largest and busiest international airport in the world.

So it could cause chaos at an especially busy time for travelers. The last weekend in August coincides with a British bank holiday. Jim Boulden is just next the runway and joins me now from Heathrow.

Two questions, firstly, any word from those talks at the conciliation service, and if not, when do we expect?

JIM BOULDEN, CNN FINANCIAL CORRESPONDENT: Well, the good news is, so far, is that they have been talking for more than seven hours today, we believe. And those talks continue into the evening, Richard. Because both sides have said quite publicly they want to make a deal here. There is no animosity, necessarily, between the two. Nothing like what we've seen between the same union, Unite, and British Airways on a completely separate issue. That has been going on for months and months and months.

Here, we have two sides dispute over a pay increase. Should these workers, who work grounds staff and security and the firefighters here at airport like Heathrow Airport get more than 1 or 1.5 percent raise this year. So it is coming up as a pretty simple question. And well be BAA agree to this in order to stop this chaos that would certainly affect these six airports and hundreds of thousands of passengers.

You know, Richard, you and I talk about it all the time, don't we? Many people come through this airport even if they're not going to the U.K., it is used for people going in and out of Africa, Asia, and the Middle East. So, if it were to be shut down, if the union were to call a strike, it would be utter chaos.

QUEST: Jim, is there any evidence that the mere fact that a dispute may be about to take place is having an affect? Are people starting to shun the British airports yet?

BOULDEN: I think it is too soon to do that, because even though the union says it has a mandate from the vote it took with the members who voted they haven't said when they would go on strike. They haven't said for how long they would go on strike. And so we would have to see if that were to come. And I wouldn't want to scare people off, but you know, here at Heathrow, they have seen so much trouble over the last year, haven't they?

QUEST: Right.

BOULDEN: Between the snows in the wintertime, and we saw the ash cloud and the British Airways strike. So, I think that you know the travelers are pretty used to having to check a long time before they fly, just in case. And this one, they need to keep their eyes on.

QUEST: And that, finally, you raise a good point, the traveling public has just about had it up to here, in terms of the issues and the problems. And most of them seem to be surrounding the U.K. airports, or the U.K. air travel.

BOULDEN: Yes, and I think BAA has also suffered as well, as a company it has suffered, because of all those problems. And it says it had a pay freeze for its employees, which they agreed to last year. That is why the employees think, hey, we're coming out of recession now. We have seen airlines travel pick up, haven't we, Richard?

QUEST: Yes.

BOULDEN: And the members of the union say, we should benefit from that, and maybe we should see a bit more than a 1 to a 1.5 percent pay increase.

QUEST: And on that point, numbers from IATA, that I saw today showed the increase in premium travel has continued to show growth. Jim Boulden next to the runway at Heathrow tonight.

A different form of travel when we return, on "Future Cities". It is clean, it is air conditioned, and maybe not like the planes, but this time, it runs on time. In "Future Cities" we'll be taking a ride on Delhi's metro system. I'm meeting the man credited with creating it. "Future Cities", in a moment.

(COMMERCIAL BREAK)

QUEST: The prime minister of India is taking emergency measures as the city of Delhi faces a race against time. In his Independence Day speech Manmohan Singh highlighted an Indian economy that is outpacing all of its rivals. With the Commonwealth Games due to open in the Indian capital in less than seven weeks, he's had to set up a special panel to ensure the construction work is finished on time; which, of course, brings us to the concern that it is growing that many building projects are behind schedule, over budget, and below the required standard, which brings us to this week's "Future Cities" report, which comes from Delhi.

As we have throughout the month of August, been focusing on the Indian capital and the way in which it is preparing for the decades ahead. It is all about an Indian success story today. The man who created Delhi's Metro system. He's called it India's most successful infrastructure project. Now this, of course, is just a small part of Delhi, a vast city, with millions of population. It's thriving. It's teeming. It is extremely busy. It has more-the Delhi Metro, which you can see over here, the New Delhi Metro with its extensions and its new lines, all the way out to the airport and beyond. More than a million people are using it everyday. So, between the city an the metro, Delhi now has a system of travel for the future.

(BEGIN VIDEOTAPE)

QUEST (voice over): Driving through the congested streets of New Delhi. Inexperienced drivers beware. In this city of 17 million people getting around is not easy. There are five million vehicles charging about. But underneath this chaos it is a different air conditioned world.

SUNITA NARAIN, DIRECTOR, CENTER OF SCIENCE & ENVIRONMENT: The Delhi Metro is definitely Delhi's pride. Definitely an issue on which, you know, most people in Delhi today look at the Metro and see, this is our transition to the future.

QUEST: The glittering underworld of New Delhi's Metro system, it defies every stereotype of urban India. Here it is clean, cool, and yes, the trains run on time, offering new hope that India's infrastructure can be fit for the 21st century.

ELATTUVALAPIL SREEDHARAN, MANAGING DIRECTOR, DELHI METRO: Delhi Metro now has become a model and an inspiration.

QUEST: Elattuvalapil Sreedharan is the man credited with making the Metro happen. And what a task, 125 kilometers of track, four lines. There are 83 stations. And yet he delivered it on time, on budget, at just over $6.5 billion.

SREEDHARAN: The success has been phenomenal. And this has given the confidence to the nation that very complex infrastructure projects can be handled by the country, all by itself.

QUEST: The real difference is the number of cars no longer on the roads.

SREEDHARAN: We carry about 1.2 million passengers a day. Now the Metro replaces about 100,000 vehicles straight away. And the emissions coming out of these 100,000 vehicles is almost equivalent of 400 tons of carbon monoxide. We are preventing nearly 400 tons of carbon monoxide being released into the atmosphere, everyday.

NARAIN: We have to change the way Delhi moves. There is data now to show very clearly that people are switching. And the more we can get people to leave their cars at home and take the Metro, the more we know we will have a cleaner air in Delhi.

QUEST: Pollution is being reduced by a third. Travel time has also gone down. There are signs that there is a new attitude among commuters.

SHEILA DIKSHIT, CHIEF MINISTER, DELHI: Delhi Metro has made an enormous change. It has not only given Delhi a modern transport system, it also changed the attitude of people to treat a public transport with respect.

QUEST: Anjali Jain takes the Metro to work and back every day. Her journey time has been cut in half.

ANJALI JAIN, COMMUTER: It is like cutting (ph) for me. It is a long distance over a short period. And very easy to transport for going anywhere, and that is why I am very happy now. SUBWAY TRAIN ANNOUNCER: Change here, for Blue Line.

QUEST: Such is Delhi's success with the Metro, arriving on time and on budget, but other Indian cities are being encouraged to make their own plans.

SREEDHARAN: The government has decided that all cities with more than 3 million population must have planning for the Metro.

QUEST: Delhi isn't done yet. A new express line runs from the airport, which will soon bring athletes to the city in record time, ready to compete for their own records in the Commonwealth Games. And officials are thinking ahead to meet the needs of Delhi's growing population.

SREEDHARAN: Were are running trains only with four coaches. We can make is six coaches, we can make it eight coaches. And today we are running trains only every three minutes. We can run trains every 90 seconds. Which means the transport capacity of the system can be made almost four times to meet the population growth in the city.

QUEST: After 13 minutes on the train, Anjali has arrived at her destination. Home is still a 16 minute drive away. But she now has the option to rent a bike, another forward-looking scheme launched by the people behind the Metro. There is a plan to have these cycle stations across the city. It is all strengthening the public transport network in Delhi and making this future city the envy of others.

(END VIDEOTAPE)

QUEST: The Delhi Metro, in part of our "Future Cities" series.

In a moment, President Obama in America's Midwest, fresh from a weekend trip to Florida. And when we come back Ed Henry joins us live from Milwaukee. Where the president has been meeting workers and discussing clean energy priorities, "Future Cities" of his own.

(DESK BELL CHIMES)

(COMMERCIAL BREAK)

QUEST: Hello, I'm Richard Quest, QUEST MEANS BUSINESS, this is CNN. And today, and always, on this network, the news always comes first.

(NEWSBREAK)

QUEST: Good for the planet and for the American job market is how President Obama is describing his administration's clean energy initiatives. Today, he took that message to the state of Wisconsin and a factory that builds high-tech batteries. Ed Henry is in Milwaukee with the details. Ed joins me now.

How much of this is political window dressing and how much is just good economics?

ED HENRY, CNN SENIOR WHITE HOUSE CORRESPONDENT: Well, Richard, the White House would lead you to believe that it's good economics. But it's politics, as well, because as soon as the president left this speech, he delivered another speech at a fundraiser for the Democratic candidate for governor here in Wisconsin. There's also a tight U.S. Senate race here in Wisconsin.

And this comes, we should say, in the middle of a three day, five state swing, where the president is jet setting all across the United States, raising money, doing campaigning for Democrats who are in tough races.

And we should note, a state like Wisconsin, that he carried in 2008, is pretty reliably Democratic, usually. He's going to California next, usually pretty reliably Democratic. But in both of those states, Senate candidates, gubernatorial candidates having a hard time.

Why?

It's all about the economy. And so when the president came here today, you mentioned the batteries, renewable energy projects going on here. He wanted to talk energy, but also jobs. There was money in that big stimulus plan that the president got past during his first 100 days in office, so money went to this company here.

And as a result, they were able to save 12 jobs that they may have had lay-offs for. And because of some of that stimulus money, they anticipate they're going to hire about 80 people in the next few months. That's a small number of people, perhaps, in the larger scale of the U.S. economy. But the president is trying to make the point that if you go through that stimulus project by project, that adds up to real jobs.

The problem, of course, is what the American people look at is not the number of 12 or 80 jobs saved or created. Instead, they look at the big picture number of 9.5 percent unemployment right now in the United States and it's a very difficult case for him to make in this mid-term election season -- Richard.

QUEST: Did -- let's just briefly catch on the mid-term elections. The president spent a weekend holidaying -- on vacation in the Gulf of Mexico obviously promoting good tourism down there -- but, Ed, how much trouble is the president and his party actually in for the mid-terms?

HENRY: In pretty deep trouble right now. I mean it's traditional that a new president, two years in, loses seats in both the U.S. House and U.S. Senate. That's true for any Democrat or Republican. But you add in the fact that unemployment is so high and you look at the polling by CNN in terms of something we call the right track/wrong track -- do you believe the country is on the right track or do you think it's on the wrong track?

The numbers are sharply in the direction of wrong track.

QUEST: Right.

HENRY: people in the United States, largely, are just frustrated right now, largely because of that unemployment figure. So they're in deep trouble. There's no way around it.

QUEST: And briefly, Ed, do -- do the people, do you think, resent his holiday in the Gulf of Mexico. It was just a weekend away. It was hardly sort of putting up the shutters and -- and disappearing.

HENRY: What he might get more flak for is the fact that he's now headed out to this fundraising starting on Thursday for about 10 days in Martha's Vineyard in Massachusetts, a very swank area where Americans like to vacation. And he may get a little bit of flak for that. I think the Gulf trip this past weekend, he's largely gotten praise for because that trip...

QUEST: All right...

HENRY: -- was not just about a vacation, it was about trying to promote tourism after that oil spill. And so he's gotten some high marks for that.

QUEST: Are you going to get flak -- are you -- are you going with him to Martha's Vineyard?

HENRY: I am not going to Martha's Vineyard. My colleague, Dan Lothian, will. And he might get some flak from his colleague for going to a swank place. And I'll tell him you said that.

QUEST: All right, please do.

Please do.

We'll talk to him on Martha's Vineyard.

Ed Henry, who is in Milwaukee.

HENRY: Thank you.

QUEST: Not quite, perhaps, as -- as glam as Martha's Vineyard.

Many thanks, Ed, to you.

HENRY: Thank you.

QUEST: OK, Patricia Wu at the New York Stock Exchange, where the -- there's a little bit of green on the Dow. The market is exceptionally uncertain -- but, Patricia, is your market in New York is anything like the European bourses, frankly, you could fire a cannon and not hit an investor, without little actual trading is being done.

PATRICIA WU, CNN CORRESPONDENT: Absolutely, Richard.

Certainly no champagne corks popping here on Wall Street. Still a lot of caution. But it was nice to see some buying early on, after four straight days of losses heading into this week. Not much on the economic calendar to produce any big changes in momentum today.

Now, earlier in the session there was concern over Japan's slow economic growth, which added some pressure and resulted in some losses. But in -- there were a few investors that took advantage of those losses, taking the opportunity to do some bargain hunting in tech stocks. And that sector, as you might remember, got flush last week.

But a new week. Today, Cisco Systems and Intel are leading the Dow Industrials and helping out the Nasdaq, as well -- Richard.

QUEST: OK, now home builder confidence fell this month. We know that the housing market, beaten up, minor recovery, hardly anything to get excited about.

But when we see numbers like homebuilder confidence weakening, what effect does that have?

WU: Well, I think it's just more uncertainty it wasn't a huge drop in confidence, but enough for that index to hit its lowest level since March of 2008. And you'll remember that that was around the time the stock market was at its lows for this Great Recession and right before Congress passed a stimulus package that included big tax credits for new homebuyers.

Now, with those gone, uncertainty as to whether this housing market can stand on its own and high unemployment, you can expect to see some rough numbers ahead. And Tuesday, we'll get the latest out on new home construction. That's a key reading that may give us a better picture of which direction this housing market is headed. Those numbers have slumped since the (INAUDIBLE) expired at the end of April, but they're expected to have held steady in July.

And we end on a positive note, Richard. A positive sign in the housing market is the retail home improvement market. Home improvement retailer Lowes reported nearly a 10 percent jump in profit last quarter. Investors certainly liked that news. But Lowes' outlook is still cautious. With all this uncertainty, you don't know how that will affect future sales -- Richard.

QUEST: An hour and 20 to go before the end of your trading day in New York. You're off 12 points. Don't touch any buttons and do more damage.

Patricia, many thanks.

We'll talk to you tomorrow.

And European shares closed mixed to lower, dragged down by further doubts on the economic recovery. And that followed downbeat data from both the U.S. and Japan. The heavyweight banking sector was the biggest faller, easing the markets lower.

Elsewhere, figures out today reveal that Eurozone inflation hit a 20- month high. Annual inflation in the 16 nation bloc rose 1.7 percent in July, up from 1.4 percent in June -- the highest rate since November '08.

In a moment, India's Detroit -- that's what they call Chennai after fears when the original Motor City has struggled to survive. Find out how the Indian rival is managing to buck the trend, in a moment.

(COMMERCIAL BREAK)

QUEST: India's biggest truck maker had a blowout month in July and it's move into passenger cars is proving ever more rewarding. The company says last month's sales shot up 36 percent from a year earlier. That's an impressive looking figure -- a nice big green arrow -- a big increases in bus and truck volumes and strongly rising demand in cars and SUVs. And it's not just at the budget end where it makes the world's cheapest car, the Nano. In the luxury segment, the Chapra (ph) of its British brands Jaguar and Land Rover.

As a whole, India can -- the industry can -- had a banner month in July. Sales hit a record month and production is rising to meet demand. In fact, the next car you buy could very well come from Southern India. So many car makers are setting up shop in Chennai, the city is being called the new Detroit, as CNN's Mallika Kapur explains.

(BEGIN VIDEOTAPE)

MALLIKA KAPUR, CNN INTERNATIONAL CORRESPONDENT (voice-over): It's known for its culture and color. Now, the traditional city of Chennai on the southern coast of India is quickly developing another title -- the automotive capital of the world. Many global car makers and suppliers have poured billions of dollars into Chennai and opened factories here over the last five years. The newest company on the block, Japan's Nissan. It began production at this state-of-the-art plant in May. Seventy percent of these cars are for export, mainly to Europe. The CEO says Chennai was an obvious choice for a number of reasons.

AKIRA SAKURAI, MANAGING DIRECTOR, RNAIPL: We need a port to export and to import the cars. Secondly, the government support -- the Tamil government is very, very supportive. And the people, we can hire lots of talented people, very young. The last one is the industrial base. So the Chennai has lots of suppliers and we can get the very high quality parts so from these other suppliers.

KAPUR (on camera): This Nissan plant is producing 200,000 units a year. The city of Chennai more than a million. Some people say Chennai is the new Detroit.

SAKURAI: Yes, exactly. Chennai has the potential to become the -- the -- like a Detroit.

KAPUR (voice-over): Others say Chennai needs to learn lessons from Detroit's downfall.

VINOD KNOW. DASARI, ASHOK LEVLAND: In Detroit, people were very complacent. They were thinking that they sat in ivory towers. They made some good products. But at the same time, they were very complacent. And that is what saw their decline.

KAPUR: The trick is to adapt to a changing market industry. He works for Ashok Levland, a commercial vehicle maker. It's been in business since 1948 and is widely credited for giving birth to Chennai's auto industry. Five decades later, he says competition has forced it to be on its toes and to keep costs low -- a mantra he believes any successful automaker needs to follow.

The influx of international brands is also changing the social fabric of the city. Japanese restaurants rub shoulders with old, traditional South Indian ones, giving Chennai its unique flavor, which residents say is part local, part global.

Mallika Kapur, CNN, Chennai.

(END VIDEO TAPE)

QUEST: As India's car market shifts up again, this is one area where China is actually struggling to keep up. Side-by-side, this is how they're faring. In India now, there has been record demand. It touched a record in July, 38 percent from a year earlier. But if you now look at the numbers from China, well, there, the numbers are rising. And it's not a bad rate at 13.6 percent. But growth is cooling off. The rate in July was the slowest pace in more than a year.

So this is -- we started our program tonight talking about India and - - sorry, about China and Japan. That put it a little bit more into context.

We have been reporting all day about lightning strikes around the airport in Columbia.

Guillermo Arduino is at the CNN World Weather Center -- Guillermo, I'm going to preface this, because, obviously, we now have got some details...

GUILLERMO ARDUINO, CNN METEOROLOGIST: Yes...

QUEST: -- about the number of lightning strikes in the vicinity.

So, but even so, lightning per se doesn't usually bring down planes...

ARDUINO: Exactly.

QUEST: -- wouldn't you say that?

ARDUINO: I think it's a very important aspect. But indirectly, it can affect the conditions at the airport or in the middle of the air, like descending air or downbursts. And that, with the proximity to the ground, may have been a factor.

But it's important to say, this was a big jet. And jets are hit by lightning all of the time. I remember interviews in other situations of pilots who say, yes, we are equipped with -- with technology that actually can sustain those hits. But the weather was pretty rough in the area.

I'm going to show you something that you can see only on CNN. It is technology that shows us the lightning hits at the airport. First, office, we have the Caribbean Sea here. This is an island off the coast of Nicaragua. We're going to fly in. And this was happening in between 6:45 and 6:50 GMT. So only five minutes. And there were 11 strikes within 10 kilometers on -- of the runway.

So the reason why we need to take this into account is because of the indirect effect -- the bad weather or lightning like this suggests that may have, again, indirectly affected the conditions over there. And the plane was affected by it.

But the weather was rough. You know, we have to say that.

I'm going to transition now to good news concerning rush hour, Richard. The rich -- the fires continue. But we see some promising change. This is a frontal system that is over Moscow right now, so north of that, we do not see smog or fires. Everything is south or around Moscow.

Also, the temperature right now is 21 and it may go down even more. When we look at the forecast, also, we see a little bit of a difference. You see, Tuesday, the high is going to at 27. We -- today, we saw, in one airport -- I'm going to look for my prom -- prono (ph) in here -- the Domodedovo is one of the most important airports in Moscow. That actually got to 30 degrees. But all of the other observatories did not get to 30 degrees, though on Wednesday, temperatures go up again. Look at Thursday. This is a big change.

So toward the end of the week, we may see much better conditions in Russia.

And we've got bad weather in Britain. You see this low here moving away, but another system coming into the area and bringing some rain. Northern Ireland now under a lot of clouds and rain. Tonight, it's looking fine, Richard, I London. So I think when you go home after the show, you're going to be fine. But the rain is coming back. So we will see some more rain with the same low, here coming and going. It's not going to be extremely rainy. We will see some light rain. But the rain it's not going away.

The heat continues in Spain. The Middle East with a lot of heat. We have a lot of heat in the area. Thirty-four in Kiev, Russia, still, you know, we're looking at it. But nothing compared to the temps that we see, in Iraq, close to 50 degrees. In Baghdad, we have temperatures above normal. No release in sight. Kuwait City 46.

So this is -- 42 in Damascus. This is really warm right now -- Richard.

QUEST: What is 50 degrees in -- in old money, as we used to say?

ARDUINO: What is?

(CROSSTALK)

ARDUINO: Old money?

What do you mean?

QUEST: On the Fahrenheit.

ARDUINO: Oh, it's like -- like 105 or so. Yes, it's beyond 100.

QUEST: So I -- you're not going to get a word of complaint from me about this. We -- in the U.K. and in large parts of Northern Europe, we have had a spectacular summer. It's not over yet...

ARDUINO: Yes, it isn't.

QUEST: So I don't think we can complain this year -- Guillermo.

ARDUINO: And I'm very happy to hear those words from you.

QUEST: Just wait until the wet and the wind and the gales start and suddenly you will once again feel the wrath of my comments.

Guillermo at the...

ARDUINO: Very Richard.

Thank you.

QUEST: -- at the World Weather Center.

It's not the job you would choose if you want to win a popularity contest. And I don't mean doing the weather forecast. In our World At Work today, we're going to profile the working life of the LANDER warden or the meter maid, as they call them, in Central London -- what gets them through the day, in a moment.

(COMMERCIAL BREAK)

QUEST: OK. They have heard every single excuse in the book. And be honest, you and I have provided most of them, as we have tried to sort out, get out and otherwise extricate ourselves from a parking ticket. These are the people who resist the charms, the slapping on of the penalty charges. But it's all in a day's work when you are a warden. And you all know how it feels when nobody really appreciates the job that you do. Just imagine it, if your entire day is spent handing out tickets, listening to nonsense excuses and trying to getting into arguments.

We join one lovely warden in her World At Work.

(BEGIN VIDEOTAPE)

CHERELLE LANDER, CIVIL ENFORCEMENT OFFICER: Good afternoon, Whiskey 05780. Can I have a radio check, please?

Over.

UNIDENTIFIED MALE: Hello. It sounds fine.

LANDER: Thank you.

My name is Cherelle Lander. And my title is a civil enforcement officer. And what I do is deal with contravention in the streets.

And I've been doing this job for over two-and-a-half years now. And I find it quite rewarding on one hand, and here, every day is different.

No, no, no, no, no. Put that back in there. If he takes it out, I'm going to have to issue him a cite.

Do you see the loading sign?

Now can you reverse -- if you just reverse. The curb marks specify that there are loading restrictions. If you stay here, I'll issue you, OK?

UNIDENTIFIED MALE: All right. Yes.

LANDER: Thank you.

Take care.

UNIDENTIFIED MALE: Thank you, too.

LANDER: Nobody likes to be charged unnecessarily, right, if they can try and get out of it. So it's really for you. It's for you to be smart enough to be able to do the job and then make the person understand at the same time that how -- how I've done the job. It's only a job that I'm doing. It's not nothing personal.

When I come up the street and cars are parked in a single line, they haven't paid in the pay but they're in -- they're inside the vehicle.

UNIDENTIFIED FEMALE: Yes.

LANDER: As soon as I get around the corner, the engine starts. Hi, there.

You are in the resident bay without a permit, sir.

UNIDENTIFIED MALE: Sorry, lovely.

LANDER: Yes, um-hmm.

Men do try to charm me so I don't write them a ticket. They call me baby, darling or comment -- oh, the color of your eyes. And I say if you want to leave, you know, you're quite welcome to. If not, I'm going to have to issue you a ticket.

You do have to have a thick skin. You have to have patience. You have to have a good sense of humor, be able to relate to people.

And you're just on the phone and that's 60 pounds for that call.

UNIDENTIFIED FEMALE: Oh, but no, I'm not on the phone. I'm just -- I just -- I'm going.

LANDER: Bye.

I would say I like what I do. I wouldn't say I love what I did, because, oh, there is a sense -- a slight sense of guilt when you've actually enforced the law for someone. Why I'm issuing the taxi is because the taxi license is valid until half past six this evening. I'm tracing the (INAUDIBLE) on the vehicle. People have to understand there's a person underneath the uniform. And it's actually the uniform that they can't stand, not the -- the person. It's my job and I know I'm supposed to do it, but, yes, I mean I have a got a heart. Yes.

(END VIDEO TAPE)

QUEST: Brilliant stuff. The World At Work of the travel -- of the LANDER warden.

And next time you're about to blow a fuse with a LANDER warden, just remember what she said -- there's a person under that uniform. All right, it's a can of sugar-free, calorie-free and alcohol-free beer. It's aptly called All-Free, the beer with no beer. It's the hottest item in an especially hot summer.

Suntory Liquors look at the company behind the All-Free. They started selling the product last week and sold out within days. Regular beer sales have fallen in Japan. Near beers are doing a roaring trade.

So the All-Free, let's hear from Kyung Lah.

(BEGIN VIDEOTAPE)

KYUNG LAH, CNN CORRESPONDENT (voice-over): Japan is in the middle of an extreme heat wave -- one of the hottest in years. And it's had an economic effect on one of Japan's industries -- the beer industry. Japan's beer makers report for the month of July, sales were up 2.1 percent. But not from traditional beers. The rage this summer in Japan are beer flavored beverages, specifically, it's this one. It is called All-Free.

The reason why -- it's because it's sugar-free, calorie-free and alcohol-free. So it's beer with no beer. Now, Suntory Liquors, who makes this type of beer -- this beverage, that is -- says it sold out almost completely in a week. This is one of the last cans in Japan.

Now, Suntory says it is now racing to make more. Other beer companies have made similar types of no beer beers for Japan's consumers.

Owikawa Hirohisa says he can't keep them on the shelves.

OWIKAWA HIROHISA: Currently zero. Toward zero (INAUDIBLE).

LAH (on camera): All zero?

HIROHISA: Yes.

LAH: They still want to drink beer and this is healthy, he says. And you don't get fat.

"It tastes a little different from beer, but it's still good," says this man, who says he can still drive and enjoy the drink.

OK, so back to this. This is one of the last cans of All-Free in Japan.

So what does sugar-free, calorie-free, beer-free sort of beer taste like?

Like -- a little bit like watery beer.

Kyung Lah, CNN, Tokyo.

(END VIDEO TAPE)

QUEST: Nothing stronger than a bit of sparkling water in the middle of this program for me.

I will have a Profitable Moment in just a moment.

(COMMERCIAL BREAK)

QUEST: So, on Thursday, when we have our new segment on QUEST MEANS BUSINESS, you'll be familiar with it. It's called Q&A -- Quest and Ali Velshi. In Q&A, you choose the topics and then Ali and I give you the answers. Watch Ali Velshi and me battle it out. See whose explanation you like best, as we unpick a subject of your choosing in a minute flat. There's a little quiz for Ali and myself. See who's going to win.

Now, if you want to help choose the subject, CNN.com/QMB. CNN.com/QMB. Or you can send me an e-mail to quest@cnn.com.

And that's QUEST MEANS BUSINESS for tonight.

I'm Richard Quest in London.

Whatever you're up to in the hours ahead, I hope it's profitable.

"WORLD ONE" is up now.

END