Understanding BRICS

 

Western institutions like Goldman Sachs expect BRICS to dominate the world economy by 2050, but still cannot understand how it works despite its strengths.

FOUR countries, each with considerable growth promise, were exploring greater trade and investment prospects at the turn of the century.

They were already among the world’s top 10 countries by way of geographical spread, population size, and national economic strength in GDP, in both nominal and purchasing power parity (PPP) terms. They were also working well together.

Brazil, Russia, India, and China then came together in 2009, and Goldman Sachs nicknamed them by the acronym “BRIC”. South Africa joined the following year to make it “BRICS”.

Almost immediately, Western scepticism worked overtime. It ranged from how a grouping with no discernible identity could achieve anything, to how long such an association with no conceivable purpose could possibly last. The sceptics did not seem to notice that the five countries happened to form a quarter of the Group of 20 (G20). Serious observers had known that the G20 was steadily surpassing the Western-led Group of 7 (G7) countries in global significance.

The International Monetary Fund had initially identified the G7 as the world’s leading economies. Yet just the five BRICS countries had exceeded the G7 in terms of GDP in PPP – with the promise of more.

Clearly, BRICS represented a shift in the global economy’s tectonic

plates. A new planetary alignment in economic power was underway, but this could not be understood through old ways of thinking.

Within the typically narrow Western perspective, an alliance could hold only by targeting significant others outside the group – or had clear affinities among members in seeking to target others.

Evidently, BRICS did not fit this notion of an intergovernmental grouping to work. BRICS was not about targeting anyone, but about developing members’ potential for building a more equitable global order together.

Obviously, those intent on keeping the Global South permanently down will be alarmed by BRICS’ development. However, such neocolonial attitudes are now the ones fading out.

BRICS is about the Global South spreading its wings, in solidarity with transnational partners and megatrends moving in that direction.

To emerging regions in the developing world this is identity and purpose enough, even if it is a blur to former colonial powers.

Typically, many in the West cannot fathom how BRICS can

nd appeal to any “friendly” or nonaligned country. They assume that countries come together only as an “alliance”, which in turn must work to rival or oppose others in zero-sum fashion.

They tend to forget that BRICS began as a small community of emerging economies exploring greater trade and investment opportunities. Economic development is crucial to countries of the Global South because colonialism had robbed them of it.

Among the Global North’s misperceptions is that BRICS is a rival to the G7. That is a mistake in terms of BRICS’ identity and purpose.

Rivalry is another party’s definitive challenge to the point of rendering one redundant or irrelevant, and then usurping one’s purpose through displacement.

To that end, the G20 should be paired with the G7 and BRICS with the Organisation for Economic Cooperation and Development (OECD). The G20 and G7 are competing entities much like BRICS and the OECD, not BRICS and the G7.

Each group has agency, yet only represents emerging or receding megatrends. Countering “unfavourable” megatrends is an enormous or impossible task that requires addressing their historic undercurrents, not the organisations themselves.

The fact that the G20 includes major BRICS countries shows that the G7 as its Western component, in ceding some influence, is facing the global shift towards multipolarity. This reality should be acknowledged and managed intelligently.

Most countries see no contradiction between joining BRICS and continuing healthy relationships with Western powers for mutual benefit. Of course, such relationships have to be based on equality and mutual respect between sovereign nations, not any kind of neocolonial or patron-client arrangement.

Indonesia reportedly considered joining BRICS, only to shelve the idea in prioritising OECD membership. Malaysia has applied to join BRICS, with an intention to join the OECD as well.

India as an important partner of the West is a leading member of BRICS. Vietnam is another Western partner considering BRICS membership.

US ally Thailand has applied for membership, while Laos and even its former “protectorate” master France have indicated interest in BRICS. Another Nato (North Atlantic Treaty Organisation) member Turkey showed interest in 2018 and applied for membership this year.

Naturally, nonaligned Malaysia seeks better economic opportunities with BRICS. After joining the Us-led Indo-pacific Economic Framework and the Trans-pacific Partnership (now Comprehensive and Progressive Agreement for Trans-pacific Partnership) once led by the US to exclude China, for Malaysia to snub BRICS would be to tilt against its main trading partner.

BRICS membership provides pluses that are cumulative with no trade-offs elsewhere. Even if only some Asean members join, it would benefit Asean as a whole through better global economic networking, without disadvantaging neighbouring countries that are not BRICS members.

BRICS offers expanded trade and investment opportunities in new, untapped markets and preferential trading arrangements among members. Greater use of local currencies also reduces transaction costs, minimises exchange rate volatility, and strengthens the value and status of local currencies.

Membership also means access to funds from BRICS’ New Development Bank, and exchange-traded funds invested in members’ emerging economies that are among the world’s fastest growing. The potential benefits explain BRICS’ popularity among dozens of countries worldwide regardless of culture, history or politics.

For Asean countries like Malaysia, membership of BRICS and the Regional Comprehensive Economic Partnership (RCEP) as the world’s biggest trading bloc can mean powerful new synergies for accelerated and sustained economic growth. Every country has the responsibility to its citizens of making the most of every available development opportunity.

For the developing world, BRICS provides a means for fasttracking the route to fully developed status. For all countries in the Global South and North, it also provides coordinated efforts for fulfilling such global public goods as UN Sustainable Development Goals.

By BUNN NAGARA Bunn Nagara is director and Senior Fellow of the BRI Caucus for Asiapacific, and Honorary Fellow of the Perak Academy. The views expressed here are solely his own.

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Understanding BRICS

 

Western institutions like Goldman Sachs expect BRICS to dominate the world economy by 2050, but still cannot understand how it works despite its strengths.

FOUR countries, each with considerable growth promise, were exploring greater trade and investment prospects at the turn of the century.

They were already among the world’s top 10 countries by way of geographical spread, population size, and national economic strength in GDP, in both nominal and purchasing power parity (PPP) terms. They were also working well together.

Brazil, Russia, India, and China then came together in 2009, and Goldman Sachs nicknamed them by the acronym “BRIC”. South Africa joined the following year to make it “BRICS”.

Almost immediately, Western scepticism worked overtime. It ranged from how a grouping with no discernible identity could achieve anything, to how long such an association with no conceivable purpose could possibly last. The sceptics did not seem to notice that the five countries happened to form a quarter of the Group of 20 (G20). Serious observers had known that the G20 was steadily surpassing the Western-led Group of 7 (G7) countries in global significance.

The International Monetary Fund had initially identified the G7 as the world’s leading economies. Yet just the five BRICS countries had exceeded the G7 in terms of GDP in PPP – with the promise of more.

Clearly, BRICS represented a shift in the global economy’s tectonic

plates. A new planetary alignment in economic power was underway, but this could not be understood through old ways of thinking.

Within the typically narrow Western perspective, an alliance could hold only by targeting significant others outside the group – or had clear affinities among members in seeking to target others.

Evidently, BRICS did not fit this notion of an intergovernmental grouping to work. BRICS was not about targeting anyone, but about developing members’ potential for building a more equitable global order together.

Obviously, those intent on keeping the Global South permanently down will be alarmed by BRICS’ development. However, such neocolonial attitudes are now the ones fading out.

BRICS is about the Global South spreading its wings, in solidarity with transnational partners and megatrends moving in that direction.

To emerging regions in the developing world this is identity and purpose enough, even if it is a blur to former colonial powers.

Typically, many in the West cannot fathom how BRICS can

nd appeal to any “friendly” or nonaligned country. They assume that countries come together only as an “alliance”, which in turn must work to rival or oppose others in zero-sum fashion.

They tend to forget that BRICS began as a small community of emerging economies exploring greater trade and investment opportunities. Economic development is crucial to countries of the Global South because colonialism had robbed them of it.

Among the Global North’s misperceptions is that BRICS is a rival to the G7. That is a mistake in terms of BRICS’ identity and purpose.

Rivalry is another party’s definitive challenge to the point of rendering one redundant or irrelevant, and then usurping one’s purpose through displacement.

To that end, the G20 should be paired with the G7 and BRICS with the Organisation for Economic Cooperation and Development (OECD). The G20 and G7 are competing entities much like BRICS and the OECD, not BRICS and the G7.

Each group has agency, yet only represents emerging or receding megatrends. Countering “unfavourable” megatrends is an enormous or impossible task that requires addressing their historic undercurrents, not the organisations themselves.

The fact that the G20 includes major BRICS countries shows that the G7 as its Western component, in ceding some influence, is facing the global shift towards multipolarity. This reality should be acknowledged and managed intelligently.

Most countries see no contradiction between joining BRICS and continuing healthy relationships with Western powers for mutual benefit. Of course, such relationships have to be based on equality and mutual respect between sovereign nations, not any kind of neocolonial or patron-client arrangement.

Indonesia reportedly considered joining BRICS, only to shelve the idea in prioritising OECD membership. Malaysia has applied to join BRICS, with an intention to join the OECD as well.

India as an important partner of the West is a leading member of BRICS. Vietnam is another Western partner considering BRICS membership.

US ally Thailand has applied for membership, while Laos and even its former “protectorate” master France have indicated interest in BRICS. Another Nato (North Atlantic Treaty Organisation) member Turkey showed interest in 2018 and applied for membership this year.

Naturally, nonaligned Malaysia seeks better economic opportunities with BRICS. After joining the Us-led Indo-pacific Economic Framework and the Trans-pacific Partnership (now Comprehensive and Progressive Agreement for Trans-pacific Partnership) once led by the US to exclude China, for Malaysia to snub BRICS would be to tilt against its main trading partner.

BRICS membership provides pluses that are cumulative with no trade-offs elsewhere. Even if only some Asean members join, it would benefit Asean as a whole through better global economic networking, without disadvantaging neighbouring countries that are not BRICS members.

BRICS offers expanded trade and investment opportunities in new, untapped markets and preferential trading arrangements among members. Greater use of local currencies also reduces transaction costs, minimises exchange rate volatility, and strengthens the value and status of local currencies.

Membership also means access to funds from BRICS’ New Development Bank, and exchange-traded funds invested in members’ emerging economies that are among the world’s fastest growing. The potential benefits explain BRICS’ popularity among dozens of countries worldwide regardless of culture, history or politics.

For Asean countries like Malaysia, membership of BRICS and the Regional Comprehensive Economic Partnership (RCEP) as the world’s biggest trading bloc can mean powerful new synergies for accelerated and sustained economic growth. Every country has the responsibility to its citizens of making the most of every available development opportunity.

For the developing world, BRICS provides a means for fasttracking the route to fully developed status. For all countries in the Global South and North, it also provides coordinated efforts for fulfilling such global public goods as UN Sustainable Development Goals.

By BUNN NAGARA Bunn Nagara is director and Senior Fellow of the BRI Caucus for Asiapacific, and Honorary Fellow of the Perak Academy. The views expressed here are solely his own.

China has a real world economy, not the fake economy bases on money ptiting kike America

Source link

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In 75 years, China has become increasingly prominent in driving global development

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Bigger thriller in Manila: Asean point man to deal with China

Point man: Asean has designated Manila its ‘leader’ in dealings with China, but can the moody Duterte, here shown bonding with Xi on a visit to Beijing in 2016, clinch a an agreement from China for the regional association? — AP

https://youtu.be/iMB26dijZAE https://youtu.be/tedFwDyW2Uo

NOW that the quartet of Asean-related summits is over for the year, so should the niggling criticisms. At least they should – more important matters are at hand.

Over the week Singapore hosted the 2nd RCEP (Regional Comprehensive Economic Partnership) Summit, the 13th East Asia Summit, the 21st Asean Plus Three Summit, and – not least – the 33rd Asean Summit.

These summits were held because it was time they were, and Singapore hosted them because it was its turn. But criticisms were not far behind.

US President Donald Trump was a no-show, and so was Chinese President Xi Jinping. Vice-President Mike Pence and Prime Minister Li Keqiang attended instead.

Trump was criticised for his absence, which allegedly “left the region wide open” for Xi’s China to make further inroads here. That complaint was limited only by Xi’s own absence.

Philippine President Rodrigo Duterte was also criticised for not attending an “informal breakfast summit” between Asean and Australian leaders.

His said it was only an informal event, and it was over breakfast which he did not eat.

A casual observer may be forgiven for sensing that there must be more important developments than these scheduled rounds of handshakes and photo opportunities. There are.

One of these begins in two days: Xi’s state visit to the Philippines, following the scheduled 30th Apec Summit in Papua New Guinea.

Duterte had made three visits to China as President, inviting Xi to visit Manila each time. This will be Xi’s first state visit, coming upon the third invitation to him.

There will be handshakes and photo opportunities too, but the substance and symbolism now may be more than the recent multiple summits in Singapore and Papua New Guinea.

The Philippines has been vocal about rival claims to territory in the South China Sea. The previous The region is generally unsettled by China’s recent occupation and construction of islands, with Vietnam remaining most disturbed. Duterte’s critics have also blamed him for being soft on Beijing.

However, Xi’s visit is expected to be smooth with an emphasis on the positives. These include mutual interests deemed to be larger than interminable disputes over distant rocks and islets.

Last year Chinese Vice-Premier Wang Yang visited Manila for four days amid more audible protests over territory such as Benham Rise. Yet the visit proceeded unhindered.

This time it is President Xi himself, for a state visit of only two days, with no particular complaint against China outstanding. It will also be after one full year of China having become the Philippines’ main trading partner.

For both sides the focus will be quite intense on specific projects backed by Chinese assistance. Duterte left the merrymaking in Papua New Guinea early to return home to prepare for Xi’s arrival.

For China, it would demonstrate to the region how it can cooperate with even a country locked in dispute with it to mutual benefit. This gains added significance when it is the Philippines, historically a US ally.

For the Philippines, there is a host of projects and programmes on Duterte’s wish list requiring Chinese aid. They span his ambitious 9-trillion peso (RM717bil) “Build, Build, Build” infrastructure plan covering all three regions of the Philippines: Luzon, Visayas and Mindanao.

These come under the Six-Year Development Program (SYDP) signed last year with China as a framework for the Philippines’ “Golden Age of Infrastructure.” It is to be Duterte’s legacy for his country.

The 75 projects include a water pump and irrigation scheme, a dam, a north-south railway, a highway, bridges, a park and a rehabilitated power plant. Economic growth is projected to outpace debt.

Duterte is clear-minded enough to know that only China is able and willing to provide the assistance needed. No other country or combination of countries is in a position to do so.

There are also plans for more Chinese business investments, as well as a framework agreement for joint oil and gas explorations at sea. The latter are understood to cover some disputed areas, with China agreeing to only a 40% share of recoverable deposits.

Countries in dispute over territory and the reserves found therein tend to shy from joint exploration, as legally this may imply recognition of the other disputing party’s claim.

But since this condition applies equally to both parties, the Philippines may be confident that China would also be obliged to acknowledge the Philippine claim. Can there be a lesson here for other Asean countries with claims to the South China Sea?

To ensure the success of Xi’s visit, there had been a positive build-up of Philippines-China relations in recent months. Xi’s state visit in turn is envisaged to lead to even better bilateral relations.

Last August, joint simulated naval exercises were held in Singapore among Asean countries and China without US participation. Manila defended that decision by saying that the “tabletop” drill was meant only for neighbouring countries in the region.

Now as Xi prepares for his visit, the US Pacific Fleet is reportedly readying a series of naval operations as a “show of force” in the South China Sea and the Taiwan Straits. In response to China’s stated concern, the Philippines said it will have no part in those operations.Xi’s visit is important not just for the Philippines but also Asean, which had designated Manila the “point man” in dealings with China. Can Duterte clinch an agreement from China for Asean?

Manila had said that a legally binding Code of Conduct (CoC) in the South China Sea was on the agenda, but Singapore Prime Minister Lee Hsien Loong said it may take another three years.

If China really wants to prove its goodwill in Manila, Xi could suggest it may happen considerably sooner.

The last Chinese President to make a state visit to the Philippines was Hu Jintao in 2005. That occasion also marked the 30th anniversary of bilateral relations, which is as auspicious a time as any.

This Tuesday’s visit by Xi will be the first Chinese state visit in 13 years. That is an auspicious number in Chinese, but not so in Western culture.

Will it be auspicious for the Philippines, the only Christian-majority country in the region once colonised by Spain and then the US? Duterte’s original style of leadership may yet make the difference.

By Behind The Headlines Bunn Nagara

Bunn Nagara is a Senior Fellow at the Institute of Strategic and International Studies (ISIS) Malaysia.

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First among equals: Putin and Xi had an official meeting before the Shanghai Cooperation Organisation summit in Qingdao. Sloppy US policies have helped to build a growing China-Russia alliance for a full decade now.- AFP

THE week that was ended with a significant non-Western event often ignored or misunderstood by the West: the latest Shanghai Cooperation Organisation (SCO) summit.

The 18th annual SCO summit in the Chinese port city of Qingdao this weekend is only the fourth held in China. Beijing is relaxed about its role in a growing organisation of eight member countries, six Dialogue Partners and four observer nations – a confidence that suggests considerable clout.

China and Russia are the two hulking members of a group that boasts formal parity, being the conspicuous “firsts among equals.” And as two consecutive US administrations unwittingly drive these giants closer than ever before strategically, Western attention is led astray.

Western reports track President Putin’s travel to Qingdao and the diplomatic niceties exchanged there. At the same time, Western commentators are tempted to dismiss the summit as yet another futile talkfest.

Both approaches are wrong or misplaced. While Xi-Putin exchanges may not be the highlight of this year’s SCO summit, neither are they insignificant.

Sloppy US policies helped to build a growing China-Russia alliance for a full decade now. This is evident enough from the meeting rooms of the UN Security Council to the battlefields of Syria to the South China Sea and the Baltics.

The latest SCO summit reaffirms the trend but adds only marginally to it by way of atmospherics. There are more important developments visible at, if not represented by, the Qingdao summit.

It is the first SCO summit at which both India and Pakistan arrive as full members.

Beginning as the Shanghai Five in the mid-1990s, the SCO has grown steadily and now incorporates three giants – China, Russia and India – in the great Eurasian land mass where both the US and the EU have scant inputs.

With Pakistan coming in at the same time as India as an equal partner, the SCO should be free from any sub-regional turbulence within South Asia.

Turkey is also an SCO Dialogue Partner whose interest in full membership is not without broader implications for the West.

Turkey has considerable military strength and is also a member of Nato, hosting its Allied Land Command and a US air base in Izmir. However, Ankara’s years-long effort to join the EU has been snubbed by Brussels.

Turkish President Recep Tayyip Erdogan has famously mulled over choosing between the EU and the SCO, reportedly preferring the latter. How would the West find a Nato member joining a non-Western group led by Russia and China?

Deep-seated discomfort would be a mild way to put a reaction in Brussels and Washington. To US policymakers, Turkey is a strategic country because of its location as well as its status as a prominent Muslim country.

Both China and Russia have sounded positive about Turkey’s prospective membership of the SCO. Nonetheless, SCO members share an understanding of sorts that Turkey may have to forego its Nato membership before SCO membership can be entertained.

However, Beijing and Moscow may be less concerned than Washington and Brussels about Turkey’s SCO membership with its Nato credentials intact. That immediately makes Turkey more comfortable to be in SCO company.

Turkey has already received what amounts to special treatment within the SCO that no other Dialogue Partner has enjoyed. Last year it was elected as Chair of the SCO’s Energy Club, a position previously enjoyed only by full members.

Erdogan has called the SCO “more powerful” than the EU, particularly in a time of Brexit. Bahrain and Qatar seek full SCO membership; Iraq, Israel, Maldives, Ukraine and Vietnam want to be Dialogue Partners; and Armenia, Azerbaijan, Bangladesh, Egypt, Nepal, Sri Lanka and Syria want Observer status.

Iran already has SCO Observer status and had applied for full membership in 2008. Following the easing of UN sanctions on Tehran, China declared its support for Iran’s membership bid in 2016.

The recent US pullout from the Joint Comprehensive Plan of Action (“Iran nuclear deal”) has further prodded Tehran to “look East.” These days that means China and a China-led SCO.

Iran already trades heavily with China with myriad deals in multiple sectors. Mutual interests abound, far exceeding the basic relationship of oil and gas sales to China.

As Europe treads carefully, mindful of possible new sanctions on Iran following the US cop out, cash-rich Chinese firms take up the slack. US policy is also pushing Iran, among others, closer to China.

In preparing for Prime Minister Modi’s arrival in Qingdao on Friday, Indian Ambassador Gautam Bambawale said both countries were determined to work in close partnership and would never be split apart.

This echoed two main points already shared by Indian and Chinese leaders – that their countries are partners in development and progress, and what they have in common are greater than their differences.

All of this seems set to undo the Quadrilateral Security Dialogue (Quad) that groups the US with Japan, Australia and India, all boasting a democratic system in common in a joint strategic encirclement of China. But India’s relations with China have been on the upswing for half a year now.

The day before Modi arrived in Qingdao, a Quad meeting in Singapore closed on Friday with India expressing differences with the other members. Its Ambassador to Russia Pankaj Saran said the Quad was not the same as its hopes for an inclusive “Indo-Pacific region” (IPR) that did not target any country.

He added that India wanted closer ties with Russia as well in an IPR. Just a fortnight before, Russia’s recent Ambassador to the US Sergei Kislyak said President Trump also wanted closer ties with Russia.

That was only a small part of the roller-coaster ride of international diplomacy in the first half of 2018.

In January Trump condemned the Taliban for a spate of attacks in Afghanistan, vowing that all talks with them were off. Until then, top US diplomats were carefully planning negotiations with the Taliban.

In March, US officials blasted Russia for allegedly arming the Taliban, which Moscow denied. The following month Nato voiced support for Afghan President Ashraf Ghani’s efforts to talk with the Taliban to “save the country.”

Meanwhile Trump’s ramparts of trade barriers in the direction of a trade war would decimate allies from East Asia to Europe. French President Emmanuel Macron expressed a European position in reaching out to China on climate and security issues.

By March the EU had dug in, preparing for the worst of US trade barriers while vowing retaliation. The WTO also warned Washington that it was veering towards a trade war with tariffs on steel and aluminium.

In April, China’s new Defence Minister Gen. Wei Fenghe arrived in Moscow for talks with his Russian counterpart Sergei Shoigu. Wei rubbed it in for Washington, publicly announcing that his visit was to show the US the high level of strategic cooperation between China and Russia.

Two days later the Foreign Ministers of China and Russia expressed similar sentiments. They championed negotiations and sticking to pledges while weighing in against the unilateralism of a unipolar power.

Where China has the SCO, Russia has the Eurasian Economic Union (EAEU).

If any discomfort is felt in Washington, it is from acting as a unipolar power in an increasingly multipolar world.

Source: Behind the headlines by Bunn Nagara is a Senior Fellow at the Institute of Strategic and International Studies (ISIS) Malaysia.



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