Cheap Chinese exports have decimated Brazil’s shoe industry and South Africa’s textile sector. India has slapped anti-dumping duties on an array of Chinese goods. Russia is sparring with Beijing over the price of oil it sells to China.
If trade is the mortar holding together the BRICS — Brazil, Russia, India, China and newcomer South Africa — the omens would appear poor for the grouping, which holds its annual summit on Thursday in the southern Chinese island of Hainan.
To its detractors, BRICS is an artificial construct — an example of life imitating not art but Goldman Sachs, which coined the acronym BRIC in 2001 for four fast-growing, politically diverse countries that it reckoned were reshaping the global economy.
Yet a more optimistic view holds that the explosion in South-South trade, which leapt to 17 percent of the global total in 2009 from 7 percent in 1990, has a long way to run.
Moreover, some experts say the BRICS caucus has already shown its worth as a counterweight to the West in global talks on trade and climate change and, within the Group of 20, on how to redistribute power in international financial institutions.
In each case, despite differing positions, the five have acted collectively to prevent advanced countries from driving a wedge between them, said Sourabh Gupta with Samuels International Associates, an international trade and political risk assessment firm in Washington.
“There is a certain basic logic to their economic interaction,” Gupta said. “They have not allowed themselves to be co-opted by Western countries. Either they’re going to hang together or hang alone.”
This is not to deny that China’s export juggernaut is causing strains, exacerbated by Beijing’s determination to let the yuan rise only slowly.
Countries such as Brazil — but also the likes of Portugal — that are above China on the value chain are struggling to compete in intermediate, capital-intensive products.
“They have genuine reasons to be worried. If nothing else, at least the unfairness arising from the yuan’s undervaluation is an issue that needs to be tackled pronto,” Gupta said.
Brazilian President Dilma Rousseff will broach the issue of the yuan, but her officials say she will avoid direct confrontation.
“What we want is more reciprocity,” Rodrigo Baena, the presidential spokesman, said about the objectives of her five-day visit to China starting on Tuesday.
POLICY FAILINGS
Indian manufacturers have also grumbled at being hollowed out by their Chinese rivals, but Gupta does not expect an unmanageable surge in protectionism.
“There is a good deal of anger about Chinese products, but there is also, deep down, an awareness in India that part of this is policy failings at their end,” he said.