Brics summit set to focus on trade liberalisation

A Chinese volunteer works at the media reception area for the 2017 BRICS Summit in Xiamen, on Sept 2, 2017.
A Chinese volunteer works at the media reception area for the 2017 BRICS Summit in Xiamen, on Sept 2, 2017. PHOTO: EPA

But group also faces China-India tensions, uneven development among members

The summit of Brics countries that starts today in the south-eastern Chinese city of Xiamen was nearly marred by a military stand-off at the border between China and India, two of the grouping's members.

One week before the confab, however, both sides announced the end of the three-month face-off. India last Monday said "expeditious disengagement of border personnel" was agreed upon while China noted India had agreed to withdraw troops from the Doklam/Donglang plateau.

If the two sides did not end the stand-off, Indian Prime Minister Narendra Modi might have skipped the summit, which would have cast "quite a shadow" over its deliberations, said Dr Raja Mohan, director of Carnegie India, a think-tank.

The incident signalled tetchy relations between the two largest economies of the grouping and showed just one of the challenges that Brics faces even as it has come a long way since 2009, when it held its first formal summit.

Brics groups five of the world's big emerging economies - Brazil, Russia, India, China and South Africa - which together make up 40 per cent of the world's population.

"The Brics economies have become an increasingly important part in the global economy, with their share of global GDP rising from 16 per cent in 2009 to 23 per cent by 2017," said Mr Rajiv Biswas, Asia-Pacific chief economist of IHS Markit, a consultancy.

Brics accounts for 45 per cent of the total economic growth of the world, driven mainly by the rapid growth of China, he added.

Said Dr Mohan: "That the Western political economies are going through a difficult moment today adds additional significance to the Brics."

The grouping has over the years started a US$100 billion (S$136 billion) development bank and a US$100 billion emergency fund.

The creation of the New Development Bank in 2014, in particular, "was a major step forward in making the Brics grouping an effective economic cooperation platform rather than just a forum for dialogue", said Mr Biswas. It has given out US$3 billion in loans since it began operations last year.

Apart from the recent rough patch in relations between China and India, other challenges to the grouping have surfaced. One of these is the uneven development of the five members, something Chinese analyst Lu Jing of the China Foreign Affairs University noted in the Global Times.

The economies of China and India have performed well but Brazil and South Africa have suffered economic crises, he told the newspaper.

Their internal crises have affected these countries' ability to contribute to the grouping, other analysts have said.

Still, the Brics summit "has become a valuable political and economic forum for improving cooperation among the world's largest developing economies", said Mr Biswas.

At the 9th summit that begins today, a key focus will be trade liberalisation through the creation of free trade zones and trade facilitation agreements. Another is the establishing of people-to-people exchanges to strengthen ties among members.

In a departure from previous summits, the Xiamen summit will also see what the Chinese have called Brics-Plus, a new platform for cooperation with developing countries outside of the bloc. From 2013, Brics summits have involved nations outside of the grouping, but they were usually those from the region of the host country, for example, African nations at the summit held in South Africa. This time, the Chinese have cast a wider net, inviting Egypt, Mexico, Tajikistan, Kenya and Thailand to the summit.

There are some, however, who are sceptical about the usefulness of Brics.

The synergy is less than meets the eye, said Dr Mohan, as the rapid rise of China has led to significant imbalance between it and the other members. China's GDP is nearly twice that of the remaining four members put together, he added.

Noting that Brics was formed as a hedge against the "American unipolar moment", which has since passed, Dr Mohan said: "The strategic implications of the rise of China are likely to limit the utility of Brics, certainly for India."

A version of this article appeared in the print edition of The Sunday Times on September 03, 2017, with the headline 'Brics summit set to focus on trade liberalisation'. Print Edition | Subscribe