Representing around 40 per cent of the world’s population and nearly a quarter of its economic output, Brazil, Russia, India, China and South Africa — the so-called Brics countries — came together in Hainan, China, recently to show off their growing global heft. Their joint statement underscored the need for a realignment of the post-World War II global order that was based on untrammelled US supremacy. The governing structure of international financial institutions, the statement said, “should reflect the changes in the world economy, increasing the voice and representation of emerging economies and developing countries”. This was in line with the long-standing demand of these rising economic powers for the restructuring of the global financial architecture to make it more representative. The statement also calls for “comprehensive reform” of the United Nations to make the body “more effective, efficient, and representative”. This was interesting as China is the biggest obstacle to changing the permanent membership of the security council.

Among the more specific actions and recommendations announced was an agreement for development banks in Brics countries to open mutual credit lines denominated in local currencies; a warning about the potential of “massive” capital inflows from developed nations destabilizing emerging economies and support for “a broad-based international reserve currency system providing stability and certainty”. There was an implicit challenge posed to the status of the US dollar as the leading global reserve currency. Clearly, there is an attempt by these emerging powers to coordinate their efforts on the global stage.

But for all the bonhomie at the Hainan summit, there are serious differences among the Brics nations themselves. First, there is the structural disparity between China and the rest. The dominance of China makes the very idea of a coordinated Brics response to the changing global balance of power something of a non-starter. China’s presence makes other nations nervous, leading them to hedge their bets by investing in alternative alliances and partnerships.

Great divide

There are significant bilateral differences among Brics nations. Brazil is worried about the influx of Chinese investment and cheap Chinese imports, and has criticized China for its undervalued yuan. Brazilian manufacturers are losing market share to their Chinese counterparts. Brazil is also wary of China’s growing economic profile in South America, a region that Brazil considers to be its own sphere of influence.

Russia is worried about its growing economic disparity with China. Russia’s failure to develop its Far East has allowed China to get a toehold in this strategically important region and pushed Beijing into the driver’s seat in defining the Asian security landscape. Even though China is the largest buyer of Russian conventional weaponry, many in Russia see this as counter-productive because China might emerge as the greatest potential security threat to Russia.

The saga of the decline in Sino-Indian ties is well known. Despite the two sides deciding to resume defence ties during the prime minister’s trip to China, New Delhi remains sceptical of Chinese intentions. China’s refusal to acknowledge India’s rise and lack of sensitivity on core security interests are leading to complications. Trade imbalance in favour of China had gone up to $20 billion in the overall bilateral trade of $55 billion as of December 2010 from $16 billion in 2009.

As such it is difficult to see a productive future for Brics countries together. The rise of Brics is as exaggerated as the decline of the United States of America. Tectonic plates of global politics are shifting, but they may not be shifting in predictable ways.