x Abu Dhabi, UAETuesday 25 July 2017

Building of BRICS offers China cover for its new status

Brazil, Russia, India, China and South Africa are an unlikely grouping, but their BRICS Summit does serve a purpose, for China and perhaps for Africa.

Every commentator dreams of inventing something that lodges in readers' brains and shapes their thoughts.

It might be a catchy book title - such as Soft Power or The End of History. Or it could be an acronym that acquires a life of its own.

In 2001, when Goldman Sachs chief economist Jim O'Neill selected four countries - China, India, Brazil and Russia - as the coming economic powers, he arranged their names to create the acronym BRIC.

The concept gained strength throughout the decade. Even though the somewhat random membership of this club was open to criticism, "BRIC" popularised the idea that wealth creation would in future take place in countries previously considered poor.

In 2008, when the "old economies" of the US and the European Union were struck by financial crisis, the grip of the new kids on the block seemed to grow stronger.

But there was a gaping hole in the membership: no one from Africa, a continent previously seen as a basket case but where many countries were developing rapidly. South Africa's president, Jacob Zuma, lobbied to join the club and was accepted in 2010, and the title added an 'S'. Now the BRICS have just held a summit meeting in South Africa.

It is the easy to poke fun at this gathering of disparate countries. The original four BRICs are not quite the stars they were. Economic growth is falling in all of them, and the fashion among commentators now is to question, rather than celebrate, China's rise to superstardom, a trend exemplified by the forthcoming book Stumbling Giant: the Threats to China's Future, by Timothy Beardson, an experienced investor in China. Shouldn't Mexico or Turkey be in the group, to pep up the parade of stars of yesteryear?

Even more glaring are the disparities and tensions among the five. China's economy is 20 times the size of South Africa's. India has a series of border disputes with China. Russia is eternally aware that China may one day covet its sparsely populated, resource-rich far eastern territories.

South Africa, which aspires to speak for Africa on the global stage, is in an economic mess. To redress the wrongs of the apartheid era, it has created a slew of black millionaires, but not created the foundations for real growth to raise living standards for all.

The labour unrest at the Marakana mine last year, where police shot dead 47 miners on unofficial strike, has shaken confidence. The public education system is underfunded, causing a dearth of qualified workers. Rather than investing at home, South African companies increasingly prefer to invest in more dynamic African countries.

One such is Nigeria, predicted to be the world's fourth-largest country by population by 2050, with 400 million people. This market will be sought out by every consumer- goods producer in the world, if Nigeria can sort out its politics, its Christian-Muslim tensions and its infrastructure problems.

(Two other African countries will also among the world's top 10 by population in 2050 - the Democratic Republic of Congo and Ethiopia, the former a byword for civil war and the latter repeatedly afflicted by drought. By then, more than 20 per cent of the world's population will be African.)

In any case, what purpose does the BRICS club serve? The simple answer is that it provides China with useful camouflage to hide the economic pre-eminence of a country that does not feel comfortable emerging as a superpower. Beijing is probably not planning, as some claim, to take over the world. Its goal is more likely to help China grow rich before it grows old, and that involves securing supplies of oil and minerals, largely from Africa. At this stage of its development, China is putting its own economic growth first.

But this creates a problem. China's imports from Africa are booming, providing much-needed growth in Africa, but this is mostly as a result of mineral extraction, which does not create many jobs, nor does it provide long-term stability. A downturn in China's manufacturing would lead to reduced demand for minerals. What Africa needs is jobs for its young labour force, increasing by 144 million per decade.

But at the same time that investment is pouring into mining, China is flooding the African countries with bargain-priced consumer goods, which destroy local industries. This is an issue raised with increasing frequency by African leaders who relish China's economic involvement and the $15 billion it has invested in African infrastructure over the past decade, but do not see any of this leading to economic take-off.

Western counties can hardly complain at China's tactics. They did their best to strip Africa bare, often with the help of local elites, when they had their day.

The BRICS club is not going to change the world. It is not a Non-Aligned Movement reborn for a globalised world economy. Its members are often in competition, for all that they proclaim their desire to collaborate.

If the BRICS grouping is to have any meaning, it must be in Africa where the five display the goal, expressed by the former Chinese leader Hu Jintao last year, to promote "the development of the whole world".

It is reasonable to ask if South Africa is the right partner for the other four, given that it trades on its heroic past rather than offering an economic model for the future. But however South Africa tackles its domestic problems, China, India, Russia and Brazil cannot escape more responsibility for the sustainability of African economies as a whole.

 

aphilps@thenational.ae

On Twitter: @aphilps