sábado, 13 de abril de 2024

China continues to dominate an expanded BRICS - Alicia Garcia-Herrero (East Asia Forum)

China continues to dominate an expanded BRICS

Alicia Garcia-Herrero

Bruegel

East Asia Forum, April 12, 2024

https://eastasiaforum.org/2024/04/12/china-continues-to-dominate-an-expanded-brics/

China’s economic size and increasing assertiveness in foreign policy give it a dominant position in BRICS, which is reflected in intra-bloc trade flows and in the bloc’s foreign policy positions. The future of BRICS is uncertain given its heavy dependence on China’s economic future and the deteriorating sentiment towards China among its members. India’s fast growth and increasing geopolitical heft also pose a challenge for the continuation of BRICS as a China-centric grouping.

The origins of BRICS — a bloc comprising Brazil, Russia, India, China, South Africa and, as of 2024, new members Egypt, Ethiopia, Iran and the United Arab Emirates — can be traced back to a 2001 publication by Goldman Sachs economist Jim O’Neill titled ‘Building Better Global Economic BRICs’. O’Neill argued that Brazil, Russia, India and China were poised to play an increasingly significant role in the global economy.

His prediction was that by 2050, these countries would collectively account for 40 per cent of the world’s economic output. In reality, from 2012 to 2022 China alone has accounted for around a quarter of global GDP growth, and the BRICS countries together contributed over 45 per cent.

BRIC was officially launched in 2009 and was renamed BRICS in 2010 when South Africa joined the group. Since then, trade relations have clearly grown, but in a very unbalanced manner.

Most of the growth in trade has been China-centric, with the contribution from the rest of BRICS remaining quite flatuntil recently. The recent increase is mostly explained by India, which has experienced an acceleration in economic growth. BRICS members are increasingly intertwined with China as far as trade is concerned, but the remaining members have very few ties among themselves. Bilateral trade between BRICS members other than China remains extremely low.

China’s sheer economic size — five times greater than India’s — and China’s increasing assertiveness in foreign policy explain China’s dominance of BRICS. BRICS countries have increasingly similar positions to China at the United Nations. This is not only the case for issues within China’s sphere, such as Xinjiang-related resolutions, but also more global issues such as resolutions on the invasion of Ukraine and the Israel–Palestine crisis.

The only exception on Ukraine has been Brazil, which voted in line with the West in March 2022. But Brazil’s diplomatic stance on Ukraine has become much more blurred since then and its position has fully aligned with China’s on the conflict in Gaza.

China has been the leading proponent of expanding BRICS to BRICS+. The main reason for expansion was to make BRICS more representative of the developing world and give it a stronger voice on the global stage.

But the six countries invited to join — which has become five after Argentina’s withdrawal — are quite heterogenous. Some are net creditors (such as Saudi Arabia and the United Arab Emirates), while others are net debtors and in a very weak financial position. Half of them are large exporters of fossil fuels (Saudi Arabia, the United Arab Emirates and Iran). Ethiopia and Egypt stand out as members from Africa, a continent that has become increasingly important for China’s and India’s foreign policy.

The questions that arise are what BRICS can achieve with such a heterogeneous group of members, and whether it will be able to maintain its objectives after expansion.

The group has called for comprehensive reform of the International Monetary Fund and the World Bank to make the institutions more representative, accountable and effective in addressing global challenges. BRICS has also consistently advocated for comprehensive reform of the United Nations, arguing that its current structure with five permanent members holding veto power does not represent the interests of all member states.

One increasingly important objective of BRICS is to become the new platform for developing countries to voice their concerns and interests. The international financial architecture is an area where members’ positions can clearly be aligned. BRICS promotes the use of local currencies in trade between its member states, especially in trade with China, as well as supporting rules-based, open and transparent global trade. The expansion of its membership evidently supports this objective.

The actual impact of BRICS expansion will depend on several factors, including the group’s ability to overcome its internal challenges and the response of the West. Still, the smooth expansion is a clear sign that the global balance of power is shifting and that developing countries are playing an increasingly important role in global affairs.

How BRICS will fare over time depends on several factors. First and foremost is how China’s power evolves. There is increasing consensus that China’s long-term growth will continue to decelerate, which will reduce the opportunities that the Chinese market has to offer for BRICS members and others. A second important factor is how BRICS members and their populations come to perceive China.

The heterogeneity of BRICS is not only economic but also political. The elephant in the room is India, which finds itself in an increasingly uncomfortable position in groupings that are dominated by China. Still, the group’s diversity and its members’ respective comparative advantages could turn out to be a boon not only for China but also for India.

BRICS, which started as a primarily economic initiative to mark the transfer of economic power to the emerging world, has grown into an important geopolitical grouping. China’s centrality and the diversity of its members present both challenges and opportunities.

The future of the grouping is uncertain, given its heavy economic dependence on China and the deteriorating sentiment towards China among its members. India’s fast growth and increasing geopolitical heft create additional challenges for the continuation of a China-centric BRICS.

Alicia Garcia-Herrero is Senior Research Fellow at the Brussels-based think tank Bruegel and Adjunct Professor at the Hong Kong University of Science and Technology.

A version of this article was first published here in EconPol Forum.



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