By Subrata Majumder
In spite of China sending a signal to Modi before the BRICS summit that any reference to Pakistan sheltering terrorism would jeopardize the summit, Narendra Modi managed to bring the issue to the centre stage. The Joint Declaration of the five-nations BRICS Forum at its 9th Summit in Xiamen city in China named Pakistan based outfits Jaish-e-Mohammed (JeM) and Lasdhkar-e-Toiba (LeT) as scary terrorist groups and called for the extermination of terrorism from their soils. China was the chairperson of the summit.
This reflects a big boost to Modi’s stature in the global leadership, enabling him to walk taller at the summit especially after the resolution of the Doklam stand-off. “Modi goes to China with enhanced stature and stronger leadership credential than Xi Jinping“, according to Professor Mohan Malik of Asia Pacific Centre for Security Studies.
This was the first time that an Asian leader has taken on the might of China. Supporting the move, China’s powerful media Global Times was assertive of the success of BRICS in burying the hatchet of political differences. “BRICS are expected to go beyond the differences in political systems and ideologies,” it pronounced.
After failing to perk up the globalization mood at the Davos World Economic Forum last January, China reignited the tone of globalization at the 9th BRICS summit. In both the summits China was the chairperson. Chinese President Xi Jinping called for an uptick in globalization at the BRICS summit and rejected protectionism for the better health of global economy. “Only openness delivers progress and inclusiveness sustain such progress,” he declared.
In Davos, American President Trump’s pulling out of the WEF summit and notifying the exit from TPP gave shivers to pro-globalization interests. Eventually, the Davos summit- the world’s biggest economic forum – ended in a limbo, shredding hopes on the Chinese model of globalization through OBOR (One Belt One Road) .
BRICS – the acronym of five countries (Brazil, Russia, India, China and South Africa) – is the forum for independent international action to encourage commercial, political and cultural cooperation between the member countries. Even though the aim of BRICS is to push forward economic engagement among the member countries by financial sustainability and infrastructural development, the 8th Summit in Goa saw heightened political engagement.
At the same time, India is unlikely to discard protectionism at the behest of China’s call for globalization. Protectionism continues to be one of the main pillars for the success of Make in India drive. High Custom tariff and import substitution will be the roller coaster to China-style globalization.
China is the biggest beneficiary of globalization. This is the prime reason that China has been advocating for it. Protectionism will restrict Chinese growth. According to Beijing custom official Huang Songpin, “The trend of anti-globalization is becoming increasingly evident, and China is the biggest victim of the trend.” Given that protectionism is intensifying in the Trump era, fears looms large over Chinese growth.
China is an export-oriented economy and the US has been the engine for China’s economic growth. It is the biggest destination for China’s exports, sharing 18 percent of China’s exports. Trump’s import substitution plus approach through tariff barriers and encouraging domestic production will possibly bring American investors back to the US. Similarly, Modi’s Make in India will reduce dependence on imports from China. Currently, China accounts for the biggest share of India’s imports, fueling a wide trade deficit. Protectionist policies by the US and India will pose a double whammy for China’s export-led growth.
Modi’s visit to China to attend the 9th BRICS Summit comes after India refused to join OBOR. The Chinese OBOR initiative is to address its domestic problems. China is engulfed by unbalanced regional development and sagging economy. Its economy dipped to 6.9 percent in 2016, lower than India while the capital flight intensified. A large financial package by Chinese government failed to gear up the economic activity. Geopolitical connectivity is the core of Chinese OBOR led globalization rather than economic spread.
India considers that the Chinese OBOR infrastructure link globalization violates the sovereignty and territorial integrity of India by virtue of the CPEC project (China-Pakistan-Economic–Corridor). CPEC passes through Gilgit-Baltistan in Pakistan occupied Indian territory in Kashmir.
China needs India more than India needs it. China’s eagerness for investment in India comes after its loss of cost competitiveness and India’s neutrality in the South China sea dispute in the wake of the ruling of UN international court of arbitration. These factors warrant China’s ardent need for India’s support.
China and India are the main drivers of BRICS economy. The external health of three other economies of BRICS – Brazil, Russia and South Africa – is closely inter-linked with China. With China slipping into lower growth trajectory, concerns are looming large over the economic health of three member economies.
China is the biggest export destination for two BRICS countries – Brazil and South Africa—and the second biggest destination for Russia. China accounted for 18 percent of Brazil’s global exports. The most important export earning of Brazil is iron ore and China accounts for 47 percent of Brazil’s export of iron ore. The fall in Chinese steel output will lead to further drop in imports of iron ore by China and this wll have a major impact on the Brazilian economy .
Similarly, China is the second biggest stakeholder of Russia’s oil export, which accounts for Russia’s biggest export earning, sharing about 70 of its global exports. Similarly, China accounts for 15 percent of Russia’s oil export. Thus China is the pivot to Russia’s export. Given China’s predominance in Russia’s oil export, a drop in oil import by China will likely cast a shadow on the Russian economy, which is already reeling under recession.
China is the biggest trade partner of South Africa and the biggest importer of its iron ore – the second biggest item of South Africa exports. The slump in steel manufacturing in China will unleash a major impact on South Africa’s iron ore export
For India, BRICS’ significance is related to infrastructure funds. India needs US$ 1 trillion investment for its infrastructure development. To this end, setting up of the BRICS National Development Bank (NDB) ensures a big support. (IPA Service)