:00:02. > :00:12.BBC World News. Now for the latest financial news with World Business
:00:12. > :00:19.
:00:19. > :00:23.China at a crossroads: it's the year of the water snake and
:00:23. > :00:28.millions of people are celebrating. But what lies ahead for the world's
:00:28. > :00:31.second-largest economy? As Japan and America takes steps to lower
:00:32. > :00:41.the value of their currencies, a strong Euro is seen as problem for
:00:42. > :00:52.
:00:52. > :01:01.Welcome to World Business Report. Confidence among its two British
:01:01. > :01:05.business leaders have dived last month. Gong Hey Fat Choy! That's
:01:05. > :01:08.Happy New Year. We are now in the year of the water snake and as many
:01:08. > :01:11.in China take a week off to celebrate and relax the inevitable
:01:11. > :01:14.question of what will the new year bring is being discussed. In a
:01:14. > :01:17.moment we'll be live in Beijing to get an economic perspective. But
:01:17. > :01:25.first, Jennifer Pak reports from Hong Kong on how the celebrations
:01:25. > :01:31.are going there. In China, snakes end up on the dinner-table and
:01:31. > :01:37.medicine cabinets. At this market in Hong Kong, the animal is said to
:01:37. > :01:45.be cute and cuddly. According to fortune-tellers, the year of the
:01:45. > :01:50.stake brings a change of luck. the Year of water over fire and
:01:50. > :01:55.fire is the element of happiness and that's why we will create
:01:55. > :01:59.positive energy and bring more confidence to people and increased
:01:59. > :02:03.economic activity and that will be a strong economic recovery in this
:02:03. > :02:07.year of the snake. The sources said the could you to start a family.
:02:07. > :02:17.State babies find it easy to make friends and work for a good boss.
:02:17. > :02:20.For non-believers, the predictions of a hoax. -- more hope. That gives
:02:20. > :02:23.your perspective from the celebrations. Patrick Chovanac, is
:02:23. > :02:32.an economist and former professor at Tsinghua University. He joins me
:02:32. > :02:36.I'm ar, I'm sure you're celebrating. What
:02:36. > :02:44.do you think the year has in store for those in China and beyond in
:02:44. > :02:47.terms of the economy? It's a feisty debate right now between optimists
:02:47. > :02:55.who see the Chinese economy recovering and moving forward to
:02:55. > :03:03.this new year strongly and sceptics that China has a difficult
:03:03. > :03:09.adjustment ahead. Right now, the Government has pumped up the
:03:09. > :03:13.economy a bit but in some ways, that may actually contribute to an
:03:13. > :03:17.imbalance will drive the economy down. In terms of the new regime as
:03:17. > :03:22.the handover of power and that was a huge event and many are trying to
:03:22. > :03:26.assess what that means in terms of the policies and decision making.
:03:26. > :03:30.We get snapshots now about decisions about the minimum wage
:03:31. > :03:39.which was quite a big deal. Tell us more about what we know about the
:03:39. > :03:43.new regime. The new leaders have come in with a lot of expectation.
:03:43. > :03:48.They will reform the economy. That means different things to different
:03:48. > :03:55.people. Everybody reads into this something pleasant. That's part of
:03:55. > :03:59.the challenge. They have an agenda which is quite broad. It embraces
:03:59. > :04:04.reforming the banking system and the state owned enterprises in
:04:04. > :04:10.China and shifting the focus of the economy away from investment and
:04:10. > :04:16.export into consumption meaning change in taxation and it's a ball
:04:16. > :04:20.plate and many things that were discussed last week, proposals to
:04:20. > :04:25.try to affect the exchange, things have been spoken about the some
:04:25. > :04:29.time. Would not see much action. There's a reason for that. It's
:04:29. > :04:33.very difficult. They actually may slow down the economy. China is
:04:33. > :04:39.under a lot of pressure to keep the growth high. Some of these reforms
:04:39. > :04:44.may slow down mac growth. It may put China on a healthier path
:04:44. > :04:48.forward but nobody wants to see the growth slowing so we will see how
:04:48. > :04:53.much they are willing to do to implement the change. Briefly, you
:04:53. > :04:57.say you were a sceptic about the debate and there's many optimists
:04:57. > :05:01.out there. But they did avoid what we feared, a hard landing, which
:05:01. > :05:08.may have set the global economy back on to recession. They did
:05:08. > :05:13.manage that well, the shift in that economy in China recently. I'm not
:05:13. > :05:20.so sure about that. What the official numbers say it 7.8%,
:05:20. > :05:25.there's reason that many analysts question the numbers, whether they
:05:25. > :05:29.actually have slowed down and what's driven that but be on those
:05:29. > :05:33.statistics, when the numbers come up for the Chinese companies in the
:05:33. > :05:39.next few weeks, to show how they perform last year, it was a tough
:05:39. > :05:43.year for them. They did see a boost at the end of the year but that was
:05:43. > :05:48.due to pumping a lot of money into the economy in ways that may cause
:05:48. > :05:52.problems later on. Enjoy the week ahead it will be interesting to see
:05:52. > :05:55.how this plays out. Its focus on Europe. It's not just the EU budget
:05:55. > :05:57.which has been keeping European politicians awake at night. The
:05:57. > :06:03.welcome improvement in sentiment towards the single currency has had
:06:03. > :06:06.an unwelcome side effect. In the past six months, the Euro has
:06:06. > :06:08.gained over 6% against a basket of other world currencies. It's
:06:08. > :06:12.especially painful for those Eurozone countries battling
:06:12. > :06:16.recession and struggling to become more competitive. A strong Euro
:06:16. > :06:18.makes their exports more expensive for overseas buyers. France is
:06:19. > :06:28.raising the issue today when the zone's finance ministers meet in
:06:29. > :06:35.
:06:35. > :06:40.Brussels. There's no end of new food that the world wants to eat
:06:40. > :06:45.but Europe cannot sell much outside its borders if the price is not
:06:45. > :06:51.right. As they market and distribute groceries to
:06:51. > :06:55.supermarkets, they feel that the rate is just bearable for now but
:06:55. > :07:01.supplies are battling price rises for commodities such as wheat and
:07:01. > :07:04.spices. We're pushing back on the supplies in Europe. We need think
:07:04. > :07:08.about where the margin will go if you want to keep your export
:07:08. > :07:12.business and its concerning but not something that keeps me awake night
:07:12. > :07:15.yet. We're only in January and we have until the end of the year. Who
:07:15. > :07:20.knows where the currency will be with that the fluctuations we see
:07:20. > :07:26.now that a far greater than we saw before the euro. We never saw these
:07:26. > :07:30.big fluctuations before. What do different country say about this?
:07:30. > :07:36.The Germans distance themselves from that St it's up to the
:07:36. > :07:41.financial markets to determine the value of the euro. The Italians say
:07:41. > :07:46.that air is tension but it's far from a currency war. The fringe do
:07:46. > :07:52.seem a bit worried about exports. - - the French. But the markets are
:07:52. > :07:56.picking up on this. The world has moved on to use the currency as the
:07:56. > :07:59.competition but you need to be competitive with wages and France
:08:00. > :08:04.is a bit more twitchy because the numbers show that the
:08:04. > :08:08.competitiveness is declining with the rest of Europe and they need
:08:08. > :08:11.the exchange rate help a bit more than the others. The European
:08:11. > :08:19.Central Bank president has begun to talk about the single currency
:08:19. > :08:26.talking it down without a rate cut but will the euro worry about the
:08:26. > :08:31.strength? It's definitely progress however painful for the exporters.
:08:31. > :08:34.In other news: confidence among UK businesses hit its lowest level in
:08:34. > :08:37.at least 21 years last month, a survey suggests. Accountancy firm
:08:37. > :08:42.BDO, which published the survey, struggle
:08:42. > :08:45.struggle to grow in the first quarter of this year. That is
:08:45. > :08:50.despite signs of improvement in the labour market, it said, with firms
:08:50. > :08:53.intending to hire more staff. Findus Sweden plans to sue France's
:08:53. > :08:55.Comigel for breach of contract and fraud, according to the CEO of
:08:55. > :08:58.Findus Nordic. He says the company's deal with French supplier
:08:58. > :09:03.Comigel stipulates the beef in the lasagna should come from Germany,
:09:03. > :09:08.France or Austria, but that has not been the case. It seems like the
:09:08. > :09:11.meat came from a number of slaughterhouses in Romania.
:09:11. > :09:15.Shoppers in Venezuela are out panic buying, after Friday's surprise
:09:15. > :09:19.devaluation of the bolivar currency. They are trying to snap up goods
:09:19. > :09:29.imported at the old exchange rate of 4.3 bolivars to the dollar. The
:09:29. > :09:31.
:09:31. > :09:35.new rate is 6.3. This is the fifth devaluation since 2003. It is a
:09:35. > :09:45.quiet day for the markets in Asia with most of them closed for the
:09:45. > :09:48.