Global Times, Beijing – 20.7.2018
Jim O’Neill, economist who coined 'BRIC' talks about the future of emerging markets
Sun Wei
From July 25 to 27, 2018, representatives from Brazil, Russia, India, China and South Africa will gather in South Africa to hold the 10th BRICS Summit. Ahead of the Summit, Global Times London Correspondent Sun Wei interviewed Jim O'Neill, who coined the acronym "BRIC" in 2001 to include the nations Brazil, Russia, India and China as emerging world economic powers, at Chatham House on July 11.
London –
O'Neill: First of all, the BRIC concept became so big that it sort of changed who I am, and people's perception of me. Yesterday, I was walking down the street and one guy stopped me and said, "Excuse me, are you Lord Jim O'Neill?" And it happens to me quite often.
The second thing is, economically, the first ten years were incredible for all of the BRIC countries. And each of them grew more than any of the scenarios that I and my colleagues had thought of. However, in this decade it has not been quite so great, particularly because Russia and Brazil went through recession and did not recover easily. I wrote something for the People's Daily recently. I set exam questions for the BRICS leaders. What have you done to influence the growth of other BRICS countries? For the past 17 years, I don't think any one has been influenced by the fact that BRICS leaders meet other than to celebrate my acronym. There are many areas where the BRICS leaders could do things to make the world a better place. For example, I've become very involved and interested in so called antimicrobial resistance. They could easily launch an initiative for new drugs to fight this, but they haven't. I suggested that two years ago, but I don't see any progress.
Thirdly, it's because of the incredible success of China, which carries on, that the BRCIS countries matter. China today is twice the size of all the other BRICS countries put together. China dominates the BRICS group, and without China, BRICS countries wouldn't be that interesting.
GT: You also identified the "Next 11" and "MIST"and "MINT"?
O'Neill: After "BRIC", everybody said why these four countries? Why not Mexico? Why not Turkey? Why not Africa? So we wrote a paper in 2004 looking at the next largest emerging economies, and identified the 11 next most populated countries and called them the "Next 11". I made an analogy with my obsessive interest in football. The BRICS are of the first division, and the "Next 11" is the second division. Among the Next 11, Indonesia, Vietnam, Philippine, and Bangladesh have very strong growth.
Actually, I didn't write about MIST and MINT. One of the amusing incidents which is a consequence of BRIC is that the MINT acronym was actually created by a BBC journalist and MIST was coined by a Korean journalist. Many years after I identified the "Next 11", I wrote another paper saying that I believe that no country that was bigger than one percent of world GDP should be regarded as a traditional emerging market. And there were four in addition to the BRICS: Mexico, South Africa, Indonesia, and Turkey. The following morning, a Korean journalist wrote that Jim O'Neill created MIST (Mexico, Indonesia, South Korea, Turkey). One year later, when I was leaving Goldman Sachs, a BBC journalist said, "why don't you do a radio program about the next countries after BRICS?" and suggested replacing South Korea with Nigeria because South Korea is a developed country. And that's where MINT came from. So they weren't really my idea, but I embraced the idea that it's interesting to think about these countries.
GT: All these years, what are the main areas you're following in terms of China's economic development?
O'Neill: Many things. First of all, the whole rebalancing towards consumption and services. In my opinion, that is the number one challenge for China, and it's the most important thing for the world. In the context of Donald Trump's trade strategy, it's really stupid because the biggest story in the world is the rise of the Chinese consumer, which is a huge opportunity for everybody, including actually for Trump. But too much of the past weighs on his thinking.
Second, the issue of pollution control. It is a really important challenge, especially in urban China, something which I try to focus on.
The third is China's role in global governance. How do we make the BRICS group more relevant inside the G20? Should we change the G7 to have not just democracies? I don't know the answer to any of those, but China is crucial to them all. In fact, one of the things I want to do in joining Chatham House is to try and elevate that issue. I want to change because you can't deal with global issues without having China in your mind.
The fourth is obviously the Belt and Road initiative. Personally, I think China needs to develop some stronger soft skills to promote it, because the world, including emerging markets, eye the initiative with suspicion. You have to engage in a positive way, particularly countries like India.
The fifth one is back to domestic China. I don't believe the hukou (household registration) system will exist in 20 years from now. In my view, that is China's biggest problem. Now you have so many people beautifully emerging as the middle class. However, living in the same city, there are migrant workers who cannot share benefits. I met a lot of Chinese policy makers who also worry about hukou.
GT: The year marks the 40th anniversary of china's opening up. How do you see the changes?
O'Neill: I first went to China in 1990, I probably went at least twice a year for 20 years, but I haven't been so much recently. I need to go because it changes so much and it's absolutely incredible. The first time I was there, Beijing only had one ring road. Now you have seven and the seventh ring road reaches all the way to the Great Wall, where half the road was a dirt track in 1990. The first time I went, virtually every other form of transport on the road from the airport was a bike, and now you have electric bikes going beyond cars. It is the most extraordinary speed of change the world economy has ever known. Around 20 percent of its people earn $40,000 a year and most of it happened in the past 25 years. GT: In May 2015, when you were a high-profile treasury minister, you led the Northern Powerhouse vision, helped attract overseas investment, and made great contributions to the UK-China relationship.
What are British people and local governments' attitude toward China's investment in UK infrastructure including nuclear power plants and high-speed rail? Are you still optimistic about bilateral relations?
O'Neill: There are three general views on Chinese investment in UK. First of all, a lot of people don't know much about China. Second, a lot of people particularly in urban areas like Manchester where there's a Chinese community, are kind of excited. They are proud of Britain's role in the world and its ability to attract people and capital from other countries. And then you have a third group, they are skeptical and don't want Chinese money.
So you have the whole array of views. This would be part of the issues that we would have to deal with as Ministers. I was part of a team with David Cameron and George Osborne that was very eager to develop Britain's relations with China, because we all shared the vision that China is going to be a really important place in the world for the next century.
We have a prime minister in the third group where she is naturally suspicious. She'd never been to China before she'd been prime minister. So her natural instinct is to be cautious. Luckily people around her say, "Listen, China's going to be important, so we have to do things with China."
I remain optimistic about the China-UK relationship, partly because I know Chinese policy makers are very happy that the UK was an early member of the AIIB and they see that as a sign of how the UK can be.
GT: Brexit is a very big concern for Chinese investors. What is your point of view?
O'Neill: Actually, Brexit is not the most important thing about Britain's future. The most important thing about our future is our productivity, our education, and our skills. And this is why the Northern powerhouse is so important. Because if we solve all of those things, it will make Britain a stronger place, whether we are in the EU or not.
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