05/03/2012 World Business Report

World News. Where will the Chinese economy going next? Now for the

latest financial news we have World Business Report. Welcome to World

Business Report. The headlines: In Russia, Vladimir Putin looks set to

serve his third presidential term but with fresh economic problems to

tackle. Shares in BP expected to get a boost after the oil giant

partly settles a legal case with victims from its huge oil spill in

the Gulf of Mexico. Vladimir Putin is set to serve a third term as

Russia's president after elections on Sunday. However the claims of

vote-rigging will not be the only problem facing Mr Putin. There are

fresh economic troubles for the Kremlin to contend with as well.

Russians are pulling billions of dollars out of the country and Mr

Putin has made spending commitments that the state will struggle to

afford. Dimitri Medvedev's four years of President was left with a

record profits from oil and gas. Dimitri Medvedev's policy was to

reinvest state funds into other industrial sectors such as high

technology. In his campaign, Vladimir Putin said he would shift

away from this form of state capitalism. The President is

starting to shift the other way. He will put in his economic programme

to increase the role of private enterprise. It will open the

country for capital enlargement. Capital is flowing out of Russia,

not into it. Business grows nervous about the rising political

temperature. Widespread protests against vote-rigging in December's

parliamentary elections. Last year alone, while the Russians sent $84

billion abroad. Russians do not trust their government. The

Westerners are holding back. What it means for Russia, it is not that

there is not enough money, what it means, there is less know-how and

technology and managerial practice. More financial pressure has been

spelled out for the future. Vladimir Putin promised big

increases in state salaries and pensions. They could cost the

government as much as $160 billion over the next six years. All this

at a time when the price for natural gas has gone into decline.

Vladimir Putin is pondering a major tax hike on oil companies.

Investors get their first opportunity to react to BP's legal

settlement with victims of the huge oil spill in the Gulf of Mexico.

Most analysts expect the stock to rise with the deal. It's being seen

as a major step towards the company recovering from the incident which

killed 11 people and spilt 4 million barrels of oil into the sea.

BP agreed to pay individuals and businesses affected by the disaster

$7.8 billion. The US government still plans to continue its case

against BP. The oil firm has lost about $45 billion in market value

since April 2010 when the accident happened. Let's talk a bit more

about how this settlement will work. Thank you for joining us. This

settlement, the small businesses devastated and the individuals

affected, can we say it is a good one for them? It is difficult to

say. From the standpoint of the individual fishermen, other coastal

residents, they do not really know what they are going to get in the

settlement. All they know is that BP have agreed to take

responsibility and will go ahead and get this resolved on a

settlement basis rather than going through what would have been

protracted trial proceedings. They have to go through the claims

process. It promises to get them more than the process that was

previously in place. How much? Too early to say. From the point of

view of how BP has dealt with this, is the feeling among those affected

that they have been treated as well as possible? The fact that BP

stepped up and agreed to settle the case, I think that is a show of

faith. That is the view that most people in the Gulf region are

taking of the settlement. That is a positive step forward. Whether or

not people will feel they are fully compensated for the damages that

they believe they have suffered remains to be seen. The focus will

be on the case brought by the government. This is a lot simpler.

Not as many people claiming. Tell us about it. It is simpler and more

complicated. It is simpler in terms of reaching a settlement. The

negotiations between BP will be with just one party. Mainly the US

government. Rather than try to deal with tens of thousands of claimants

through hundreds of different lawyers. The problem might be that

the US government will ask BP to step up and accept criminal guilt.

Certainly take responsibility. The civil settlement was a neutral

settlement. BP agreed to pay and settle the claims. We have to leave

it there. Thank you very much indeed. China has cut its target

for economic growth this year as part of the government's plan to

reduce the country's reliance on exports and make the economy more

stable. At the annual National People's Congress, a ten day

meeting and the last under the current leadership, Premier Wen

Jiabao said they were aiming for growth of 7.5% this year, down from

8% which had been the goal since 2005. Joining us from Hong Kong is

Patrick Chovanec, an associate professor at Tsinghua University's

school of economics and management in Beijing. Let's talk about this

new target of 7.5%. What does that mean? What it means is that the

government is admitting it cannot get the magic 8% target any more.

Mainly because investment needs to slow down. They are having a hard

time finding all of the investments they need to drive the economy

forward. They also said they are going to target 84% inflation rate.

That is still an aspirational golf. -- goal. It is an omission that the

Chinese economy is slowing down. -- admission. He talked about reducing

reliance on exports. Being an economy led by a consumption rather

than infrastructure development. have seen a lot of talk about that

for the past several years. Ever since the financial crisis. It has

been a lot more difficult to make that happen. There are deeply

entrenched interests. There is a lot of push back PHI market

reformers against the role of state owned enterprises in the economy. -

- against market reformers. Even today, I have seen a report that

China's second richest man came out and said the government has two

great of a role in the economy and needs to create more space for