From Chinese Press

Stay rational about the BRIC platform

(chinadaily.com.cn)
Updated: 2010-04-21 11:02

On April 17, caing.com published a blog titled "China should stay rational about the BRIC platform," written by its chief editor Hu Shuli. In this article, Hu proposed that China not look down upon the effect of the BRIC platform or exaggerate it. Here is an excerpt:

The word BRIC, representing Brazil, Russia, India and China, was first introduced by economists, and its meeting system was established after the first summit in Moscow. Just as Brazil's President Luiz Inacio wrote, BRIC is no longer a vague concept, but a political reality.

It is time for China to consider how to assess and utilize the BRIC platform in the post-financial crisis era, when the world is restructuring.

As leading emerging markets, the BRIC countries possess 42 percent of the world population, 14.6 percent of the global economy gross and 12.8 percent of global trading. If the BRIC countries maintain their development pace, their combined GDP will surpass six Western economies, except Canada, by 2050, and become the strongest economic force.

BRIC's complementary trading, similar political stands and opening-up policy led to high expectations. In almost 10 years, trading among theses countries increased more quickly than global trading. China became the first trading partner of Brazil and India, and the third partner of Russia. Also, the opening-up policy implied that any emerging country whose GDP reaches over 5 percent of the global gross might be accepted into the BRIC system.

Russia was the most active party to institutionalize the summit, not just hoping to develop BRIC into an economic union, but also aiming to form a political union. Russia's President Dmitry Medvedev said that BRIC countries would help to strengthen the security of the world by building up the economic basis for a multi-polar world. With his proposal, the Senior Delegate Meeting on Security Affairs was held in the first summit, during which senior officials in charge of foreign affairs of the four countries also exchanged their ideas on the international situation and the enhancement of cooperation.

Moreover, on the financial, economic and trading agenda, which had the most importance attached to it, the BRIC countries continued to request a more plural international monetary system, besides their renewed appeal to the management reform of international monetary institutions, including IMF and the World Bank.

Although they have a common interest appeal, their divergence is also obvious. Due to the difference in economic structures, the BRIC countries have performed unevenly in their fight against the financial crisis. Russia's economy, especially, slide eight percent in 2009, as it depended highly on energy and other staples. The trading policies also diverge in the four countries. On the export side, Brazil and Russia hope to benefit from the high price of staples, while India and China can benefit from their low prices.

The divergence also exists in the global major reserves of US dollars. Although all four countries appeal to set up a stable, predictable and more plural international monetary system, China may be most affected by a weak US dollar since it holds over 2 trillion dollars in reserves. In addition, the border dispute between China and India, the weak trading relationship among Brazil, Russia and India, will both increase the difficulty of BRIC's further cooperation.

As the adjustment of international situation continues in the post-financial crisis era, China undoubtedly should seize the opportunity to employ the BRIC platform as a leverage, to finish tasks that a single country cannot do, and raise its voice on increasing the security influence of developing countries. But China must also avoid being dragged by this institution. No matter which institutions China belongs to, BRIC or BaSIC (the new institution for coordinating major economies on the climate change issue, including Brazil, South Africa, India and China), these concepts of emerging economy institution have bound China with other developing countries.

The most important task for China's diplomacy is to create a favorable international climate for domestic needs. That is the meaning of being part of BRIC.