China, doubling BRICS size, challenges U.S.-led global order

September 05, 2023 08:45
Photo: Xinhua

Last March, as Chinese President Xi Jinping was finishing a state visit to Russia, he bid an emotional farewell to his host, President Vladimir Putin. “Right now there are changes the likes of which we haven’t seen for 100 years,” the Chinese leader said, alluding to a perceived decline of the U.S.-led global order, “and we are the ones driving these changes together.”

Last month, Xi left China for the second time this year, bound for Johannesburg for the 15th summit meeting of BRICS, the five-nation grouping of Brazil, Russia, India, China and South Africa, The three-day summit was a transformative affair, with the group more than doubling its size by accepting six new members: Iran, Saudi Arabia, the United Arab Emirates, Argentina, Egypt and Ethiopia.

Three of the six are major oil-producing countries. This suggests BRICS may attempt to end the pricing of oil and gas in dollars.

Even before the expansion, BRICS was slightly larger than the G7 western economies in purchasing power parity terms. With the addition of the six countries in January, the 11-nation BRICS group will, according to the Financial Times, account for 47 percent of the world’s population and 37 percent of its GDP in PPP terms compared to 9.8 percent of the world’s population and 29.8 percent of global GDP for the G7.

China has been a major proponent of BRICS expansionism. In 2017, when the summit was held in Xiamen, China, Xi introduced the concept of BRICS Plus.

"We should let more countries join the BRICS family to pool wisdom and efforts to make global governance more just and equitable," Xi said in Johannesburg, seemingly confirming reports of division within BRICS, with the Indian prime minister, Narendra Modi, and the Brazilian president, Luiz Inacio Lula da Silva, arguing for a slower pace of expansion.

Although China is now the world’s second largest economy, it still claims to be a developing country. By identifying as a developing country, China depicts itself as leader of the Global South.

In 2001, a Goldman Sachs economist, Jim O’Neill, coined the term BRIC to draw investor interest in four emerging economies. Those four countries then decided to form their own group and invited South Africa to join, resulting in the name BRICS.

On April 14, 2011, the first five-member summit was held in Sanya, Hainan Island, in China.

According to the Sanya Declaration, “BRICS aims at contributing significantly to the development of humanity and establishing a more equitable and fair world.”

More recently, the group has focused on financial issues, including floating the idea of a BRICS currency. A BRICS bank, the New Development Bank, was founded in 2014. Increasingly, BRICS countries use their national currencies when trading with each other and not the dollar.

Putin attended virtually because of an arrest warrant issued by the International Criminal Court alleging war crimes in Ukraine.

At the latest summit, the group called for reform of the Bretton Woods institutions, “including for a greater role for emerging markets and developing countries.” Currently, the World Bank is always headed by an American and the International Monetary Fund by a European.

President Xi was in South Africa not only for the BRICS summit but also for a state visit.
He was welcomed at the airport by the South African president, Cyril Ramaphosa, who did not meet the two other visiting BRICS leaders, Modi from India and Lula from Brazil. Ramaphosa also honored Xi by presenting him with the Order of South Africa, the country’s highest official award.

Despite BRICS’ loud calls for reform, the United States seems unconcerned. Washington, it seems, prefers to focus on the G20, which is considered the premier global forum for discussing economic issues. But BRICS members’ issues won’t go away. After all, India is the president of the G20 this year. In 2024, the G20 presidency will go to Brazil and in 2025 to South Africa.

With the addition of Saudi Arabia and Argentina, BRICS will have seven members in the G20, exactly the same number as the G7 advanced economies.

There are dozens of countries clamoring to join BRICS. If the West doesn’t cooperate, other players may simply take action to bring this about.

It would be far better if the United States and other western countries take seriously the demand for reform. That would put the onus on China, to see how much reform it is prepared to accept, such as a permanent Security Council seat for India, which has replaced China as the world’s most populous country but which has been opposed by China at every turn.

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Frank Ching opened The Wall Street Journal’s Bureau in China in 1979. He is now a Hong Kong-based writer on Chinese affairs.