The $17 trillion BRICS shift that few noticed
- By Dan Steinbock
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E-mail China.org.cn, July 14, 2015
According to conventional wisdom, the BRICS economies have experienced a paralyzing growth slowdown in the past few years. As a result, their economic weight and their bargaining power are decreasing. In reality, the BRICS economies, in absolute terms, have suffered from the aftermath of the global crisis. In relative terms, their economic and bargaining power continues to go faster, while that of the West is declining.
Back in 2007, the U.S. economy was still double the size of the BRICS economies. Today, the combined output of the latter nearly matches that of the US. What’s worse, the growth of all G7 nations is now reliant on historically low policy rates and quantitative easing, which is paving way to new and potentially destructive asset bubbles.
In this environment, the BRICS economies continue to have inherent growth potential that can support the world economy another decade or two.
Moreover, the rise of the emerging world is about to accelerate in relative terms – which the 7th BRICS Summit will intensify in the foreseeable future.
From a dialogue forum to a strategic partnership
At last year’s BRICS Summit in Fortaleza, Brazil, President Xi Jinping proposed the creation of a new cooperation blueprint, which would reflect the growth experiences of the large emerging economies and boost broader and deeper ties among the BRICS nations.
In Ufa, President Xi pushed efforts to increase the cohesion of the BRICS bloc, through dual objectives. On the one hand, he was promoting an economic partnership strategy to support the development of the BRICS countries in the coming years. On the other hand, he hoped to operationalize that strategy into a pragmatic cooperation roadmap.
The dual objectives are challenging. After all, the participant economies reflect huge diversity. Demographically, the BRICS include two massive nations that each have 1.3 billion people, whereas South Africa’s population barely exceeds 53 million. Economically, the bloc is dominated by China, the second-largest economy in the world, whose $10.4 trillion economy is larger than that of its BRICS partners’ combined. Socially, each BRICS economy reflects different cultural, ethnic and historical legacies. In defense, China dominates the BRICS military expenditures, which today account for about a fifth of the world total. However, Russia’s nuclear weapon stockpile remains larger than that of the United States.
