EMAIL DETAILS

China backs a new bloc for the world
Beijing hopes for 'concrete action' from BRICS' co-ordinated role in
international affairs
Ed Zhang in Sanya
Apr 14, 2011


Why is China, contrary to its habitual low profile in world affairs,
so active in promoting BRICS - the grouping with Brazil, Russia, India
and South Africa? What does it expect to gain out of encouraging
mutual co-operation among the club of the world's largest emerging
market economies?
Dr Liu Youfa , from a key foreign relations think tank in China, gave
a very straightforward answer: "We don't want to put all our eggs into
just one basket."


As vice-president of the China Institute of International Studies,
under the auspices of the Ministry of Foreign Affairs, Liu called the
bloc a "new basket" - and "a fairly good basket" that would help China
diversify its business interests in the developing world and avoid
overdependence on developed economies.

At the International Monetary Fund, the BRICS nations would also have
a substantial effect on the balance of power if they consolidated all
their voting rights, amounting to 11.28 per cent, against the United
States' 16.82 per cent, he said. It takes 15 per cent to veto any issue.

It would be ideal if the BRICS nations could co-ordinate their
positions first before they negotiated with the developed countries on
the global economy and financial system, Liu said.

The bloc will hold its 2011 summit in Sanya , Hainan , today,
welcoming South Africa as a member to the two-year-old grouping.

China is trying to make the event more formal, not just an annual
summit with a joint final statement, but also matched by more meetings
on a ministerial level and among government think tanks. It is also
likely that, following the Sanya summit, a BRICS secretariat will be
established to facilitate exchanges.

Liu said that by 2050, the BRICS' total share of the world economy
might exceed that of the developed economies combined, offering China
"a good way to diversify risks and seek more opportunities".

The Chinese Academy of Social Sciences' first Annual Report on BRICS'
Social-Economic Development, launched in Beijing last week, says that
in the first decade of the 21st century, the BRICS averaged annual
economic growth of more than 8 per cent, compared with 2.6 per cent
for developed countries and the 4.1 per cent global average.

At the same time, the five countries' combined share of the world
economy grew from 17.71 per cent in 2001 to 24.22 per cent in 2009. In
terms of their contribution to the world's additional wealth, the
share of the BRICS nations sky-rocketed, from next to nothing at the
start of the 1990s to more than 60 per cent last year. Academy vice-
president Li Yang said the percentage could rise to 70 per cent this
year.

In contrast, the developed countries' contribution to the world's new
wealth has steadily declined.

Apart from economics, Liu said, the bloc was a platform for Chinese
diplomacy, enabling it to reach out to more developing countries and
to gain leverage via the BRICS' "collective bargaining power".

In particular, the bloc should form a united voice in post-recession
reform of the international financial system and economic order, Liu
said.

He agreed the bloc had strong common interests in the G20 grouping,
after analysts from think tanks in BRICS countries said at a recent
Beijing meeting that the bloc should work within the G20 framework.

G20's substitution for the older G8, dominated by the developed
countries, was already a fait accompli, he noted.

The BRICS now needed to help the G20 grow into "a mainstay in the
mechanism of global governance" post-recession, to be joined, ideally,
by the United Nations, World Bank, International Monetary Fund and the
World Trade Organisation, he said.

The BRICS played a key role in mitigating the impact of the 2008
crisis, Liu said, and would continue to be a driving force in the
world economy. But to achieve genuine equality, such as a better
distribution of voting rights in the IMF, the bloc would have to unite
more developing countries, indicating that China might expect to
enlarge the club to include more members, he said.

As for concrete action, Liu suggested member states help one another
get rid of any lingering effects of the recession, boost growth and
seek low-carbon developmen