BRICS leaders look for stronger union

Struggling economies of some members put pressure on group

The leaders of the leading emerging nations need to demonstrate the BRICS organization still matters when it meets for its eighth summit in Goa, India, on Oct 15, experts say.

The two-day meeting takes place against the backdrop of uncertainty surrounding some of the economies within the bloc.

High on the agenda will be institutional reform so its members, Brazil, India, Russia, South Africa and China, can work more effectively together to deliver results.

Martin Jacques says China remains committed to the developing world rather than focusing all its interest on the West. Zhang Wei / China Daily

 

The summit, which President Xi Jinping will attend, and which will have a lotus flower in the color of each of its members' flag as its emblem, will have a five-pronged approach to build a more coherent organization, which will include integration, innovation and exploring synergies among existing mechanisms.

Jeremy Stevens, chief China economist at Standard Bank, Africa's largest bank, says such issues remain important for such a young organization. It was in effect founded only seven years ago.

"I expect them to focus on issues such as institutional underpinning and collaboration generally such as people-to-people exchanges and learning from one another," he says. "One area where they might want to cooperate more is infrastructure construction."

Gideon Rachman, chief foreign affairs commentator and author of Easternization, which examines the rise of Eastern countries, says there remains a big question about how BRICS hangs together as a political grouping.

"It started out as an economic proposition and has mutated into something more political. I am not sure if it still makes sense as a geopolitical proposition. What is actually meant to unite them? They are all big emerging markets, apart from South Africa, but that is about it.

"My guess is that in 20 years' time we will have forgotten all about BRICS, but I could be wrong."

BRICS, a term first used by former Goldman Sachs chairman Jim O'Neill in 2001, formally became an official grouping when the countries held their first summit in Yekaterinberg, Russia, in 2009.

The founding countries, Brazil, Russia, India and China, were joined by South Africa, which, although much smaller than the others, was seen as a proxy member for the African continent.

Since the last summit in Russia in July last year, the organization has set up the New Development Bank and launched a 3 billion yuan ($447 million; 401 million euros; 364 million pounds) green financial bond.

But with the Chinese economy slowing and the Russian and Brazilian economies hit hard by the slump in commodity prices, the organization may have lost some of its original gloss.

Martin Jacques, author of When China Rules the World and a visiting professor at the Institute of Modern International Relations at Tsinghua University, believes China remains committed to the organization, despite the suggestion it is looking more to Western countries such as Germany and the UK to build economic and commercial ties.

"China's fundamental orientation is to the developing world, and I think you can see this by looking at its overall foreign policy and the arguments it makes about reform of the International Monetary Fund and the World Bank. Unlike BRICS, these Washington-based institutions don't reflect the developing world."

Despite the recent economic difficulties of some of its members, some 3 billion people, or 43 percent of the global population, live in BRICS countries and the bloc makes up 20 percent of global GDP.

"The reality is that the BRICS economies matter more and more every year," Stevens of Standard Bank says. "These countries are reshaping global trade and investment in a profound way. The growing size of their economies and their huge populations are producing a huge structural transformation."

Some argue that the biggest BRICS initiative has been overshadowed by China setting up its Asia Infrastructure Investment bank this year, which has more development capital than the World Bank, and its Belt and Road Initiative.

"It might have slightly overshadowed what BRICS is doing, but I think China sees the organization as one of its major networks and it won't abandon it," Jacques says. "When China does something it sticks to it."

In BRICS, China's economy is the biggest, five times larger than that of the next biggest, India.

Ruchir Sharma, head of emerging markets and chief global strategist at Morgan Stanley in New York and author of The Rise and Fall of Nations, believes this remains a fault line.

"China is really far above any BRICS nation. This and the changing general sentiment about emerging markets is also not good for the organization," he says.

Windsor Chan, strategy consultant for Asia practice at law firm Hogan Lovells in Johannesburg, insists, however, that China playing a major part in BRICS gives it its strength.

"It is certainly very important for South Africa. BRICS as with the Forum on China-Africa Cooperation is seen as a way of engaging with China and facilitating investment and trade with Africa generally."

andrewmoody@chinadaily.com.cn