Bric­sstill­rel­e­vant

De­spite global down­turn BRICS re­mains eco­nom­i­cally re­silient

ChinAfrica - - Cover Story - By Han Liqun

Fol­low­ing the re­cent eco­nomic con­trac­tion in some coun­tries of the BRICS - Brazil, Rus­sia, In­dia, China and South Africa, the ar­gu­ment that the as­so­ci­a­tion of large emerg­ing economies is fal­ter­ing is pre­vail­ing again.

In the cur­rent cli­mate of global eco­nomic fragility, the BRICS has en­coun­tered many dif­fi­cul­ties in de­vel­op­ment. But the rhetoric that the BRICS is de­clin­ing has over­looked the fa­vor­able fac­tors for the long-term growth of th­ese coun­tries and tried to play down its role in global af­fairs on the mere basis of its eco­nomic slow­down.

Eco­nomic growth is not the only foun­da­tion for co­op­er­a­tion be­tween BRICS coun­tries. In an ever-evolv­ing world, the rise of emerg­ing economies is a his­tor­i­cal trend that will re­main sig­nif­i­cant. De­vel­oped na­tions also need the vast mar­ket of emerg­ing economies, though they may, at the same time, want to pre­vent a ri­val political group com­ing into be­ing from the lat­ter. at­tempt­ing to re­gain dom­i­nance of the world econ­omy through rein­dus­tri­al­iza­tion, which may re­shape the glob­al­iza­tion process. Take the United States as an ex­am­ple. The con­tracted growth in av­er­age real wages and wide­spread au­to­ma­tion has boosted pro­duc­tiv­ity in the coun­try and re­duced its pro­duc­tion costs, push­ing the re­turn of man­u­fac­tur­ing jobs. Ad­di­tion­ally, large U.S. multi­na­tional cor­po­ra­tions are con­stantly in­no­vat­ing their com­pe­ti­tion strate­gies and en­ter­ing emerg­ing in­dus­tries to main­tain their global lead­er­ship.

Fur­ther­more, other emerg­ing economies have grown rapidly in re­cent years. Mex­ico, for in­stance, is ris­ing to be­come the world’s new fac­tory, tak­ing ad­van­tage of its large work­ing-age pop­u­la­tion, fa­vor­able lo­ca­tion next to the huge U.S. mar­ket, as well as its mem­ber­ship in the North Amer­i­can Free Trade Agree­ment.

To cope with the global fi­nan­cial cri­sis, BRICS coun­tries have with­out ex­cep­tion adopted pow­er­ful stim­u­lus mea­sures, help­ing them to sur­vive the tough­est time. How­ever, th­ese mea­sures have, to some ex­tent, sti­fled en­ter­prises’ op­er­a­tion, harm­ing long-term eco­nomic de­vel­op­ment. For ex­am­ple, Brazil low­ered its bench­mark lending rate 16 months in a row, which dealt a heavy blow to Petro­bras, a semi-pub­lic pe­tro­leum com­pany ac­count­ing for 10 per­cent of the coun­try’s econ­omy.

Be­fore the global fi­nan­cial cri­sis, the na­tional se­cu­rity spend­ing of BRICS coun­tries was com­pa­ra­bly low since the sit­u­a­tion in their vicin­ity was rel­a­tively sta­ble. How­ever, the post-cri­sis se­cu­rity en­vi­ron­ment around the world has wors­ened re­mark­ably due to in­ter­twined tra­di­tional and non-tra­di­tional threats as well as the com­bined in­flu­ence of state and non-state ac­tors (such as Al Qaeda and the “Is­lamic State” ex­trem­ist group) on global af­fairs. The es­ca­la­tion of strate­gic com­pe­ti­tion be­tween ma­jor pow­ers has not only com­pli­cated some hotspot is­sues but also threat­ened the sta­bil­ity of the ex­ist­ing in­ter­na­tional se­cu­rity sys­tem. If this sit­u­a­tion re­mains un­changed, the global eco­nomic re­cov­ery will be­come more dif­fi­cult. For ex­am­ple, Rus­sia has been in­volved in wars in Ukraine and Syria since the end of 2013, bal­loon­ing its mil­i­tary ex­pen­di­ture to $66.4 bil­lion in 2015, its high­est in the past decade.

De­spite all that, the fu­ture growth po­ten­tial of BRICS coun­tries is still strong. There have been ef­forts to ad­just their eco­nomic struc­tures to cre­ate new driv­ers of growth. All of them are seek­ing to forge new com­pet­i­tive edges in highly value-added fields through in­creas­ing

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