n September 3 and 4, the 9th BRICS Summit was hosted by China in the coastal city of Xiamen, attended by leaders from the BRICS countries of Brazil, Russia, India, China and South Africa.
While it was intended to be one of China’s keynote diplomatic events of the year, the summit appeared to attract less attention from international media than previous summits. To some extent, the event was overshadowed by North Korea after Pyongyang conducted its nuclear test just one day before it started. But whatever the reason for the muted coverage, there is a perception among analysts that the group’s significance is declining.
Developed from an acronym originally coined in 2001 by Goldman Sachs economist Jim O’Neill, the BRIC group formed an official association in 2008 on the sidelines of the UN General Assembly. With the group’s first summit held in Russia in 2009, South Africa was invited into the bloc in 2011, turning BRIC into BRICS. The summit has been an annual event ever since.
With its calls for reform of the West-dominated international financial system, the bloc, which includes what many believe to be the world’s next economic powerhouses, has long been considered a rival to the Group of Seven (G7, the Group of Eight minus Russia). In recent years, the bloc has successfully led to a restructuring of global governance with an increase in the share of voting rights given to emerging markets at the International Monetary Fund and World Bank. The bloc has also launched the New Development Bank, previously known as the BRICS Development Bank, in 2015.
But in the past couple of years, the bloc has lost much of its glamor. With the fall of the price of oil and other commodities, Russia, Brazil and South Africa have been struggling economically, while the latter two have also been embroiled in a web of domestic political scandals in recent years. Even China’s growth has slowed down, with India being the only BRICS member that has seen accelerating growth. This has led many analysts to assert that the BRICS, as a bloc, has become less and less relevant.
Chinese President Xi Jinping, it appears, disagrees. In a speech at the opening ceremony of the BRICS Business Forum on September 3, Xi said in a time of sluggish economic growth, issues that the BRICS have aspired to address, such as “uneven development, inadequate governance and deficit of fairness” have become more acute as “protectionism and an inward-looking mentality are on the rise.”
“It is true that, affected by complex internal and external environments, we BRICS countries have encountered headwinds of varying intensity,” said Xi. “But the growth potential and trend of our countries remain unchanged, and we are fully confident about it.” Xi then called on the BRICS countries to deepen their partnership and usher in a “second ‘Golden Decade’ of BRICS cooperation.”
In another speech, at the BRICS Dialogue of Emerging Market Economies and Developing Countries held on September 5, Xi positioned China and the BRICS countries as guardians of economic globalization. Reiterating its warning against rising protectionism and resistance against multilateral cooperation such as the Paris Accord on Climate Change, apparently referring to the US President Donald Trump’s policies without naming them, Xi called for the BRICS and other developing economies to promote trade liberalization and an open world economy.
Xi also announced that China will provide 500 million yuan (US$76 million) for a BRICS economic and technology cooperation plan and another US$4 million to support the projects of the bloc’s New Development Bank.
Apparently, to deal with the persistent perception of the bloc’s influence being in decline given the economic difficulties encountered by the smaller BRICS members, China also launched the so-called “BRICS Plus” concept, proposing that the bloc include more developing countries into the BRICS mechanism.
The concept enjoyed a prominent position in Xi’s speech on September 3, as Xi called on the BRICS countries to “promote the ‘BRICS Plus’ cooperation approach” to “get more emerging market economies and developing countries involved in our concerted endeavors for cooperation and mutual benefit.” Instead of focusing on the five BRICS countries, China’s rhetoric regarding the BRICS cooperation has increasingly focused on “emerging markets” and “developing countries” as a whole.
The concept was eventually featured in the joint statement released by the BRICS states after the summit concluded, as the BRICS pledge to “pursue equal-footed and flexible practices and initiatives for dialogue and cooperation with non-BRICS countries, including through BRICS Plus cooperation.” An editorial published by China’s Party-owned Global Times dubbed the concept a “major legacy” of this year’s summit.
But China has not achieved all it had hoped for. In previous years, it has been a tradition of the host country to invite other developing countries to attend the BRICS summit as observers. This year, China invited Thailand, Tajikistan, Mexico, Kenya and Egypt as guests. With the BRICS Plus concept, China has proposed to transform this practice into a permanent mechanism. But according to a report of The Times of India, China’s efforts in this regard were resisted by India, as New Delhi is concerned that its own influence within the group might be diluted by other countries, especially if Beijing’s allies are included.
Indeed, besides the economic difficulties the BRICS countries have encountered, the potential strategic rivalry between China and India, the world’s two most populous countries and the two largest economies of the BRICS bloc, has long been a major concern over the long-term cooperation between BRICS members.
In the run-up to the BRICS summit, border troops of the two countries had been locked in a confrontation in the Doklam region for over two months, which had cast a shadow over the possibility of a successful summit. The standoff was ended less than a week ahead of the summit on August 28, allowing New Delhi to confirm the attendance of India’s Prime Minister Narendra Modi to the summit the following day, August 29.
It is no surprise that the meeting between Xi and Modi on the sideline of the BRICS summit was a major focus of the event. During their meeting, the two leaders stressed the importance of “maintaining peace and tranquility in border areas.” The two countries also pledged to see each other’s development as an opportunity, instead of a threat.
While there is still a profound lack of political trust between China and India, the fact that the border confrontation was defused just before the BRICS summit also shows how important the BRICS grouping is for the two countries, as it provides one of few platforms for them to work together on various issues.
Despite their different interests on a variety of issues, China and India continue to share the common aspiration to reform global financial governance. In his speech at the summit, Modi echoed much of Xi’s call for greater BRICS cooperation. Noting that the world is “drifting towards uncertainty,” Modi said that the BRICS countries have developed a robust framework for cooperation.
On reforming global financial governance, Modi also called for the creation of a BRICS ratings agency to counter Western ratings institutions and cater to financing the needs of sovereign and corporate entities of developing countries. Also in the joint declaration, the BRICS countries reaffirmed their commitment to reforming the IMF and World Bank.
In the meantime, the New Development Bank (NDB), the BRICS’ answer to the World Bank, has also funded (rather than providing a loan) its first project, a solar power project of US$76 million, which started operation in Shanghai on September 2 after being approved in December 2016. According to Shi Yaohui, China’s vice minister of finance, the NDB has approved 11 projects.
Just one day prior to the BRICS summit on September 2, a ceremony was held to mark the construction of the NDB’s permanent headquarters in Shanghai, which is expected to be completed by September 2021. Earlier in July, the NDB launched its African Regional Center in Johannesburg, South Africa.
According to Chen Fengying, former director of the World Economy Institute at the China Institutes of Contemporary International Relations, although some of the BRICS countries have experienced some growth pains, the logic behind the significance of the bloc, that is the rise of emerging economies and their aspiration for reforming the global governance framework, remain unchanged.
Data released by China’s Ministry of Commerce show that the BRICS countries’ share of global GDP has increased from 12 percent in 2006 to 23 percent in 2016, with the share of total trade increasing from 11 percent to 16 percent and the foreign direct investment increasing from 7 percent to 12 percent.
Moreover, Chen argued that unlike the G7, the BRICS cooperation has more to it than just a presidential summit. In the joint declaration released after the BRICS summit, for example, it outlines dozens of cooperation initiatives covering a variety of fields.
“When one talks about how BRICS has lost its luster, one should not ignore the fact that BRICS cooperation has gone far beyond a yearly presidential summit, to have become an institutionalized mechanism,” Chen told NewsChina. The incremental steps achieved by each meeting and summit, Chen said, will lead to a long-term reform of the global governance structure.