13/05/2013 World Business Report

financial news with World Business Report.

The Chinese balancing act. We look at how the world's second largest

economy intend to stay ahead of its competitors by focusing on itself.

fastest-growing countries in the world, Nigeria says it is trying to

diversify its economy away from oil. Welcome to World Business Report.

Also in the programme: The slippery slide of the yen continues today as

G7 finance chiefs say they will tolerate the currency's decline.

China's growth has steamed unstoppable for four decades. It

became known as the factory of the world but then came the global

recession. Even the mighty China pause forced to take a hit. It has

seen growth drop from double-digit a single digit but the question now

is how protracted the slowdown is and what impact it will have won

the rest of the world. Our chief business Correspondent has been

joining us from Hong Kong. We joined her now. Sorry, first of all

we are going to talk to, find out about one of the interviews she is

doing for us. Linda has been speaking to the chief economist

from the World Bank. I think the Chinese economy, yes,

it is slow in its growth rate. Compared to how we used to be. But

it is cyclical. The global economy has not gotten over this 2,000

bandaid crisis yet. The a lot of your work has extolled... Talk

about how China shows the capacity to increase. It has the capacity

for 8% growth rate. Compared to advanced countries like the US, it

was similar to Japan in the early 1950s. Singapore in the mid- 1960s.

And Taiwan and Korea in the mood 1970s. -- the mid. They maintained

around 8-9 per cent growth rate for 20 years by tapping into the

potential. We know that China's growth model has been similar to

the east Asian growth model since the tradition started in 1979. With

that potential, it enabled of Japan and others 8-9 per cent growth rate

for 20 years. So China should have the potential to grow at around 8%

for another 20 years. That is how the Chinese government will manage

the economy. And the potential is there.

We have got you on standby, Linda. Clearly there is a very important

rebalancing change going on in China. It started off with the new

leadership at the end of last year. What signs are there that things

are changing for the better? One of the key signs is that for the very

first time this year, the first few months, the data suggests that the

services sector, tourism, financial services, education, shops,

retailers, that is more important in China's economy than factories.

That is the first time this has been the case since 1979. Whether

or not this is sustainable depends on whether the new leadership could

be tempted to fuel the easier source of growth which is

investment, construction. If they did that there is a danger that

they could end up using debt to fuel the growth. As we know in the

west, that is not sustainable. If they continue to grow domestic

demand and support this and allow the services economy to flourish,

that alongside, and by the way factories are still rolling, China

can grow in a balanced way. -- factories are still growing. That

will be better for China and the world as China is the world's

biggest engine. Thank you very much indeed. Linda

is with us throughout the day on BBC World News. You can get in

touch with her via Twitter. Send her your questions.

To Africa, and investors, business people and politicians have wrapped

up their gathering at the World Economic Forum in Cape Town. There

has been much focus on the recent African boom and what it means for

investors and people who live there. One of the countries attracting

plenty of interest is Nigeria. According to the World Bank it is

now one of the fastest growing economies in the world but faces

challenges. Economic growth has not cut poverty and has not created

unnecessary jobs. About two-thirds of the population lives on less

than one US dollar a day. There is dilapidated infrastructure and an

over-dependence on the oil and gas industry. Our correspondent spoke

to the Finance Minister and asked about the financial strategy to

develop the non-oil sector. The oil sector does not create the jobs we

need so we focus on agriculture. It is 40% of GDP. Our target is 20

metric tons of food. We are focused on housing because it has many

linkages to the rest of the economy. Manufacturing. We believe we need

to build an industrial base and have a competitive advantage.

Investors are concerned that despite the attractive elements of

the economy in Nigeria, this is a country that has major

infrastructure constraints, particularly power constraints. It

adds to the cost of business. How do you address that? You are

absolutely right and we address that, in particular power. Earth we

recognise we have not been able to manage this sector are as we should

so we have privatised it and liberalised it. We hope the power

sector will make more headway and we can provide the power that

Nigerians need. Security is another concern. Reports of insurgency, a

wave of violence in the north of the country. Let me say this. We

are heartened that in spite of this, Nigeria is the biggest destination

for investment on the continent now. I think that investors see the way

that most of the country is functioning normally. It is Ameen a

section of the country being impacted like this. -- it is only a

section. Much of the country is functioning well. In the north-east

of the country we have a challenge and that is where most of these

incidents happened. We have a strategy to deal with it. But it is

not just Boko Haram, in the south kidnappings are still going on in

the oil-rich region. All of those factors create a situation where

people are afraid. Let me respond to that by saying yes there is

kidnapping and other issues but it is all over the world. In South

Africa there are problems of security. I don't want to comment.

In the US, the UK. I think the Boko Haram is a special thing we focus

on but the others are criminal things. That is not daunting

investors. Nigeria's finance minister there

with her interesting take on the future of that rapidly growing

economy. The markets in Asia. No surprise,

Japan up over 1%. The yen slid again today verses the US dollar.