:00:07. > :00:12.World News. Where will the Chinese economy going next? Now for the
:00:12. > :00:22.latest financial news we have World Business Report. Welcome to World
:00:22. > :00:27.
:00:27. > :00:30.Business Report. The headlines: In Russia, Vladimir Putin looks set to
:00:30. > :00:35.serve his third presidential term but with fresh economic problems to
:00:35. > :00:38.tackle. Shares in BP expected to get a boost after the oil giant
:00:38. > :00:48.partly settles a legal case with victims from its huge oil spill in
:00:48. > :00:56.
:00:56. > :00:58.the Gulf of Mexico. Vladimir Putin is set to serve a third term as
:00:58. > :01:01.Russia's president after elections on Sunday. However the claims of
:01:01. > :01:04.vote-rigging will not be the only problem facing Mr Putin. There are
:01:04. > :01:07.fresh economic troubles for the Kremlin to contend with as well.
:01:07. > :01:09.Russians are pulling billions of dollars out of the country and Mr
:01:09. > :01:17.Putin has made spending commitments that the state will struggle to
:01:17. > :01:27.afford. Dimitri Medvedev's four years of President was left with a
:01:27. > :01:28.
:01:28. > :01:32.record profits from oil and gas. Dimitri Medvedev's policy was to
:01:32. > :01:38.reinvest state funds into other industrial sectors such as high
:01:38. > :01:43.technology. In his campaign, Vladimir Putin said he would shift
:01:43. > :01:53.away from this form of state capitalism. The President is
:01:53. > :02:00.starting to shift the other way. He will put in his economic programme
:02:00. > :02:06.to increase the role of private enterprise. It will open the
:02:06. > :02:10.country for capital enlargement. Capital is flowing out of Russia,
:02:10. > :02:15.not into it. Business grows nervous about the rising political
:02:15. > :02:22.temperature. Widespread protests against vote-rigging in December's
:02:22. > :02:30.parliamentary elections. Last year alone, while the Russians sent $84
:02:30. > :02:35.billion abroad. Russians do not trust their government. The
:02:35. > :02:44.Westerners are holding back. What it means for Russia, it is not that
:02:44. > :02:51.there is not enough money, what it means, there is less know-how and
:02:51. > :02:56.technology and managerial practice. More financial pressure has been
:02:56. > :03:00.spelled out for the future. Vladimir Putin promised big
:03:00. > :03:06.increases in state salaries and pensions. They could cost the
:03:06. > :03:11.government as much as $160 billion over the next six years. All this
:03:11. > :03:21.at a time when the price for natural gas has gone into decline.
:03:21. > :03:23.
:03:23. > :03:26.Vladimir Putin is pondering a major tax hike on oil companies.
:03:26. > :03:29.Investors get their first opportunity to react to BP's legal
:03:29. > :03:35.settlement with victims of the huge oil spill in the Gulf of Mexico.
:03:36. > :03:38.Most analysts expect the stock to rise with the deal. It's being seen
:03:39. > :03:42.as a major step towards the company recovering from the incident which
:03:42. > :03:44.killed 11 people and spilt 4 million barrels of oil into the sea.
:03:45. > :03:48.BP agreed to pay individuals and businesses affected by the disaster
:03:48. > :03:54.$7.8 billion. The US government still plans to continue its case
:03:54. > :03:58.against BP. The oil firm has lost about $45 billion in market value
:03:58. > :04:08.since April 2010 when the accident happened. Let's talk a bit more
:04:08. > :04:13.
:04:13. > :04:16.about how this settlement will work. Thank you for joining us. This
:04:17. > :04:21.settlement, the small businesses devastated and the individuals
:04:21. > :04:27.affected, can we say it is a good one for them? It is difficult to
:04:27. > :04:30.say. From the standpoint of the individual fishermen, other coastal
:04:30. > :04:35.residents, they do not really know what they are going to get in the
:04:35. > :04:37.settlement. All they know is that BP have agreed to take
:04:37. > :04:43.responsibility and will go ahead and get this resolved on a
:04:43. > :04:50.settlement basis rather than going through what would have been
:04:50. > :04:55.protracted trial proceedings. They have to go through the claims
:04:55. > :05:01.process. It promises to get them more than the process that was
:05:01. > :05:06.previously in place. How much? Too early to say. From the point of
:05:06. > :05:12.view of how BP has dealt with this, is the feeling among those affected
:05:13. > :05:17.that they have been treated as well as possible? The fact that BP
:05:18. > :05:23.stepped up and agreed to settle the case, I think that is a show of
:05:23. > :05:27.faith. That is the view that most people in the Gulf region are
:05:27. > :05:31.taking of the settlement. That is a positive step forward. Whether or
:05:31. > :05:37.not people will feel they are fully compensated for the damages that
:05:37. > :05:42.they believe they have suffered remains to be seen. The focus will
:05:42. > :05:49.be on the case brought by the government. This is a lot simpler.
:05:49. > :05:54.Not as many people claiming. Tell us about it. It is simpler and more
:05:54. > :06:00.complicated. It is simpler in terms of reaching a settlement. The
:06:00. > :06:04.negotiations between BP will be with just one party. Mainly the US
:06:04. > :06:08.government. Rather than try to deal with tens of thousands of claimants
:06:08. > :06:15.through hundreds of different lawyers. The problem might be that
:06:15. > :06:24.the US government will ask BP to step up and accept criminal guilt.
:06:24. > :06:31.Certainly take responsibility. The civil settlement was a neutral
:06:31. > :06:41.settlement. BP agreed to pay and settle the claims. We have to leave
:06:41. > :06:44.it there. Thank you very much indeed. China has cut its target
:06:44. > :06:47.for economic growth this year as part of the government's plan to
:06:47. > :06:54.reduce the country's reliance on exports and make the economy more
:06:54. > :06:56.stable. At the annual National People's Congress, a ten day
:06:57. > :07:00.meeting and the last under the current leadership, Premier Wen
:07:00. > :07:04.Jiabao said they were aiming for growth of 7.5% this year, down from
:07:04. > :07:06.8% which had been the goal since 2005. Joining us from Hong Kong is
:07:06. > :07:12.Patrick Chovanec, an associate professor at Tsinghua University's
:07:12. > :07:18.school of economics and management in Beijing. Let's talk about this
:07:18. > :07:26.new target of 7.5%. What does that mean? What it means is that the
:07:26. > :07:30.government is admitting it cannot get the magic 8% target any more.
:07:30. > :07:33.Mainly because investment needs to slow down. They are having a hard
:07:33. > :07:41.time finding all of the investments they need to drive the economy
:07:41. > :07:51.forward. They also said they are going to target 84% inflation rate.
:07:51. > :07:52.
:07:52. > :08:01.That is still an aspirational golf. -- goal. It is an omission that the
:08:01. > :08:05.Chinese economy is slowing down. -- admission. He talked about reducing
:08:05. > :08:12.reliance on exports. Being an economy led by a consumption rather
:08:12. > :08:17.than infrastructure development. have seen a lot of talk about that
:08:17. > :08:20.for the past several years. Ever since the financial crisis. It has
:08:20. > :08:28.been a lot more difficult to make that happen. There are deeply
:08:28. > :08:38.entrenched interests. There is a lot of push back PHI market
:08:38. > :08:38.
:08:38. > :08:48.reformers against the role of state owned enterprises in the economy. -
:08:48. > :08:50.
:08:50. > :08:56.- against market reformers. Even today, I have seen a report that
:08:56. > :09:00.China's second richest man came out and said the government has two
:09:00. > :09:06.great of a role in the economy and needs to create more space for