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Opinion
The Dawn of a New Golden Decade
A look forward to BRICS's bright future
By Michael Zakkour | NO. 37 SEPTEMBER 14, 2017

The Dialogue of Emerging Market and Developing Countries is held on the sidelines of the Xiamen Summit on September 5, when leaders of Egypt, Guinea, Mexico, Tajikistan and Thailand were invited to join the BRICS leaders (XINHUA)

The seaside city of Xiamen in southeast China's Fujian Province has been a hub of global trade and maritime commerce for hundreds of years and made an appropriate setting for the Ninth BRICS Summit held on September 3-5. The theme for the meeting was Stronger Partnership for a Brighter Future and the message from the leaders of the five-country bloc was that Brazil, Russia, India, China and South Africa have built a strong basis on which they can further grow their economies and global influence and secure a more peaceful world by acting in unison.

Jim O'Neill of Goldman Sachs coined the acronym BRIC (South Africa was added in 2010) to describe the countries best positioned for rapid economic growth which would join the existing economic powers of the time to be among the world's biggest economies and which would make up the majority of global growth and GDP in the 21st century.

In 2009, the First BRIC Summit was convened to announce the evolution of the group from an informal description of disparate countries, only unified through economic growth, into a formal institution. Since that time, there has been some criticisms from economists, political leaders and global influencers that the BRIC bloc was largely toothless and did not take action or materially change each other's fortunes or influence global governance.

During his opening remarks at the BRICS Business Forum on September 3, Chinese President Xi Jinping addressed these criticisms by making clear that BRICS had a clear set of goals, saying that "We should push for an open world economy, promote trade liberalization and facilitation, jointly create a new global value chain, and realize a global economic rebalancing." Over the following 48 hours of meetings and with the release of the Joint Declaration, these goals were explained in detail and the actions the group would take to achieve them were also made clear.

Evolution and action

In addressing the next iteration of the cooperation platform, President Xi noted that it took time to transform "BRICS" from a description to a unified body poised for action with an analogy saying "the construction of a tall building starts with a foundation. We have laid the foundation and put in place the framework for BRICS cooperation."

The BRICS economies largely developed independent of each other over the last 25 years and have faced and responded to unique challenges since 2001.

Russia, Brazil and South Africa charted their growth strategies and prospered in accord with their abundance of and global demand for natural resources. China became the second largest economy in the world by creating the most important and largest manufacturing, export and supply chain economy in the world. India, in response to a world that is digitizing and flattening, stakes its prosperity and future in services, IT and hi-tech industries.

The result was that the five countries, which represent 43 percent of the world's population and 26 percent of Earth's landmass, experienced rapid development of their economies, created new middle classes and new wealth for their citizens, and saw their combined GDP rise from 11 percent of global GDP in 1990 to more than 30 percent in 2017.

It seemed that the BRICS were on an unstoppable path to growth and influence and that the group which existed in name only could continue their own paths. Then the unstoppable stopped. The defining event was the global financial crisis of 2008, but there had been some signs of trouble beforehand and events that followed that jeopardized the idea and the reality of a global BRICS-led economic order.

Russia, Brazil and South Africa all suffered major setbacks due to falling demand for and prices of natural resources. India's once robust growth rates of 7-9 percent dropped to 1-2 percent and it seemed for a time that the only BRICS country to have emerged largely unscathed was China. To this point it is worth noting that China's GDP in 2000 was $1.2 trillion and India's was $450 billion, today they are $11.2 trillion and $2.2 trillion, respectively.

The good news is that things are on the upswing. At the 2017 summit, members made clear that because the global economy and the economies of the member states have recovered, the time for a new BRICS focused on action was at hand, or as President Xi put it, "it is time to set sail when the tide rises."

Dialogue-trust-agreement

Having spent almost 10 years building its foundation and weathering global and country-specific challenges and setbacks, what we witnessed at the summit was the unveiling of BRICS 2.0, a group whose members are richer and more influential and which exists in a world that is very different from that of 2001, 2009 and even 2016.

Indian Prime Minister Modi and President Xi both stated that being a BRICS country is no longer just about rapid growth, but about taking action. And in order for the group to take effective actions, it must build trust through constant dialogue and equal respect.

In addressing this need, President Xi said that "in terms of BRICS cooperation, decisions are made through consultation [and] not by one country. We respect each other's model of development, accommodate each other's concerns and work to enhance strategic communication and mutual trust."

"Given difference in national conditions, history and cultures, it is only natural we may have some differences in pursuing our cooperation…However, with strong faith in cooperation and enhancing collaboration, BRICS countries can achieve steady progress in our cooperation."

This was not just lip service. The summit saw meetings held for members as well as meetings between individual leaders.

The action plan

As a first step to take action, President Xi suggested that "BRICS countries should implement agreements and consensus already reached while actively exploring new ways and areas of practical cooperation."

A new Golden Era could be at hand for BRICS, built on a strong foundation of past achievements, open communication and trust, new prosperity, shared interests and a shared vision of the role emerging counties will play in the 21st century. But the key to this new era becoming a reality will depend on how well the member countries coordinate on turning ideas into actions and to keep global trade open and free because, as President Xi noted, "some countries have become more inward-looking, and their desire to participate in global development cooperation has decreased."

By the end of the summit, it was clear that BRICS exists in a different world order with old players ceding space in global development and cooperation and others stepping into the breach. The member countries have achieved numerous individual and group development milestones that would form the new agenda and roadmap for the group.

For instance, Prime Minister Modi noted that from a largely closed economy, "India is changing fast into one of the most open economies in the world today. Foreign direct investment inflows are at an all-time high, rising by 40 percent."

The bloc is committed to free and open global trade and to growing the global economy so that BRICS members and other developing countries can enjoy the fruits of a bigger pie without displacing developed nations. It is ready to play a bigger role in global economic development and governance with a focus on building a more peaceful world through enriching all people, combating terrorism, and ensuring freedom of trade on land and sea, while exploring the idea of expanding membership.

On this last note, many have suggested that Indonesia should have been included from the start and have referred to the bloc as BRICS to make the point. There is some validity to this point in that it is predicated by some that Indonesia will vie with Brazil to be the fourth largest economy in the world in 2050, after China, India and the U.S. This year, Egypt, Mexico, Thailand, Tajikistan and Guinea were invited as guest nations.

The author is Vice President of China/APAC & eCommerce Practice at Tompkins International and a columnist of Beijing Review

Copyedited by Chris Surtees

Comments to yushujun@bjreview.com

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