Establishing a Multi-level and All-Round Cooperation Framework: the BRICS Pragmatism and Vision

By Hu Mingshi, Senior Researcher of Daily Telegraph



Establishing a Multi-level and All-Round Cooperation Framework: the BRICS Pragmatism and Vision

By Hu Mingshi, Senior Researcher of Daily Telegraph

At present, the BRICS member countries’ total land areas account for 27% and the total population for 43% of the world's total respectively. According to the relevant international organization statistics, in 2013 the five countries GDP together account for 17%, and total trade volume for 16% of the global total respectively. China is the world's most dynamic economic region, introduces the largest amount of foreign capital, and becomes production bases of the world's largest enterprise groups. With 1.3 billion inhabitants, China is the world's largest populous country, abundant, cheap and reliable labor generating China economic prosperity, besides the labor quality is rising. Brazil's GDP is the highest in Latin America, in addition to the traditional agricultural economy and production, service sectors are also increasingly prosperous, and occupy a natural advantage in terms of raw material resources. Brazil has the world's highest iron, copper, nickel, manganese, bauxite reserves, in addition, communications, financial and other emerging industries also show an upward trend. India is the largest populous democratic country in the world, more than 6000 listed companies in the stock market indicate unprecedented growth. Over the past 20 years, India's economy has grown at an average of 5.6% year-on-year, and behind the economic front, it has a highly qualified workforce. Export sectors also provide a strong follow-up impetus to economic development. Russia has vast territory, abundant resources, and rich in energy, however Investors nowadays pay particular attention to the Russian current economic policy changes, which, in addition to the price of raw materials, is another important factor to impact the Russian financial market. As the economy continues to recover, how to ensure sustained and healthy economic growth this year is the top priority of the Russian government. In terms of Russia's economic situation, to curb inflation, and reduce the deficit are the two main challenges to the Russian government. Employment is the biggest challenge facing South Africa, with the help of the G20 Hangzhou Summit, both domestic and international investments for the purpose are encouraged; its bottleneck of transportation and communication facilities restrict economic exchanges; in order to overcome the single energy structure, the South African government proposes the development of solar, wind and other new energy.

During the G20 Hangzhou Summit, the BRICS leaders informal meeting was held, The top leaders of the 5 countries -- President Xi Jinping, Prime Minister Modi of India, President Jacob Zuma of South Africa, Brazilian President Temel, and Russian President Putin - believe that the prospects and momentum for economic growth in the BRICS member countries are still there, and will continue to serve as an important engine of global economic growth. BRICS countries, under the guiding principle of open, equality, solidarity, inclusiveness, mutual understanding, and mutually beneficial and win-win cooperation, would further strengthen their strategic partnership, and promote the construction of equal and fair international order on the basis of international law.

Reaffirming the will of in-depth cooperation

This BRICS leaders meeting was presided over by PM Modi of India as the BRICS chairmanship state, and issued a Press Statement after President Xi Jinping delivered the welcome speech. The BRICS leaders congratulate and support China as chairmanship state of the G20 Summit 2016, are fully satisfied with the fruitful results achieved for the Hangzhou Summit, appreciate China as the G20 chairmanship state attaching great importance to the development agenda, agree with close coordination on global problems commonly concerned by the BRICS and strengthen dialogue and cooperation with other emerging market economies and developing countries under the framework of the G20, while emphasizing the construction of innovation-driven, invigorated, interconnected and inclusive world economy, creating a new era of global economic growth and sustainable development, expecting the G20 to take the Hangzhou Summit as a starting point to begin a new journey of the strong, sustainable, balanced and inclusive economic growth.

On the subject of the global economic development attracting much attention in the world, the BRICS leaders have given accurate judgment. After the meeting, in the Press Statement, the leaders agree that the current global economic recovery is still imbalanced, facing the grim downturn risks, stress that the G20 members should strengthen coordination of macro-economic policies, avoid the negative spillover effect, and achieve strong, sustainable and balanced growth. The leaders believe that the G20 members countries should focus their efforts on the implementation of the domestic growth strategy. They together with the G20 member states, are determined to continue to contribute to economic growth, agree that innovation is an important driving force for long- and medium-term growth and sustainable development, welcome the G20 Blueprint on Innovative Growth.

The BRICS leaders stress that the center position of WTO as the cornerstone of the rule-based, open, transparent, non-discriminate, and inclusive multilateral trading system should continue to take development as the core of WTO. They reaffirm their commitment to strengthening the WTO role and consultative functions, show concerns to the rise of protectionism under the background of the declining global trade, and agree to strengthen the market interoperability and build inclusive, rule-based, and open world economy.

In addition, the leaders also emphasize that an effective global economic and financial governance structure is essential to achieve the risk-resistant growth, and will continue to make efforts in this regard. They stress that the International Monetary Fund quota system does not reflect the current state of the global economy, hope that the G20 members states and the IMF to make joint efforts to increase the IMF quota resources, reevaluate the quotas and voting rights, and to ensure a fair reflection of the status of emerging market economies and developing countries. They call on the IMF in 2017 to complete the fifteenth round of quotas review before the annual meeting, including the formation of a new quota formula.

Cooperation mechanism is becoming more and more Improved

From the first meeting of the foreign ministers of the BRICS member countries up to now, the BRICS have gone through 10 years of cooperation. From non-existence to establishment, from small to large, the BRICS cooperation has covered the political, economic, financial, trade, social and cultural fields, etc., and formed a multi-level and all-round cooperation framework, with the contents of cooperation becoming more and more diversified. In December 2010, the 4 founding countries -- Brazil, Russia, India and China -- on the basis of consensus, admitted South Africa officially into the mechanism, thus, "BRICS" has come into being. BRICS countries over the past ten years have contributed more than 50% to the global economic growth rate.

In June 2009, the first official meeting of the BRICS leaders held in Russia officially launched a cooperation mechanism between the BRICS members. After several years of development, the BRICS cooperation mechanism is increasingly improved, currently under the guidance of the top leaders meeting, pillared with meeting of senior representatives on security issues, and ministerial meeting of foreign ministers, has formed the multi-level architecture to carry out pragmatic cooperation in wide-ranging fields, and become an important platform for emerging markets and developing countries to have communication and dialogue in the economic, financial and development fields.

It is worth emphasizing that the BRICS Development Bank, the Contingency Reserve Fund Arrangements both get started, marking the BRICS cooperation mechanism institutionalized and normalized, indicating that the BRICS mechanism has become an entity from the concept, and in the future will provide effective protection for the BRICS countries and other developing countries, improve infrastructure, respond to the exchange rate fluctuation, and deepen financial cooperation, have the milepost significance to promote the BRICS cooperation.

Having used the BRICS concept first and worked for Goldman Sachs, British economist Jim O'neal said that the most positive progress in cooperation between the BRICS member countries is to set up the BRICS Development Bank, and the BRICS countries will also cooperate on some important issues concerning the Development Bank.

Professor Xia Huasheng of finance at the Federal University of St Paul, Brazil, pointed out that in cooperation among the BRICS member countries, the BRICS Development Bank will play an important role. The BRICS member countries expect directly from the emerging financial institution to obtain the necessary funds for development; and can within the framework of the bank carry out currency swaps and other financial exchanges so as to enhance the economic and currency impact-resistance. As emerging economies, to strengthen cooperation between them is the development needs of the times, the BRICS mechanism may have the potential to lead the world economic development in the future.

Executive Director of the Russian National Committee on BRICS Research Toloraya pointed out that the role of the BRICS cooperation mechanism is not limited to the members economic cooperation, there is greater room for it in solving international problems, and improving the international financial system. Having derived from the BRICS cooperation mechanisms are the Parliamentary Forum, Civic Forum, Youth Summit and other new cooperation platforms, marking the BRICS countries begin to explore the possibility of cooperation in more fields. Under the current international situation, various difficult problems emerge endlessly. BRICS leaders can discuss the most pressing global issues in the framework of the BRICS cooperation mechanism, which will become very important.

Troyjo Marcos, visiting professor at the University of Brazil, director of the Center for the BRICS Studies, U.S. Columbia University, stressed that the BRICS cooperation mechanism is upgraded from the "BRICS 1.0" to the "BRICS 2.0", i.e., from coming together to emphasizing the construction of global governance tools, such as the BRICS Development Bank, the Contingency Reserve Fund, as well as counter-terrorism, public health and customs working groups, these cooperation platforms are necessary to guarantee the BRICS mechanism development.

Cooperation between the BRICS member countries are fruitful, which is not only a reflection of subjective aspirations of the BRICS countries, but also the objective needs of their own development, and reflects the mega-trend of the world's political and economic pattern as well.

BRICS Research Center of Fudan University Director Shen Yi pointed out that since the establishment of the BRICS Summit mechanism, the BRICS concept has already gone far beyond the then pure economic scope, but formulating a platform for the new market economies to seek discourse in the global economic governance system, and no matter what happens, the BRICS cooperation mechanisms is in objective existence, the needs of the BRICS countries to participate in the global governance system and its goals to seek development will not change.

Last year, at a seminar on the new concept of development and the BRICS cooperation held in Fudan University in Shanghai, experts believe that independent decision-making, equality, inclusiveness, and green is the essence of the new development concept the BRICS member countries have formed.

From the perspective of future economic cooperation, the BRICS countries will make more efforts in exploring innovative models of cooperation, and promoting the overall reform of domestic and diplomatic policies, and earnestly implement the BRICS Economic Partnership Strategy adopted at last year Summit to create a new situation of trade and investment integration, monetary and financial circulation, infrastructure interconnection and interoperability, and personnel and cultural exchanges on large scale, so as to form a powerful force for complementary advantages and growth linkage. Meanwhile, the BRICS countries should also strengthen South-South cooperation, try to help other developing countries to enhance their development capacity, give them a ride on the express train of the BRICS development; promote the pragmatic cooperation under the BRICS framework, work together to implement the sustainable development agenda, make efforts to create a new and balanced development situation jointly built by the stakeholders of various interests in all sectors and shared prosperity by all social strata.

Global Gloomy Economy Cannot Cover up the BRICS Brightness

At present, the global economy is still in the in-depth adjustment period after the international financial crisis, and instability and uncertainty are increasing. In particular, the emerging markets and developing countries, represented by the BRICS countries, in the face of gathering risks and challenges, experience the general slowdown in economic growth. But the BRICS member countries have rich natural and human resources, vast domestic markets, great development potentials, ample spaces for the policy, so the upward trend will not change, and is still an important driving force for global economic growth in the future.

In late July, the International Monetary Fund downgraded again the world economic growth rate expectation for this year and next year, argued that uncertainty produced by the results of the "Brixit Europe" referendum will bring downturn risks for global economic growth, and expected the world economic growth rate of 3.1% and 3.4% for this year and next year, down 0.1 percentage point compared with the predicted rate in April; economic growth for newly emerging economies and developing countries is expected to remain at 4.1% and 4.6% respectively for this year and next year. For the BRICS countries, affected by the slow recovery of the global economy and the impact of the decline in staple commodity prices, their economic growth meets with the slowdown or even negative growth. World Bank forecast that China and India can still maintain a relatively high growth rate, while the economy of Russia and Brazil this year will shrink by 1.2% and 4% respectively, a decline compared with the forecast made at beginning of the year.

Looking at the current trend, the overall rise of the emerging economies remains, and is still an important driving force for the growth of the world economy.

The IMF data shows that over the past 10 years, the BRICS's contribution rate to world economic growth is more than 50%, by the year 2030 the BRICS members economic growth will be generally higher than that of developed countries and other emerging economies. Russian Research Centre for APEC deputy director Ivashentsov pointed out that an American study shows that by the year 2020, BRICS countries share of global consumption will increase from the current 23% to 62%, which also reflects the economic weight of the BRICS countries.

It is a mutually beneficial and win-win choice for the BRICS member countries to come together. Although the five countries have different national conditions, yet the stage of development is similar, and are faced with the same arduous task of maintaining growth, maintaining stability, and maintaining the people livelihood. In the process of economic development, they also meet with similar challenges or problems such as structural adjustment, environmental protection, etc.. Each BRICS country has its own advantage, and their economies are highly complementary, so they have both a solid foundation to carry out extensive cooperation, and the practical and strategic needs to promote the common development, thus strengthening cooperation is only logical.

It is in line with the common interests of the international community for BRICS countries to come together. Different with the G7 countries cooperation mechanisms, the BRICS is neither a new bloc of major countries, nor a political alliance, but a development partner. The issues discussed by this mechanism focus on economic, financial and development areas, with which both developed countries and developing countries are generally concerned. It can be said that the BRICS is an active advocate and practitioner of global development partnership, and is a bridge for dialogue and cooperation between the North and the South.

BRICS member countries are important developing countries and emerging market economies, have many similarities in economic and social development goals, share similar positions on many international issues, and have common requirements to reform the current world political and economic system and build a more balanced global governance system. These common interests and similar positions are the central factors that unite the BRICS members more closely.

With the gradual formation of the BRICS cooperation mechanisms, as the representative of the global emerging economies, the BRICS international influence is also growing. The BRICS with a broader representation has come on the international stage. With the BRICS cooperation mechanisms becoming more and more mature, there may be more emerging economies to join in the future, the growing BRICS will play a more important role in the international political and economic affairs. Looking ahead, the BRICS member countries cooperation still face challenges, but will show a more promising prospect.