BRIC as an acronym was coined by the Goldman Sachs Economist Jim O’Neill, back in 2001, right after 9/11, to represent the emerging markets at that time.
Brazil, Russia, India and China were the fastest growing economies back then, outside of the US and Europe. It was essentially a basic identifier for investors and stock market traders to pick companies in these countries which were poised for maximum growth.
There’s nothing that binds these countries. They are at different stages of development. They are in four different continents. They have different political and even market structures. And to top it all, they are not even the fastest growing economies anymore, certainly not at the pace they were growing in back in the early 2000s. The economies of all these countries have slid from over 8 and 9 percent to a best case of slightly above 6 percent to a worst case of under 4 percent.
Brazil is in negative growth of -3.6%. Russia is at minus 0.2 % growth. India and China are slight silver linings with 7% and 6.7%. But India’s has also further dipped with first quarter numbers slipping to 5.7%.
So what holds BRICS together? And will this system stand the test of time, like NATO and EU?
It is clear that BRICS is now seen as some vague forum for South-South co-operation, even though Russia wouldn’t consider itself in the list of South or developing world countries.
But more than that, BRICS has become yet another multi-lateral forum for China to establish some new order-building around the world.
As far as the Chinese are concerned, it is clear that Bretton Woods institutions like the World Bank and IMF represent the status quo. China certainly wants to change the status quo. Which is why it is actively promoting new multi-lateral fora like SCO and BRICS.
The OBOR is also another attempt by China at order building. China is hoping that these will be the new World Banks and IMFs in the 21st century.
Which is why, if you look at the upcoming BRICS summit, it’s clear from the streets of Xiamen as well as coverage on Chinese media that they see this as yet another forum to showcase China and her leadership to the world.
There was a lot of celebration last year when Beijing hosted the APEC summit. Expect similar over the top ‘China celebration’ this time round too.
What’s in it for India though?
While India has grown closer to the US over the last 10 years aligning its position with America on most issues, including the South China Sea, India would also want to be nimble-footed enough to have one leg in each basket.
Hence India’s proactive outreach to Central Asian Countries to be part of SCO, which India managed to procure in June at the Astana summit.
With BRICS, it is slightly different. Though India was the one that proposed a New Development Bank under BRICS, China through some hefty diplomacy was able to get the bank established in Shanghai.
China has undue influence in the goings on within BRICS. For example, this year, China wants to expand BRICS by inviting observer countries like Mexico, Egypt, Guinea, Tajikistan and Thailand. Each of these is a country China wants to cultivate in five different regions of the world.
India is not warm to this idea, as the expansion of BRICS does not serve her any strategic purpose. India’s logic is what’s then to stop China one day from inviting Pakistan into BRICS?
But the most important threat to the very survival of BRICS will come from Sino-India rivalry. As both countries expand their footprint in different regions of the world, it is but natural that they will collide. Expect more Doklam-like situations in the future.
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