China and the BRICS

China and the Brics

STUDENT: NICOLE ROMANELLI

SUPERVISOR: LIU WEI

China and the Brics

student: Nicole Romanelli

student number: 788999

supervisor: Liu Wei

RESEARCH QUESTIONS

1) Which is the economic and political position of

China among the BRICS?

2) Is the BRICS an equally based and homogeneus

group or not? Is the BRICS group

institutionalized and rule-based?

3) Chinese interests in BRICS are more economical

or political?

METHODOLOGY

Theoretical dissetation based mainly on

documentary analysis

Analysis of the existing literature

Primary sources: agreements and summit declarations

Quantifiable data: economic data provided by

international institution concerning: GDP, demography,

FDI, intra-trade and balance of payment.

RESEARCH DESIGN AND

STRUCTURE

Overview of BRICS origin and development

BRICS countries economic fetaures comparing to

G6 countries

BRICS intra-trade

Chinese investments on BRICS

BRICS members’ position on New Development

Bank and CRA

Chinese diplomatic strategy with BRICS

BRICS ORIGIN AND

DEVELOPMENT

2001 Jim O’Neil created the acronym BRICS in the report Building

Better Global Economic BRICs

Solow economic model it frames economic development as a

cath up or convergence growth towards steady state.

2009 inaugural BRICs summit in Yekatirburg in Russia

2011 South Africa jointed the group in Sanya summit

BRICS ECONOMIC FEATURES

BRICS differ from G6 countries

for: size, demography, GDP and

economic growth.

G6: USA, Germany, Japan, Great Britain, France

and Italy.

BRICs and BRICS: excluding South Africa

SIZE AND DEMOGRAPHY

Population growth

2005-2013

GDP AND ECONOMIC GROWTH

GDP per capita growth 2005-2013

GDP growth 2005-2013

THE SPECTER OF POVERTY

CHINA IN BRICS INTRA-TRADE

BRICS summits focus officially their cooperation on trade

and investment among members.

CHINA

INDIA

BRAZIL

RUSSIA

SOUTH AFRICA

CHINESE INVESTMENT IN BRICS

In BRAZIL

In INDIA

In RUSSIA

In SOUTH AFRICA

In the UNITED STATES OF AMERICA

BRICS need China more than China does

THE NEW DEVELOPMENT BANK

AND THE CRA

The creation of NDB can be seen as a response to the lack of

reforms to existing financial institutions (WB, IMF, ADB).

After the financial crisis of 2008 and G20 meeting it was clear

that Bretton Woods institutions did not reflect anymore

contemporary economic power distribution in the global

order.

NEW DEVELOPMENT BANK

The cration of the BRICS Bank passed through a long

process started in 2010 during the summit held in Brasilia

The Bank was established in 2014 during the Fortaleza

summit

The Bank shall have an initial authorized capital of 100

billion US$ and an initial subscribed capital of 50 billion

US$ equally shared among memebers

The Bank works on a equal-shared voting basis since

each of five signatories contributing with 10 billion US$

with no veto power.

Headquarter will be in Shanghai, the first president will be

Indian and there will be a regional center in Johannesburg.

CRA

In 2014 BRICS countries have also created a 100 billion

US$ Contingency Reserve Arrangement in order to

provide additional liquidity protection to member

countries during balance of payments problems.

Unlike the NDB is not equally shared but it is being funded

41% by China and 18% by Brazil, India and Russia, and

5%by South Africa

The parties shall be able to access resources subject to

maximum access limits equal to a multiple of each party’s

individual commitment set forth as follow:

CHINA’S DIPLOMATIC STRTEGY

China does not see the BRICS group only as an economic

platform, but BRICS also values its importance at the

political and soft-power level and it is China’s interest to

use the collective voice og the BRICS to influence the

reforms and decision-making process of major

international institution without facing or take the lead

directly.

BUT

China does not want to build stonger ties with the group.

China has no specific policies towards BRICS collectively

and it only pursues the improvement of bilateral realtions

with each memebers

Even BRICS members seem to not trust China totally as

can show the alternative group of IBSA.

CONCLUSIONS - Which is the economic and political position of China among the

BRICS?

- Is the BRICS an equally based and homogeneus group or not? Is the

BRICS group institutionalzed and rule-based?

1) CHINA DE FACTO LEADERSHIP

China is the biggest economy in terms of

population, GDP and FDI.

CRA Chinese quotas

2) CHINA DOES NOT NEED BRICS AS THEY DO

BRICS intra-trade data

Chinese investment in BRICS

Other members’ economies depend deeply on

China no economic homogeneity

3) CHINA’s RETHORIC

China officially affirms that BRICS should stress

and improve their economic relation but summits

are far to be fully institutionalized and rule-based

China still prefers to enhance bilateral relations

with members no cohesion

- Chinese interests in BRICS are more economical or political?

4) BRICS POLITICAL IMPORTANCE

China needs BRICS more politically than

economically speaking. BRICS are the facto the

group who play the only alternative voice to the

West in which China could ask to reform the

current financial system (ex. NDB, SDR and G20)

in which all BRICS are united, but they don’t have

other political beliefs in common no political

homogeneity (ex. IBSA)

Thank you for your

attention