Haibin Niu / A Chinese Perspective on the BRICS in 2015

Haibin Niu / A Chinese Perspective on the BRICS in 2015

“The BRICS group is not only an economic concept but increasingly it is also taking the form of a political entity”, - Haibin Niu, Deputy Director, Center for American Studies, Shanghai Institutes for International Studies

Thanks to the power shift in the international system and the deepening cooperation of the BRICS countries (Brazil, Russia, India, China, and South Africa) in the past six years, the role of this group in global affairs continues to gain momentum. The BRICS group is not only an economic concept but increasingly it is also taking the form of a political entity. However, with the slowing economic growth in BRICS countries and changing geopolitical dynamics around the world, the role of the BRICS on global governance is facing greater challenges than before. As the largest economy of the five countries, China’s vision and strategy about the future of the BRICS group is increasingly important.

Russia will host the seventh BRICS summit July 9–10, 2015, in Ufa, the capital of the Republic of Bashkortostan, gathering the heads of state of the five countries. As per usual, the hosting member will decide the annual summit theme. This year, Russia finds itself confronting worsening relations with the United States and the European Union over the Ukraine crisis, in addition to its own economic problems. Considering these current difficulties, one of the major challenges for the BRICS in 2015 is how to maintain a relationship of cooperation with Russia. Before discussing China’s perspective, it is worth considering Russia’s agenda for the BRICS in 2015.

Possible Topics at Ufa Summit

Investment Cooperation: Holding an economy-focused BRICS summit in 2015 makes sense, given falling oil prices and slowing economic growth. Expanding investment cooperation and exploring a strategy for multilateral economic cooperation is the centerpiece of Russia’s 2015 agenda in the framework of the BRICS. President Vladimir Putin made it clear that Russia was prioritizing strategic economic partnerships when he attended a meeting of the BRICS leaders on the sidelines of the G20 Summit in Brisbane last year.

Financial Cooperation: Financial cooperation matters considering the current economic performance of Brazil and Russia. At the 2014 Fortaleza summit, BRICS countries decided to establish the New Development Bank (NDB) and the Contingency Reserve Agreement (CRA). The CRA is especially relevant for addressing the shrinking foreign reserves of Russia.

Health Cooperation: After G8 cooperation disbanded in 2014, Moscow expressed its desire to increase cooperation within the BRICS countries on health issues. The suggested cooperation agreement includes treating noncommunicable and infectious diseases, exploring biomedical science, and developing effective mechanisms to assess the quality and the accessibility of health care.

China’s Expectations of the BRICS in 2015

The BRICS group was identified by the Eighteenth Congress of the Chinese Communist Party as one of the most important multilateral platforms for China. China values the role of the BRICS on the global stage and enjoys full membership and great influence in the forum. China shares the feeling with other members that the BRICS are being unfairly treated within the IMF and World Bank regarding voting power and the leadership selection process. That is why the BRICS countries strongly support an egalitarian G20 as the main forum of international economic cooperation. The scarcity of such kinds of multilateral fora is one of the reasons why China remains so committed to the BRICS process. China, together with other members, is using the BRICS to pursue a fairer world order rather than challenging a specific power.

China shares Russia’s desire to focus on economic cooperation in the BRICS 2015 agenda. If we look back the speech President Xi made at the sixth BRICS summit in Brazil, it mainly focused on building a stronger economic partnership among BRICS countries. BRICS countries are facing a stronger U.S. dollar, devalued currencies, and capital flight. Falling oil prices have also complicated relationships between BRICS energy consumers and suppliers. Members have adopted a range of different fiscal and monetary policies and all are implementing structural adjustments to their economies to respond to slowing growth. Measures to generate additional revenues by changing tax and interest rates may raise business costs between and among the already relatively closed BRICS economies. It is high time for China to lead the way in building closer economic ties among BRICS members.

At the same time, it is important that China not see the BRICS group only as an economic platform, but that it also values its importance at the political and soft-power level. The diversity in terms of political systems, societies, and cultures makes the BRICS extremely well suited to foster new ways of engaging in international relations. There is a spirit of respect and peer learning in each member’s development model. It is also in China’s interest to use the collective voice of the BRICS to influence the reform and decision-making processes of major international institutions. BRICS foreign ministers, for instance, issued a joint statement ensuring Russia not being excluded from the Brisbane G20 Summit in 2014. The actions of the BRICS regarding Russia’s participation in the Brisbane G20 summit showed the value of the group in preventing one of its members from becoming geopolitically isolated. China will continue its efforts to foster mutual political trust, encourage cultural exchanges, and strengthen diplomatic ties among the BRICS. China also values the role of the BRICS in safeguarding the peace of the international community by promoting cooperation on issues such as antiterrorism and cybersecurity.

Policy Options for China

Accelerating the Institution Building of the BRICS: During the Ufa summit, the first president of the NDB, from India, is expected to be confirmed. China is working hard to ensure the NDB headquarters in Shanghai is ready this year and expects that the NDB will be operational before the end of 2015. Though Western countries have widely cast both the NDB and the CRA as alternatives to the World Bank and the IMF, BRICS countries believe that the new institutions will play a complimentary role to established ones. However, the priority placed by the NDB on infrastructure development has triggered a new enthusiasm from established financial institutions to shrink the global infrastructure-development gap. This shows that there is potential for mutually beneficial interaction between BRICS initiatives and established institutions. It is also important for the BRICS to build a strong partnership between the NDB and the World Bank, not least to match the former’s capital with the latter’s knowledge on promoting the UN’s Post-2015 Development Agenda.

Putting Economic Cooperation First: Deepening and broadening economic cooperation is a clear priority for BRICS countries in 2015. Unlike the original summit in 2009, BRICS leaders today need to focus more on their own challenges than the economic situation of G7 countries. China can start by increasing imports and outward investment, and building more interconnected infrastructure among BRICS countries. Unlike regional economic integration organizations like NAFTA, the EU, and ASEAN, the BRICS must overcome the inconvenience of geographic distance.

China can do these things by both facilitating more liberal bilateral economic arrangements and using the newly established NDB or CRA to provide financial support to BRICS members and other parts of the developing world. China should encourage BRICS members to build a more favorable domestic environment to attract foreign capital and technologies, especially against the backdrop of an increasingly attractive U.S. market. It is clear that the United States is reaching out to India and Brazil respectively for updated and increased economic cooperation. Chinese companies also need to increase engagement in BRICS members’ industry and e-commerce sectors.

Building a Partnership Beyond Economic Cooperation: The BRICS have an opportunity to shape a better world order, which requires China and other BRICS members to act like global players. Sovereignty still needs to be emphasized when talking about cybersecurity and domestic stability, among other issues. Even as the U.S. economy is becoming more attractive, political disputes over cyberspace are still hampering the U.S.-Brazil economic relationship. Considering the diversified preferences on cyberspace, it is quite important for BRICS countries to maintain cooperation on issues like Internet governance with a balanced view between sovereignty and the openness of the space. It is also in China’s interests to encourage a peaceful solution to the Ukraine conflict and to help Russia stabilize its economy, since China has both the “One Belt, One Road” strategy for economic cooperation across the region and heavy investment in Russia.

Оригинал публикации: http://www.cfr.org/councilofcouncils/global_memos/p36088