Sunday, July 26, 2015

China's BRICS Balancing Act

As we have noted here on the blog, getting nations to cooperate at any level is no easy task. The Eurozone has demonstrated this recently. The IMF has had to deal with this problem for decades. Now we see that even the BRICS have cooperation issues to deal with. This article by Minghao Zhao in Project Syndicate points out that China has to do a balancing act within BRICS so as not to end up looking like the US does to the BRICS nations. Below are some quotes from the article.


As much of the world focuses on Greece’s travails, the BRICS countries – Brazil, Russia, India, China, and South Africa – have been working to advance their own economic agenda, most recently at their seventh annual summit in the Siberian city of Ufa. But, though Russia hosted the meeting, it is China that was viewed as dominating the grouping. Indeed, the BRICS has already proved to be a force multiplier for Chinese diplomacy, and can remain so if China is careful not to push its national interests too hard.

. . . . 

"The Chinese government is now going further, urging the rest of the BRICS to institutionalize their cooperation, not just pursue domestic reform. China contends that a stronger BRICS grouping would help to safeguard the interests of all developing countries. To that end, the country is also spearheading the effort to reform the global economic architecture, including by pushing for reforms to the International Monetary Fund’s weighted voting system.

But despite such efforts’ potential benefits for emerging and developing economies, they have provoked considerable anxiety among China’s BRICS partners, which fear that its leadership could quickly morph into domination. Beyond fundamental differences in the BRICS’ countries political systems, social values, and cultural traditions – factors that undermine trust and cohesion – there is the obvious fact that China’s economy (not to mention its military) dwarfs the others’."

My added comments:  

This is an aspect of regional and global institutions that often gets overlooked. While governments and central banks do wield much power, they also still have to deal with each other. There are substantial political, cultural, and religious differences involved. All these work against the idea of cooperation above the national level. It's hard enough to get cooperation within nations (especially democratic nations), much less at a higher level.

This all tends to slow down significant change which is why rapid change takes place more often during times of crisis. Change under those conditions can be good or bad, but it is more likely to happen quicker when things are unstable. Slower change has the advantage of gaining public acceptance over time when people are not under duress.

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