4. Brics: Dynamics, Resilience and the role of China

BRIC, an acronym coined by Goldman Sachs chief economist Jim O'Neill in 2001 to include Brazil, Russia, India and China, the four developing economies and emerging markets, have taken the world’s breath in recent decade in terms of the fast growth and future perspective of its economic entity. Only few year after the publication of the important research report to bring its birth, Jim O’Neill gave a new forecast in 2009 that BRIC would overtake the combined GDP of the G7 nations by 2027, nearly a decade sooner than the conclusion by the previous study. Now the BRICS – Brazil, Russia, India, China, and the group's newest member South Africa – are rather big in terms of population, landmass and economic size. Together, the five countries make up 40 percent of the world's population, 25 percent of the world's landmass, and about 20 percent of global GDP. They already control some 43 percent of global foreign exchange reserves, and their share keeps rising. With South Africa as a new member, the combination becomes more balanced with a representative from African continent, a continent with enormous human resources, natural resources and rich cultural tradition, although the enclosure resulted in some disagreement from the creator of the acronym.

BRICS has now become a phenomenon, a fact and the focus of the world academia, which likes to use it to describe the change of the global economic situation and even a solution for modern world which has sunk into an economic crisis.

Different Names

In international field, people are accustomed to use names or titles to describe countries with similar characteristics at present, regardless of their different histories or cultures. In particular, acronyms have long been favourite of economic experts and policymakers, as a convenient tool for describing the world and the changes taking place. For recent years, besides BRICS, there have appeared several terms or acronyms to describe the countries which have performed satisfactorily in global economy.

Vista 5

In 2005, Japanese BRIC Institute put forward a new acronym, VISTA, e.g., Vietnam, Indonesia, South Africa, Turkey and Argentine, to indicate emerging countries, which all have the conditions of an emerging market, rich natural resources, increasing young laborers, stable political and economic situation, active attraction of foreign investment and expanding consumers.

Next Eleven N-11

In December 12, 2005 – a new term of Next Eleven was created (besides the BRIC) by Goldman Sachs to describe eleven big developing countries with a large population and fast economic development, e.g, Mexico, Indonesia, South Korea, Turkey, Vietnam, Philippines, Pakistan, Nigeria, Egypt, Iran and Bangladesh. The term was coined to predict the bright future of the eleven countries.²⁰⁵

Group of Five (Outreach Five)

In 2007, Group of Five is another term used by G8 in the so-called “Heiligendamm Process” created by German Prime Minister Angela Merkel to indicate the promising five countries, namely Brazil, China, India, Mexico and South Africa, which the G8 wanted to include in the discussion of the global issues. People also use Outreach Five to describe the same group.

B(R)ICSAM Constellation

Since Russia has entered the G8 Group, it was removed by some from BRICS, thus Group of Five appeared as above-mentioned. However, Centre for International Governance Innovation in Waterloo of Canada insists to include Russia in the Group thus created B(R)ICSAM Constellation, e.g. Brazil, Russia, India, China, South Africa and Mexico.²⁰⁶

Emerging 7 (E7)

In 2009, Emerging Seven was put forward by PricewaterhouseCoopers to include China, India, Brazil, Russia, Indonesia, Mexico and Turkey, and it was predicted that in 2020, the economic aggregate of E7 would reach 70% of the G7, and in 2032, Emerging Seven would surpass the present G7 in all the fields.

CIVETS (CIVITS)

In 2009, another acronym CIVETS was first put forward by The Economist, to include Columbia, Indonesia, Vietnam, Egypt, Turkey and South Africa, for they all possess characteristics of a huge young population and vigorously diversified economy, thus being a best place to attract investment. Later, Columbia was changed to China, and Egypt to India. Since the pronunciation is the same, the term stuck to the market. ²⁰⁷

Emerging 11

On April 9, 2010, Boao Forum for Asia held in Hainan Island in China put forward a new concept, Emerging 11, which includes Argentine, Brazil, China, India, Indonesia, South Korea, Mexico, Russia, Saudi Arabia, South Africa and Turkey. The 11 countries are also members of the G20. It is recognized that the emerging countries should be studied as a totality.

Growing Economies

On February 7, 2011, Jim O’Neill again put forward the idea that the Growing Economies including BRICs and Next 11, e.g. Brazil, Russia, India, China, Mexico, Indonesia, South Korea, Turkey, Vietnam, Philippines, Pakistan, Nigeria, Egypt, Iran and Bangladesh have formed an emerging market of 15 countries and became the new and the biggest driving force in world economy. The BRICs and N-11 created the best hotspot for investment, since they all have a large population, rich natural resources and big group of consumers.

MIST

In 2012, Jim O’Neill created another acronym, which denoted the ideal countries for foreign investment. Out of the N 11, MIST includes four countries, e.g., Mexico, Indonesia, South Korea and Turkey. Together with Bangladesh, Egypt, Nigeria, Pakistan, Philippines, Vietnam and Iran, the original N 11, performed much better than the BRICs. According to the performance of the investment, Goldman Sachs has gained profit of 12% from N 11 countries, yet only 1.5% from BRICs.

There are also other terms to describe the new phenomenon, such as Asian Drivers of the Global Change, Anchor Countries, Emerging Economies, Emerged Markets, Emerging Countries, Emerging Markets Countries, Emerging Market Economies (EMEs),²⁰⁸ etc.

What do all these acronyms, new names and titles indicate? It means an unexpected change has occurred in international arena, be it economy or politics.

Similar Implication

In a book entitled Head to Head: The Coming Economic Battle among Japan, Europe and America published in 1992, the author analyzed the economic powers in the coming century. Lester C. Thurow, a prominent economist in the U.S.A., one of the original founders of the Economic Policy Institute in 1986 and former dean of the MIT Sloan School of Management made in this book some predictions for the 21^st century. He was quite confident in his naming of the coming economic powers, Japan, Europe and U.S.A. His argument is that in the 20^th century, the rich country club admitted only one country, Japan, into the club, and it is not at all strange if no country would be admitted into the rich country club in the 21^st century. Obviously, his prediction was incorrect since none of the BRICS was mentioned in his list and he pointed out that Europe would take the lead in the new century.²⁰⁹

No matter how famous Lester C. Thurow was, he did not make the right prediction this time. Why did he neglect those emerging countries? It seems reasonable from a contemporary view. “Until the beginning of the 1990s, Russia was still behind the Iron Curtain, China was recovering from the Cultural Revolution and the Tiananmen Square unrest, India remained a bureaucratic nightmare, and Brazil experienced bouts of hyperinflation combined with a decade of lost growth. These countries had largely muddled along outside the global market economy; their economic policies had often been nothing short of disastrous; and their stock markets were nonexistent, bureaucratic, or super volatile. Each needed to experience deep, life-threatening crises that would catapult them onto a different road of development.”²¹⁰ That is how the West looked at the future BRICS countries at that time. Yet, things changed very quickly.

The prediction itself indicates one thing: Lester C. Thurow was quite confident in the international order established by the West after the WWII. He never expected the dramatic change, let alone with such an astonishing speed.

What does it mean creating all these new acronyms, names and titles? It is meaningless to name some countries just to catch the eyes of the world. There must be some unique characteristics regarding those countries.

Criteria. Generally speaking, the emerging countries must have the following characteristics.

1. These countries must be developing countries, not included in the list of traditional developed countries.

2. The countries must have experienced a steady economic development for a period of time and the ratio of the growth should be above the average of the global level.

3. They must have shown resilience during the period of difficulties and provided more dynamic and vigorous force than other countries.

4. The countries usually have a large population, which prepares a huge consumer market for economic growth.

5. They must have a reasonable economic aggregate, which can bring about a greater impact on world economy.

6. They usually have a large young labor power, which provides a driving force for the sustainable and vigorous development.

7. Their political and social situation is reasonably stable which lays down the foundation for the healthy development of economy.

All these conditions create a better environment for economic development in these countries, which in its turn attracts more foreign investment in comparison with the other countries.

Indicator of change. The appearance of the emerging economies or emerging countries clearly marks a denial of the present economic system. The formation of the BRICS is one of the indicators of the current order decline. G7 (U.S., Great Britain, France, Germany, Italy, Japan and Canada) has represented the best, the biggest and the most prosperous economies of the world for more than half a century. Yet in recent years, the economic situation has worsened in these traditional economic big powers headed by the U.S.A. After the economic crisis occurred, the economy not only deteriorated in the above mentioned countries, but also spread the instability to the global economy as well. While the old balance is being shaken up, the new one is emerging. As the Conception Paper for the Third International Solidarity Conference says, “Who would have thought that one day Europe or the U.S. would be on its knees, begging for money from China?”²¹¹ Although the statement is an exaggeration, yet tells some truth: people are tired of the unequal relations with the West. However, the West would not easily give up the status of dominance, the order they set up and based on their own interests since the WWII. Different strategies have been used to sabotage the solidarity of the BRICS. The extreme case is the article by Ruchir Sharma entitled “The Demise of the Rest”, published in the newest Foreign Affairs, predicting the break-up of the BRICS.

We have to be very careful.

Longing for the equality and better world. The appearance of the emerging countries also indicates a new hope for a better and equal world order. Although the ideal of equality is embodied in the constitution of almost every country, and it is also the theme in the history of various social movements and human development, yet the international socio-economic situation established after the WWII does not recognize the principle of equality. History has witnessed various incidents, events and situations of unequal cases, and underdevelopment was not only created by colonialism, but also by the current unequal political and economic order. For example, Niger has an enormous deposit of uranium which could provide an excellent foundation for its normal development. However, the deposit has been monopolized by the French company Areva for half a century; and Niger is still one of the Least Developed Countries in the United Nation’s list. When the U.S. economic situation deteriorates, it just turns on the machine to print more money, thus all the world has to pay for its debt. Inequality does not only exist in the economic field. Developed countries can use their power to interfere in other countries business under the pretext of democracy or human rights protection. The extreme case includes the situation in Afghanistan, Iraq and recent Libya. Definitely, people hope for a just world order and a better future. Who is going to bring this bright future? The good hope is laid on the rising powers and emerging economies, such as the BRICS, Emerging 11, Mist or CIVITS. Definitely, the countries included in those groups are expected to play a better role in economic performance.