BRICS offers both opportunities and challenges

SONG CHEN/CHINA DAILY

The two major aspects of the just-concluded 16th BRICS Summit in Kazan, Russia, were a possible major expansion of BRICS membership, and de-dollarization efforts.

The then four-nation BRIC held its inaugural summit in Yekaterinburg, Russia, in 2009, and welcomed a fifth member, South Africa, in 2011, turning BRIC into BRICS. The participation of Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates in BRICS cooperation is, therefore, a more significant enlargement.

The expansion of BRICS is important for many reasons, one of them being the cumulative GDP of the grouping's member states is now higher than the collective GDP of G7 members. Over the past 15 years, the growth of BRICS, comprising emerging market economies and developing countries, has represented the natural and logical demand for a fairer world economic order and global governance system.

Thanks to economic globalization, the North-South economic and trade bond has deepened. But the unbalanced international development calls for further reform of the world order, which the Global South has been seeking by deepening South-South cooperation, which has been made possible because of the rise of emerging economies such as China, Russia and India.

BRICS' major expansion has opened a new page. The grouping has become more representative and inclusive with the inclusion of African and Middle East countries. This will encourage the grouping to play a more important role in the global economy in a fairer and more balanced manner.

The global economic democratization the grouping is trying to promote includes an alternative international financial settlement mechanism. While the SWIFT(Society for Worldwide Interbank Financial Telecommunication) system is still the dominant mechanism facilitating global trade transactions, there is no harm in allowing parallel systems to grow. In fact, TARGET2(a real-time gross settlement system for the eurozone) and CIPS (a renminbi-based settlement system) are both developing steadily, offering an alternative but safer and more robust global settlement system. Such endeavors are needed to reform the international financial system.

The BRICS Summit in Kazan not only formalized the grouping's expansion but also attracted a number of dialogue partners, some of which have already applied to join the grouping.

More important, there is a need to ponder what President Xi Jinping said in his speech at the Kazan summit: that BRICS should be built into a "peaceful", "innovative", "green" and "humanitarian" grouping. It goes without saying that the creation of a BRICS-based settlement mechanism could improve the overall global settlement mechanism, and enable the grouping's member states to make more contributions to international development.

However, BRICS faces various challenges, some of which arise from within the grouping. Most of the member states are more interested in sharing the economic opportunities, and may or may not share the political and strategic motivation of the major economies that make up the grouping. Member states that disagree with transforming a geo-economic BRICS into a political grouping could be wary of the grouping's political and strategic activity. In this regard, the Russia-Ukraine conflict could have affected the cohesiveness within BRICS.

Russian President Vladimir Putin did not physically attend the BRICS Summit in Johannesburg, South Africa, due to the Moscow-Kyiv conflict. And the Western sanctions and restrictions, which have reduced Moscow's global visibility, go against BRICS' efforts to help build a "peaceful" and "prosperous" world.

Addressing, if not resolving, the important differences between BRICS members could also take time. Thankfully, the BRICS Summit saw Chinese and Indian leaders meeting on the sidelines and agreeing to take measures to restore peace along the disputed borders. Simultaneously, the two countries' armies reached a deal on patrolling their disputed borders to end a military impasse last week.

The formal expansion of BRICS will certainly create new opportunities. Yet all BRICS member states should work to help end the Russia-Ukraine conflict. While economic collaboration is often conducive to enhancing members' mutual political trust, resolving member states' strategic differences is more crucial for laying a solid foundation for intra-BRICS cooperation. And before further expansion of BRICS, the existing member states should strengthen the grouping's internal unity.

The author is a professor emeritus at and former executive dean of the Institute of International Studies, Fudan University.

The views don't necessarily reflect those of China Daily.

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