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Commentary: Amid a brewing trade war, BRICS gains influence

The association of the five major emerging national economies Brazil, Russia, India, China, and South Africa, is becoming more influential since it started more than ten years ago, says one observer.

Commentary: Amid a brewing trade war, BRICS gains influence

Indian Prime Minister Narendra Modi, China's President Xi Jinping, South Africa's President Cyril Ramaphosa, Russia's President Vladimir Putin and Brazil's President Michel Temer pose for a group picture at the BRICS summit meeting in Johannesburg, South Africa, July 26, 2018. (Photo: REUTERS/Mike Hutchings)

CANBERRA: As far as international groupings go, BRICS (Brazil, Russia, India, China and South Africa) was always considered head-scratchingly strange.

They have been a disparate group of nations with very little to link them, whether it be geographical size, language, or form of governance.

What BRICS did have in common was a shared status as economies transitioning from developing to developed.

But was that ever enough to keep this group afloat?

Since the inception of BRICS in 2006, the bloc has been dogged by predictions of its imminent demise. But 12 years on, it is clear that BRICS is to be ignored or dismissed at peril, as it is shaping up to be a significant grouping – so much so that other developing countries wouldn’t mind being admitted into the club.

By 2016, BRICS contained 41 per cent of the world’s population, just under 30 per cent of the globe’s territory, 23 per cent of global GDP, and 18 per cent of its trade.

Against a backdrop of instability in the global world order, it is fair to say that BRICS is gaining currency and, potentially, influence.

Last month saw the 10th annual BRICS Summit, held this year in Johannesburg, South Africa. For three days, leaders and representatives of the five members met to discuss how to best cooperate strategically and pragmatically in the face of their differences.


In particular, BRICS aims to boost multilateral trade, investment, and financial connectivity between developing nations – possibly, it might be said, to reduce their dependence on the West.

Trade wars with the United States top discussions at the three-day summit meeting of the BRICS emerging economies - Brazil, Russia, India, China and South Africa. (Photo: AFP/JOHANNES EISELE) Trade wars with the United States are likely to top discussions at the three-day summit meeting of the BRICS emerging economies -- Brazil, Russia, India, China and South Africa -- that kicks off on Wednesday. AFP/JOHANNES EISELE

The summit was watched keenly by the international community, eager to see China’s moves and words on trade in the face of the potential threat of a US-induced trade war over tariffs.

Observers also wanted to see whether China would work to assert itself as the dominant state in the bloc whose members have, perhaps until now, enjoyed equal billing.

The Chinese media might believe this is the case, with magazine covers such this one presenting President Xi Jinping towering over his counterparts, even Russian President Vladimir Putin.

Xi did not disappoint. Delivering the summit’s keynote speech, he underscored the importance of developing countries, and the need for cooperation in the face of rapidly changing global systems. He said:

A trade war should be rejected, because there will be no winner. Economic hegemony is even more objectionable, as it will undermine the collective interests of the international community, those who pursue this course will only end up hurting themselves.

Later, Xi called for BRICS countries to support the multilateral trading regime and increase the voices of emerging markets and developing countries.

READ: US-China trade war to continue on for years, not months, a commentary


His counterparts took heed. At the end of the summit, all leaders signed the Johannesburg Declaration, reaffirming their commitment to fight unilateralism and protectionism, and pointing out the importance of an open world economy which would enable all people to share the benefits of globalisation. 

The Declaration also calls upon World Trade Organisation members to abide by the rules and honour their commitments to the multilateral trading system.

China's President Xi Jinping takes his seat at the first closed session of the leaders of the BRICS summit meeting in Johannesburg, South Africa, July 26, 2018. (Photo: REUTERS/Mike Hutchings)

The Declaration also reaffirmed members’ joint commitment to cooperate on sustainable development, energy, agriculture, as well as on climate change, to ensure international peace and security.

Just how meaningful is this document?

Despite the presence of Putin’s signature on it, it is unlikely to have any real impact. (However, it is worth noting that the US and EU have since agreed to start talks that could stave off a potential trade conflict.)

What will have more impact is China’s strategic spending on the African continent.

Two weeks ago, Xi pledged US$14.7 billion in investment in South Africa, among other investments across Africa. South Africa returned the favour, pledging US$300 million to China for a new metro line in the city of Luoyang, a gesture that Beijing no doubt appreciates.

Indeed, lending between BRICS members is a key part of the bloc’s raison d’etre. The New Development Bank, formerly known as the BRICS Development Bank, now has a lending portfolio covering 23 sustainable infrastructure projects totalling US$5.7 billion. 

These include roads and water supply provision in rural areas, energy projects, and more, emphasising the bloc’s commitment to developing countries.

READ: Don't wait for a global recession to take trade war threats seriously, a commentary


With efforts and sums such as these, it is no surprise other countries want in on BRICS.

Last year, China invited a few guests of its own under the “BRICS Plus” banner, sparking speculation that Beijing wants to expand the bloc further.

This year, several African leaders were invited as guests, including those from Uganda, Angola, Namibia and Togo. At the same time, BRICS Plus was formalised, including representatives from Argentina, Indonesia, Egypt, Jamaica, Turkey and the United Nations.

Turkey's President Tayyip Erdogan arrives for a group picture at the BRICS summit meeting in Johannesburg, South Africa, July 27, 2018. (Photo: REUTERS/Mike Hutchings)

From its indeterminate beginnings, BRICS has emerged as a significant global bloc: More than ten years in, it is starting to realise some of its early ambitions.

What will be interesting to see as it progresses is what the group wants to do next. Does it remain focused on financial connectivity, or does it want to take a greater role in global governance?

Is it content to allow China to take on a leadership role? And, importantly, will this bloc become yet another channel through which China will exert its influence?

For a group that could provide a solid counter to Western hegemony, that would be a sad outcome indeed.

Aarti Betigeri is a multi-platform journalist and former foreign correspondent based in Canberra. A version of this commentary first appeared on Lowy Institute's blog The Interpreter. Read it here.

Source: CNA/nr(sl)


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