Economist Jim O’Neill, who created the “BRIC” acronym, said China primarily remains the most important economy in the world, leading the economic growth in the five BRICS countries to contribute more than 20 percent of the world’s GDP.
“Even though its growth rates have fallen to around 6.5 to 7 percent, in nominal dollar terms, China is still adding the equivalent of a whole new Switzerland or Turkey every year to the world,” O’Neill said in an interview with China Daily ahead of the summit of the group. “Or a new UK economy every three years.”
It was the former Goldman Sachs chief economist who coined the term in 2001, grouping together four states－China, Brazil, Russia and India－as potential growth powerhouses of the future. Now the group also includes South Africa.
China’s economy continued its steady expansion in the first half of the year, with GDP up by 6.9 percent to about 38.2 trillion yuan ($5.6 trillion), according to the National Bureau of Statistics.
O’Neill said China’s development can be an example to other developing countries, especially in the area of attracting foreign direct investment.
“Most of the world’s largest companies have played an important role in helping China’s development, and it is to the government’s credit,” he said. “Other BRICS countries should take note.”
O’Neill said Brazil’s and Russia’s emergence from recession is another key contributor to the global economy staying strong in 2017.
The recovery of these two, along with the eurozone, is probably the main reason why growth is stronger than for many years, said O’Neill, who forecasts global GDP growth in the first half of this year close to 4 percent.
He encourages China, Brazil, Russia and India to move beyond symbolism and agree on some common policies with a shared interest.
Although he said the BRICS group is less likely to achieve anything alone in terms of world governance due to the exclusion of the world’s most important advanced countries, the former UK Treasury minister sees disease prevention as one potential area in which BRICS countries could take a collective position.
“I strongly encourage the BRICS leaders to be bolder in this area,” O’Neill said. “It is surprising to me that they have not gone down this path. But if they did, it would be impressive and send a very large positive signal.”
O’Neill, however, concedes it is not easy for the BRICS countries to coordinate between themselves to achieve stronger collective growth without ambitious plans for a free-trade zone with no tariffs.
Economist Jim O’Neill says other developing countries should learn from China.
Other four experts also shared their opinions on the following five questions:
1. Starting in 2006, BRICS has entered a new era where protectionism seems to be wielding an increasingly strong influence in the global economy. What can BRICS do to help make the global economy more open and inclusive?
2. Made up of five emerging economies that contribute more than 20 percent of the world’s GDP, what is BRICS’ role in helping the global economy recover?
3. What can BRICS contribute to global governance to help make the international order more fair and the developing countries better represented?
4. The theme of the upcoming summit is “BRICS: Stronger Partnership for a Brighter Future”. In what fields can BRICS members strengthen their partnership, and how?
5. China is upgrading its economy into an innovation-and-efficiency-driven one. It is also working with other countries to develop the Belt and Road Initiative. What lessons do you think other developing countries can learn from China’s development?
Christopher Bovis, professor of international business law, University of Hull, UK
1. Protectionism in international trade must be avoided. BRICS can positively influence the introduction of an international regulatory trade system which could strike a meaningful and workable balance between free trade and national concerns in order to alleviate the dangers of protectionism. The WTO is ready for meaningful reform and, if it is to continue as a fit-for-purpose international trade instrument, it must change in a positive manner to accommodate the dynamics of the world in the 21st century. BRICS can influence the reform of the WTO.
2. The recovery of the global economy requires a collective and coordinated approach to address industrial policies at national and regional levels. BRICS can play an instrumental role in instigating a responsive and responsible political and economic leadership. BRICS can help global recovery by instigating contemporary industrial policies which will aim at creating framework conditions under which improvement of national or regional competitiveness would compensate, where necessary, for market failure. Free trade and the aftermath of globalization generates positive externalities on the economy as a whole, increasing the growth potential and vibrancy of the economic fabric, fostering innovation and training as a result of increased demand for skills.
3. Under the auspices of a responsive and responsible political and economic leadership, BRICS should insist on the need to promote sustainable development. The focus of sustainable development should be the assessment of the traditional trade systems raised by developing countries for preferential treatment and the current concerns that such economies in the global trading environment may be vulnerable to marginalization and the problem of managing discrimination. The role of institutional actors such as the UN, the World Bank and the IMF in promoting economic development in developing countries needs to be reviewed.
4. The BRICS nations can strengthen their partnership by promoting the role of the private sector in catalyzing economic recovery and promoting growth. The private sector includes the finance industry, manufacturing industry and high-tech industry. The private sector can also play a pivotal role in delivering and managing infrastructure, assisting growth and sustainable economic performance.
5. We are currently witnessing the transition of Chinese investment strategy from traditional industries, energy and infrastructure, which have been served through sovereign funds, to services and high value interests which are served primarily through private capital. The modality of such transition is the role of private equity and of institutional investors. This appears to be one of the most prolific trends for the years to come and reveals the private sector influence on investment decisions and outcomes and also offers critical insights to developing countries.
Jon R. Taylor, professor of political science and director, Master of Public Policy and Administration Program, University of St. Thomas, Houston, Texas
1. The BRICS can help the global economy by leading by example, by taking a united stand against protectionism and by backing a multilateral trade system. The need to be aggressive in warning about the dangers of greater protectionism is particularly important in the aftermath of Brexit and the US presidential election. The growth of emerging countries, particularly the growth that we have seen in China, has clearly underscored the importance for growth to be both sustainable and inclusive.
2. The overall economic conditions of the developing world have improved dramatically, as exemplified by the BRICS－particularly China. China’s role has been critical in both the global economic recovery and in championing the benefits of economic globalization. The BRICS role in the global economic recovery should aim at a political goal by supporting open markets and a philosophical goal of encouraging and enhancing South-South cooperation.
3. They can follow China’s lead by pushing for win-win cooperation policies that are aimed at common development, maintaining open and accessible markets and trade, and policies that are aimed at poverty eradication and inclusive growth. Given that we appear to be at a potentially pivotal moment in the battle against global economic inequality, the BRICS can be champions of mutually beneficial cooperation. Thanks to close cooperation and coordination between China and the other BRICS nations, the BRICS contribute to safeguarding the interests of developing countries as a whole and improving the global governance system. China’s “BRICS Plus” proposal shows promise by offering to build mutually beneficial bilateral and multilateral partnerships through dialogue and consensus.
4. Several issues immediately come to mind: income inequality, climate change, energy, trade, e-commerce cooperation, cybersecurity, anti-terrorism, and increasing people-to-people exchanges. What is needed is an emphasis on maintaining economic momentum. While China is doing its part, the other BRICS nations are facing economic and political challenges. They would do well to follow China’s lead on economic stabilization and supply-side structural reforms.
5. Developing countries can draw the following from China’s development experience: Start small, focus on structural reforms first, invest heavily in a knowledge-based infrastructure, encourage policy and political cohesion, emphasize inclusive development, promote policy experimentation, remove impediments to economic reform and promote financial and market stability.
Rajiv Biswas, Asia-Pacific chief economist, IHS Markit
1. Key examples of how BRICS nations can lead international trade and investment liberalization are China’s active role in advancing the Regional Comprehensive Economic Partnership trade negotiations among 16 Asia-Pacific nations, as well as its strategic plan to boost economic cooperation through the Belt and Road Initiative. BRICS nations have also established the New Development Bank in 2014 to finance infrastructure development in developing countries worldwide. BRICS can champion new initiatives to boost South-South trade and investment flows.
2. The five BRICS nations currently account for approximately 23 percent of world GDP, making these nations an important part of the world economy. China, as the world’s second-largest economy, has been the key driver for sustained global economic growth since the global financial crisis of 2008-2009, accounting for around 40 percent of the total increase in world GDP since 2009. The BRICS, led by China, have also been a key driver for growth in world trade and investment flows over the past decade.
3. Ever since the end of World War II, global governance has been dominated by the developed countries. However, the world has changed tremendously since 1945, with many former European colonies having become sovereign developing nations, while the world share of GDP contributed by developing countries has approximately doubled within the last two decades. Consequently the old global governance architecture is no longer relevant and the BRICS need to lead the initiative to create a fairer system of global governance by working together to change existing governance structures in international bodies, as well as to create new international standards-setting bodies that have a modern governance structure with much stronger voting rights for developing countries.
4. The BRICS need to further strengthen their joint initiatives for boosting international trade and economic development. The BRICS countries can act as a core group to build policy frameworks and technological cooperation for a wide range of global South-South development initiatives. One of the greatest challenges facing developing countries is global climate change and meeting the Paris climate change agreement commitments.
5. China’s economic development since 1978 has been remarkable, lifting it within just one generation from a poor nation based on subsistence agriculture into the world’s second-largest economy that has reached upper middle income status and has become an advanced industrial economy. The Belt and Road Initiative is a great strategic vision through which China is helping many developing countries in Asia, Africa and the Middle East to accelerate their economic development through improving infrastructure connectivity. Over the long-term, China’s successful experience of rapid economic development will allow it to help other developing countries in many areas of development.
Sikhumbuzo Zondi, research assistant at the Institute for Global Dialogue associated with the University of South Africa
1. In a global economy that is facing uncertainties, BRICS countries, in collaboration with major economies, should enhance macroeconomic policy coordination and work together to avoid negative spillovers to emerging economies. In addition, the BRICS formation should stress the importance of upholding a more inclusive, stable and open world economy through the creation of an enabling environment for the development of emerging markets and developing countries. To achieve this, they need to encourage human resource development and increasing people-to-people relations, so that all countries and peoples can equally share the benefits of globalization.
2. BRICS countries have been responsible for many initiatives to assist global economic recovery by establishing the New Development Bank and the Contingent Reserve Arrangement, among others. It has enabled BRICS members to obtain funds for development, provided new financing channels for other developing countries and realized financial exchanges, such as currency swaps among BRICS members that expand the capacity of their economies and currencies to withstand the impact of global economic turbulence.
3. BRICS plays a strategic role as a pacesetter for developing countries. Unity and cooperation among BRICS members enhances the rights of developing countries to have a voice and meaningfully participate in global political and economic decision-making. BRICS has become a vital platform for major developing countries to conduct exchanges and dialogues in the spheres of politics, economics, finance, development and culture. In the process, the BRICS formation has established a framework for an inclusive, multilayered and all-around cooperation. Overall, leaders of BRICS continue to meet regularly to discuss major global issues, so as to expand their international influence and provide strategic foundations for the greater participation of developing countries in global economic governance.
4. The BRICS countries should avail themselves of opportunities provided by international economic cooperation in the following areas: trade and investment, manufacturing and minerals processing, energy, agriculture, science, technology and innovation, financial cooperation, people-to-people connectivity, tourism, information and communications technologies.
5. Developing countries can take note of the fact that China’s growth over the past 30 years has been driven in large part by the government’s market reform policy. In addition, developing countries can learn that China succeeded in achieving the Millennium Development Goal of reducing child mortality, with the world’s fastest rate of decline in both maternal and child mortality.
Zhao Huanyu, researcher of Ghent University’s Institute for International Studies in Belgium
1. First and foremost, all the BRICS countries must strongly commit to resisting all forms of protectionism and disguised restrictions on trade. Moreover, they must seek a favorable environment for the development of other emerging markets and developing countries－hanging together with them to foster better macroeconomic policy coordination, support a rules-based, transparent, nondiscriminatory, open and inclusive multilateral trading system, implement existing WTO rules and commitments. Also, they must collaborate with advanced economies and the international community to fight poverty, social exclusion and inequality.
2. The key role for BRICS is to increase the supply capacity of global public goods－be a global economy stabilizer, booster, and accelerator. In an era of uncertainty, world peace and stability are prerequisites to a sustainable global economic recovery. Therefore, BRICS must be a “stabilizer” for committing to international law and maintaining the core status of the UN to advance the political solution of hot spot issues. Furthermore, to be a real “booster” is to be a learning and sharing platform－the BRICS Plus model of open economic cooperation.
3. BRICS needs to continue pushing forward reform of the Bretton Woods institutions to increase the voice and representation of developing markets in global economic governance－to urge the IMF to complete the 15th general review of quotas, expand and strengthen the role of special drawing rights and facilitate the World Bank voting share review. It needs to make better use of the New Development Bank and the Contingent Reserve Arrangement.
4. Given the complex, contested and connected world situation, BRICS nations can strengthen their partnership in many fields, including economy, finance, foreign policy, health, education, energy, climate change and agriculture.
5. For robust and sustainable development in the long run, China has been working hard on an innovation-and efficiency-driven economy by 1) pushing forward structural reform and implementing innovation-friendly policies; 2) supporting investment for science, technology, innovation and seeking possibilities of inter-BRICS investment instruments, such as the National Development Banks and other existing financing platforms; 3) supporting cross-border cooperation between science, technology and innovation talent, especially young scientists and young entrepreneurs, and fostering industry-academia-research synergy; 4) promoting exchanges and good practices under the rubric of the Belt and Road Initiative, enhancing mutual understanding, inclusive growth and socioeconomic progress driven by scientific, technological and social innovation for more countries and people.