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World
The Way Forward
Creating a more balanced partnership for global growth
By Jacques Fourrier | NO. 37 SEPTEMBER 14, 2017

People watch and feed pigeons at Bailuzhou Park in Xiamen on September 2 just prior to the BRICS Summit (XINHUA)

The 2017 Xiamen BRICS Summit has ended with a strong pledge to enhance practical cooperation and boost development of BRICS countries. In the Xiamen Declaration, BRICS leaders have committed to "promote exchanges of good practices and experiences on development, and facilitate market inter-linkages as well as infrastructure and financial integration to achieve interconnected development."

The Declaration has also underscored the importance of establishing broad partnerships with emerging markets and developing countries (EMDC), stating that BRICS countries will "pursue equal-footed and flexible practices and initiatives for dialogue and cooperation with non-BRICS countries, including through BRICS Plus cooperation."

At the press conference held after the summit, China's President Xi Jinping hailed the event as a "new starting point" for the member states which will bring a "positive energy to global growth."

With the rise of protectionism, the surge of anti-globalization sentiment as well as slow growth in major markets like the United States and parts of Europe, the BRICS leaders' messages of free-market globalization will very likely ring out around the world.

In Xiamen, the BRICS have definitely showed initiative to set out a course for the next phase of globalization in a more open, more inclusive world economy.

BRICS Plus building blocks

In March this year, Chinese Foreign Minister Wang Yi announced that China would explore a BRICS expansion, dubbed BRICS Plus, and build a wider partnership with other major emerging economies and developing countries and organizations, thus transforming the bloc into the most influential platform for South-South cooperation in the world.

Actions speak louder than words. China has started to implement the BRICS Plus proposal this year by inviting the leaders of Egypt, Guinea, Mexico, Tajikistan and Thailand to attend the Dialogue of EMDC during the summit and engage in dialogue with BRICS members.

"We should promote the BRICS Plus cooperation approach and build an open and diversified network of development partnerships to get more emerging market and developing countries involved in our concerted endeavors for cooperation and mutual benefits," said President Xi in his speech at the opening ceremony of the BRICS Business Forum on September 3. About 1,200 business leaders from more than 600 enterprises attended the two-day forum, an important side event of the summit.

Ahead of the summit, Wang Xiaojun, Deputy Director of the United Nations Office for South-South Cooperation, remarked that the five-member bloc has not only promoted development and cooperation among its members, but also substantially contributed to development around the world. She also highlighted China's role.

"China's development provides the world with wisdom and is a good example to follow. And above all, China, being a major country, has always shouldered the responsibilities that go with this status," she said, adding that the world also has expectations for China. "But we have to prepare the answers now, and these answers can already be found in many developing countries, whose development in tourism, agriculture and [other fields] is driven by [the] digital revolution," she noted.

Jean-Claude Maswana, Associate Professor of Economics at the University of Tsukuba in Tokyo and expert in development economics and China-Africa relations, warned that the BRICS Plus concept would have to overcome a series of hurdles, especially in the field of new technologies.

"The world economy is becoming increasingly geared toward the knowledge economy. Most newcomers in the BRICS Plus initiative—as well as most of its actual members—are consumers, not designers or producers of technological knowledge," he told Beijing Review during the summit. "Such a hurdle will only be overcome in the long term. However, with the exception of China, nothing hints at the moment that potential incumbent nations are taking this path."

Maswana noted, however, that the BRICS Plus initiative could act as a game changer on the international stage and help other emerging and developing nations get on the right track. "BRICS Plus could provide China with new business opportunities and enable BRICS members to have a bigger say on the world economic order," he added.

The next decade will also see a new type of partnership between BRICS countries and development platforms such as the Belt and Road Initiative and the Action Plan adopted at the Forum on China-Africa Cooperation (FOCAC) in Johannesburg in December 2015.

Wang Wen, Executive Dean of the Chongyang Institute for Financial Studies at Renmin University of China, was adamant that the BRICS and the BRI have the potential to complement each other. "BRICS members and the countries participating in the Belt and Road Initiative share the same spirit and the same values. They all want to open their economies and achieve mutually beneficial cooperation. And they all wish to achieve inclusive development," he told Beijing Review.

If these platforms for cooperation and development are complementary in nature, they will more importantly generate a trickle-down effect on those less developed countries suffering from lack of infrastructure and substantial deficit in project funding. This synergy will give strong impetus to deepening South-South cooperation and the implementation of the 2030 Agenda for Sustainable Development.

Making bricks

"You can't make bricks without using straw," the saying goes. The BRICS needs to further expand trade and investment within the bloc as the world economy is moving upward and economic indicators are slowly picking up. At the same time, a new round of technological and industrial revolution is gaining momentum with new industries, new technologies and new business models springing up, bringing a slew of opportunities for the BRICS and providing the necessary ingredients for stable, balanced and sustainable growth.

Wang Shouwen, China's Vice Minister of Commerce, addressed the issue of imbalance within the BRICS. At a press briefing on September 3, he remarked that while the five BRICS members have doubled their GDP weighting to 23 percent of the world's total during the past 10 years since the mechanism was launched, trade within the bloc only accounts for 6 percent of the members' total foreign trade.

"The size might be small, but the potential for trade is substantial," noted the vice minister, pinning great hopes on transnational e-commerce. According to data from last year, BRICS countries had a combined population of over 3 billion, and some 700 million households shopped online. "The total e-commerce trade volume reached $871.6 billion and the transnational trade volume hit $92 billion," he said.

Wang Shouwen also told the media that the proposed E-Commerce Cooperation Initiative discussed during the trade ministers' meeting in August this year is crucial to tapping into the huge trade potential within the bloc. Moreover, this initiative will greatly increase local employment, especially among younger generations and women, and boost small businesses.

While the potential for e-commerce is large, BRICS countries still need to address issues regarding logistics and transnational payment and enhance consumer protection and communication infrastructure to provide real benefits for businesses, suppliers and consumers. To that effect, the BRICS Summit adopted several guidelines on trade and investment facilitation, e-commerce, intellectual property rights protection and economic and technical cooperation.

The BRICS Summit also adopted an outline for investment facilitation. In response to the comparatively small share of mutual investment within the bloc, which only accounts for 5 percent of its total foreign investment, the summit set out to address problems on three major issues: enhancing transparency of investment policies, streamlining approval procedures and improving communication between government and the private sector.

Moreover, China has announced the China International Import-Export Expo to be held in 2018 and encouraged the business community to take an active part in the process in order to reduce trade imbalances. This pledge comes on the heels of substantive measures adopted this year to increase imports from BRICS countries and other developing nations.

China calls for improving BRICS' capacity to open up to international markets and improving mutual investment and trade through specialized workshops, training programs and joint research.

At the opening ceremony of the BRICS Business Forum on September 3, President Xi said BRICS countries should "promote the building of an open global economy, advance trade and investment liberalization and facilitation, build new global value chains, and rebalance economic globalization."

The Xiamen BRICS Summit is already seen as blazing a new, sustainable trail in innovative, coordinated, green, open and shared development and will undoubtedly, as President Xi remarked at the press conference on September 5, inject a dose of "positive energy" to global growth and shared prosperity. (Reporting from Xiamen)

Copyedited by Chris Surtees

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