The fourth summit of the BRICS nations (Brazil, Russia, India, China, and South Africa) took place in Delhi on March 28-29. The summit ended with the participants signing a joint declaration, summarizing cooperation between the BRICS member states and outlining the prospects for further cooperation. China thanks to its fast-growing economy often referred to as the BRICS` ‘informal leader’, this time managed to regain its ‘best of the equals’ status.
In a written interview with the BRICS media, including The Rossiyskaya Gazeta, released on March 28 Chinese President Hu Jintao praises cooperation between the countries comprising the group, describing it as a ‘priority of China`s foreign policy’. A couple of years ago prominent Chinese political analyst Jiang Jiemian even suggested that Beijing should rely primarily on its partners in the BRICS rather than on all developing countries in general. In his interview Mr. Jintao stressed the need to boost cooperation within the BRICS in all major spheres and look for new aspects of partnership.
This is an approach which Beijing has been recently adhering to. When China presided over the BRICS summit in 2011, it held meetings between the group’s agriculture ministers, experts on scientific cooperation, and healthcare ministers.
Addressing the summit, Mr. Hu called to actively support cooperation between five countries in the name of the group and the entire world.
Actually, China has been quite consistent in making this idea come true. The results of China’s mutual trade with the BRICS partners have made it a leading trade partner for each member nation of the group. The China Customs Statistics information service says that in 2011 the country’s trade with the BRICS stood at $282.7 billion: Brazil ($84.2 bln), Russia ($79.2 bln), India ($73.9 bln), South Africa ($45.4 bln). Although these sums are still far from those typical for China leading trade partners – US, Japan, Korea, and Germany, the BRICS nations still demonstrate very good results if compared to the overall growth of China’s trade. In 2011, China’s foreign trade grew by 22.5% in total, with its mutual trade with Brazil, Russia and South Africa seeing a 34.5%, a 42.7% and a 76.6% increase respectively.
China’s investment cooperation with the BRICS is also on the rise despite some remaining obstacles. In 2010 Russia received $567 million in Chinese investments, while $487 million and $411 million China invested in Brazil and South Africa. It is a well-known fact that China is one of major importers of fuel and minerals from its partners in the BRICS, including iron ore from India and Brazil and oil from Russia. So, an agreement reached in Delhi on developing ties in energy cooperation and energy security policy serves the interests of both China and its partners in the group.
The BRICS development banks signed an agreement aimed at boosting trade among the member nations by offering credit in their respective local currencies and thus reduce the demand for fully convertible currencies for transactions between the group nations.
It means that the BRICS nations have confirmed their readiness to expand the role of their group of emerging economies on the global financial scene. The entire text of the Delhi declaration focuses on this very agreement. Its message can be interpreted in the following way: the macroeconomic recovery to a great extent depends not on the developed economies alone but on the developing countries and their cooperation with stronger economies as well.
We may even say that the BRICS summit in Delhi marked another step towards the internationalization of yuan. This has long been a widely discussed issue in Chinese and international politics- and economy-oriented media. A new term for yuan was introduced in the West – the red buck. Meanwhile, one should be aware that the internationalization of yuan will take much time and effort. In early 2010 the US dollar and the euro accounted for 65% and 25% of the world`s foreign-exchange reserves respectively. The British pound sterling and yen accounted for approximately 3.5% each. The IMF and China’s Development Research Center of the State Council have recently published a report titled China 2030: Building a Modern, Harmonious and Creative High Income Society, which predicts the Chinese yuan to become an international currency after 2025, and to account for 12% of the world’s foreign-exchange reserves by 2035.
There are also some other points in the Delhi declaration that could have been initiated by Beijing. A section dealing with ‘green economy’ deserves special attention. The authors of the declaration insist that the implementation of this kind of economy should not be an end in itself.
“We, – the BRICS leaders say, – do not approve any obstacles to trade cooperation made under the pretext of abiding to the principles of a green economy”. In other words, the BRICS have unanimously rejected the EU scheme to charge airlines for carbon emissions. As we know, China strongly refused to pay a EU carbon tax.
Apart from major global economic issues, the BRICS summit demonstrated the unity on the most pressing international political problems. Moscow and Beijing`s approval of Kofi Annan`s peace plan for Syria brought them closer to other groups nations during the talks on the Syrian crisis. The Delhi declaration calls for an inclusive political process and a broad national dialogue in Syria.
Iran was also on the agenda of the BRICS summit. The declaration insists on a peaceful solution to the problem, adding that Iran itself could contribute to the settlement.
Speaking on March 28 Chinese Commerce Minister Chen Deming confirmed his country`s independent position on the Iranian problem. He said that honoring all UNSC resolutions China would maintain trade ties with other countries, Iran included. “We (BRICS nations) are not obliged to follow any domestic laws against Iran,” Deming said, commenting on sanctions proposed by the US and the EU against countries purchasing crude oil from Iran. Nevertheless, an urgent visit paid by the Chinese Prime Minister Wen Jiabao to the Gulf countries in January proves that China, which received 25 million tons of oil from Iran in 2010, is still considering alternative routes.
The 4th BRICS summit is over but it looks that its results will have a significant impact on the global politics and economy.
Vladimir PORTYAKOV – Doctor of Economics, Professor, deputy head of the Institute of Far Eastern Studies of the Russian Academy of Sciences