BRICS— A New Model

In December 2010， the four BRIC countries agreed to accept South Africa， the first African country， into its cooperation mechanism. At the BRICS Summit held in Sanya during April 13 and 14， South Africa became the new full member of the BRICS. The BRIC countries are estimated to account for 42% of the world’s population and 30% of the world’s trade volume， 1/4 of the world’s land area and 15% of the world’s GDP. Besides， the BRICs group holds a huge amount of foreign exchange reserves and the number of multi-national companies from the BRICs is also on the rise. And now the five BRICS countries account for a global trade volume of 17% and are expected to occupy 61% of the world’s economic growth in 2014.First raised by Russia， the proposal for the admission of South Africa was nailed down after full consultation among the Big Four. But inviting South Africa to join the BRICs focuses more on geopolitics rather than economic relations， because South Africa just has a small economic scale although it is the largest economy in the African continent with China as its largest trade partner. In 2009， at a total population of 49.32 million， South Africa reported a GDP 1/3 of that of Sub-Saharan Africa， but its economic aggregate merely stood at around USD 286 billion， 1/4 of that of Russia， the least economically powerful country in the BRICs; in terms of population， South Africa cannot be comparable to India with a population of 1.2 billion， Brazil 191 million and Russia 143 million. However， as the largest economy in Africa， South Africa is still a quite influential country， accounting for 40% of Africa’s industrial output， 50% of Africa’s consumption capability and 1/4 of Africa’s GDP. South Africa’s finance minister Pravin Gordhan predicted earlier that South Africa’s GDP will see a rise of 3.5%， 4.1% and 4.4% respectively in 2011， 2012 and 2013. South Africa’s economic scale is far less than 30% of that of Russia， the country with the smallest economic scale in the BRICs， and its economic growth rate is much lower than the ASEAN nations’ average. On the other hand， South Africa has ranked among the more developed nations with a per capita GDP of USD 5，857 in 2009， far above the average of the emerging economies. As an innovation center and an ideal investment destination， South Africa， a significant emerging economy， boasts enormous potential for development.Given South Africa’s import role in Africa， South Africa’s accession is a win-win initiative both for South Africa and the cooperation mechanism of the BRICs. As one of the regions with the most rapid growth across the world， Africa is projected to experience a 5% economic growth this year. Among the more than forty countries in the African continent， no one can be comparable to the Big Four， O’Neill who first raised the concept of the BRICs wrote in the Financial Times recently. But if combined， these countries in the African continent can rival the BRICs in terms of economic growth potential. As the largest economy and one of the most influential countries in Africa， South Africa dominates 1/3 of Sub-Sahara Africa’s GDP， playing a leading role in the local economic development. Data show that as the largest energy producer and consumer， the largest producer of gold， platinum and palladium in Africa， South Africa occupies a prominent position in the global market. Moreover， pertinent enterprises in South Africa play a crucial role in such domains as finance， power， telecommunications， construction and agriculture. As a representative from Africa in many important international institutions， South Africa was the only African member in the G8+5 Dialogue and now it is the only African member in the G20. Since South Africa represents the African continent in many aspects， its accession will further enlarge the international popularity of the BRICs’cooperation mechanism and serve as the gateway for the BRICs to nudge into Africa. Zuma holds that the concept “BRICs” has become a multilateral diplomatic force， stimulating the quantitative and collective change of the global governance. The BRIC countries are all important economies in the world， and South Africa is the only African member in the G20 and a member in the G8 outreach session. South Africa’s accession to the BRICs will strength its role and also the role of the African countries in such international institutions as the above-mentioned organizations and the United Nations.“South Africa serves as a favorable gateway for the BRICs to enter the African market. In spite of a small population， our voice not only stands for South Africa but the whole African continent. As the most diverse and developed economy in the African continent， we will bring opportunities for all the African countries in a move to achieve economic integration in the African continent，” said Maite NkoanaMashabane， South Africa’s minister of International Relations and Cooperation. Enterprises in South Africa enjoy unique competitiveness by virtue of a perfect business network and familiar business environment in the African continent; furthermore， South Africa has done well in macroeconomic environment construction as well as protection of intellectual property rights， real rights and investors’ interests， NkoanaMashabane added. Having become the largest trade partner of Africa and South Africa， the BRIC countries will make full use of the opportunities provided by the African market promising enormous potential. In the upcoming months， we will establish free trade areas among the regional economic cooperation institutions， such as the Southern African Development Community， the Common Market for Eastern and Southeastern Africa as well as the Western African Economic Community. We’re so pleased that the BRICs will take South Africa as a portal for entering the African market， and we’re willing to provide suggestions in terms of economic opportunities in Africa， said Zuma， President of South Africa.South Africa’s joining the BRICs will not only introduce in investment projects and trade opportunities， but also help enterprises in South Africa go global， which will upgrade the cooperation level between South Africa and the BRIC countries. South Africa will well pave the way for the four BRIC countries to target at the 1 billion consumers in the African continent. The cooperation mechanism in the BRICs is an inevitable outcome of the emerging economies’ rising， which facilitates economic and trade contacts among China， Russia， India and Brazil and has also fuelled the world economic growth， said Matola.Accession to the BRICs will produce positive effects for South Africa， according to an article in Africa Business Report on April 14. Equipped with complete infrastructure and a highly transparent capital market， South Africa will provide support for the BRICs to enter the African market. Sub-Sahara Africa will become the region with the greatest growth potential after Asia and Latin America， and South Africa will promise abundant opportunities once it becomes a gateway for the trade and investment inflow from the BRIC countries into Africa， said Jeff Gable， Economist at Amal- gamated Banks of South Africa Group Limited.The BRICS Summit serves as a platform for the five newly-born economies to discuss mining， infrastructure construction and how to attract overseas investment， which will then stimulate employment with new job opportunities. Acquaintance with different social and economic obstacles through communication via the official mechanism will enable the Big Five to better understand the necessity of the cooperation ties among the BRICS and make the present cooperation relations more rule-abiding. And the BRICS countries will also benefit from the growing consumption market in Africa.However， we should be aware that the economic structures differ greatly in the five BRICS countries: China and India are both large importers of resources and exporters of manufactured goods and services; Russia and Brazil are now shifting to typical resource exporters from industrial countries 10 years ago; South Africa， despite its weakest economic strength， boasts complete industrial technological departments and various mineral resources. “Employment poses the most severe challenge to South Africa， which cannot be solved only by the local enterprises. Large influx of overseas investment will help and this summit is an excellent opportunity for attracting investment from abroad，” said Jerry Vicarage， CEO of South African Business Council. “Infrastructure development lags behind in South Africa， in particular its railway network construction much inferior to other BRICS countries， which hampers the flow of commodities and services. Therefore， this filed promises substantial opportunities for overseas investors.Moreover， the simplex energy mix and power supply shortage in South Africa is another bottleneck restricting South Africa’s economic development. The government of South Africa has therefore proposed to energetically develop new energy and expand the application of solar power and wind power. The mining enterprise in South Africa hope to cooperate with the investors from the BRIC countries， which will benefit the local communities by helping the local enterprises expand production capacity and enhancing workers’skills. But this kind of cooperation should not only “offer fish to the local enterprises”， but also “teach them how to fish”. As the only member from Africa in the BRICS cooperation mechanism， South Africa is also a portal for the BRIC countries’ trade and investment flow into South Africa， Vicarage added. Thanks to the sales and production network of the South African enterprises in Southern Africa， products and services of the BRIC countries can timely and easily flow into the 15 countries and regions in the Southern African Development Community. Besides， economic cooperation will also push forward the political cooperation between the BRIC countries and the African countries， which will then endow the emerging countries with a bigger say in dealing with the international issues.The BRICs will soon be replaced by the BRICS—a boarder and more representative concept—in the international arena. With its cooperation mechanism improving， more emerging economies may join the BRICS in future so that the more influential BRICS will play a more significant role in the international political and economic affairs.LinksBRICs is an acronym that refers to the economies of Brazil， Russia， India and China and it has the same pronunciation as the English word “bricks”. Among the four countries， Brazil is known as the “World’s Raw Material Base”， Russia as the “World’s Gas Station”， India as the “World’s Office” and China as the “World’s Factory”.