China set to launch trade counter attack on US at Brics meeting in South Africa
Analysts expect President Xi Jinping to condemn Trump's protectionism stance and accompanying risk of de-globalisation
South Africa is likely this week to provide a platform for a Chinese-led fightback against US President Donald Trump’s protectionist agenda as it hosts leaders of the so-called Brics group of nations, encompassing Brazil, Russia, India, China and South Africa.
The annual summit of the coterie of emerging economic powers which begins on Wednesday is the 10th since its leaders started meeting and the first since the prospect of a full-blown global trade war became a real threat.
Earlier this year, Curtis Chin, a former US ambassador to the Asian Development Bank and managing director of advisory firm RiverPeak Group, told The National The UAE may well be a contender as the next Brics country. He cited the country's ranking at 21 on the World Bank’s Doing Business 2018 report and Transparency International’s Corruption Perception Index 2016, on which the UAE is ranked as the 24th least corrupt out of 176 assessed economies, as potential reasons.
Mr Chin, the inaugural Milken Institute Asia fellow, was talking ahead of the two-day Milken Institute Mena Summit held in Abu Dhabi in February.
Chinese President Xi Jinping, following his visit to the UAE last week, has already used his arrival in Africa to forge friendships and consolidate influence with multibillion-dollar investments in the continent, including South Africa, which counts China as its biggest trading partner, Bloomberg reported.
Mr Xi held talks with South African President Cyril Ramaphosa on the eve of the gathering, saying that "the Johannesburg summit has special significance for Brics cooperation in the new circumstances".
China has the most at stake in a potential trade conflict, accounting for the bulk of the combined gross domestic product of about $17 trillion that Brics represents.
Beijing this week sharply rejected accusations by Mr Trump that it was manipulating the yuan to give its exporters an edge, saying Washington appeared determined to provoke a trade war, according to AFP.
Mr Trump has said he is ready to impose tariffs on all $500 billion of Chinese imports, complaining that China's trade surplus with the US is due to unfair currency manipulation.
“I expect to see a bold, sweeping statement led by the Chinese side that will condemn protectionism and de-globalisation with an intent to keep the global trading regime intact and predictable,” Martyn Davies, managing director for emerging markets and Africa at Deloitte, told Bloomberg. “Access to the global economy through trade has underpinned China’s economic success over the past two and a half decades.”
The five Brics countries’ GDP is now more than 90 per cent the size of US output. While they have combined foreign-exchange reserves of $4tn, the group’s currencies, stocks and bonds took a hit from the trade war and Fed policy tightening.
Mr Xi’s counterparts from Russia, Brazil and India have joined him at the summit, as will African leaders such as Angola’s Joao Lourenco and Zambia’s Edgar Lungu.
“China is the most important trade country in this coalition and is likely to offset the negative impact from greater US protectionism through increased domestic stimulus,” said Madhur Jha, head of thematic research at Standard Chartered Bank.
The Brics nations would “reiterate their own domestic agendas at this meeting as well as commit to more trade and investment among these countries”, she said.
Updated: July 25, 2018 02:34 PM