China leads the BRICS: building an alternative to US hegemony

With China playing the champion of globalization and multilateralism, the BRICS held in September their first formal summit after Trump's inauguration. China leads the way to an alternative to US hegemony. Español

Alejandro Frenkel
28 September 2017

BRICS leaders meet on the sidelines of G20 in China. Photo: Narendra Modi, CC BY-SA 2.0.

This article is published as part of the partnership between Nueva Sociedad and democraciaAbierta. You can read the original article here.

In the climate of increasing polarization that characterizes the international system, the foreign strategies of China and the United States are becoming increasingly divergent. Coinciding with Donald Trump’s arrival at the White House, Washington has turned to defensive bilateralism in relation to other countries.

From this new perspective, any multilateral scheme is guilty until proven otherwise. Either because the United States assumes economic costs and others enjoy the benefits - such as in the case of the North Atlantic Treaty Organization (NATO) or the United Nations (UN) - or because it harms businesses and the "American people "- such as the North American Free Trade Agreement (NAFTA), the Agreement on Climate Change, or the Trans-Pacific Economic Cooperation Agreement (TPP) -, it is better to get rid of structures that create ties and to negotiate “one on one".

In this game of differences, China has decided to be right on the other side. The strategy, in this case, is that of expansive multilateralism. According to the Asian giant, global bodies and agencies must be expanded and anything involving sectarianism and protectionism should be done away with.

China’s enormous economic weight makes it a primus inter pares

The way in which Beijing intends to redesign the international system is a good prism with which to analyze the last summit of the BRICS - the bloc formed by Brazil, Russia, India, China and South Africa -, which was held precisely in the Chinese city of Xiamen, on September 3 to 5. Two other aspects of this summit deserve to be highlighted: the conflicts between members of the bloc and the performance of the two Latin American countries participating in the conclave: Brazil and Mexico (attending as a guest).

The BRICS are a state-centric intergovernmental group that calls for South-South development cooperation between emerging powers. Beyond this pretended horizontality, however, China’s enormous economic weight makes it a primus inter pares. This being so, the indications are that China is determined to turn the BRICS into one more link in its strategy to lead the globalization process which the West - in the times of Brexit and Trump - is leaving vacant. Some of the points in the final declaration and the words of Chinese President Xi Jinping in the opening address should be interpreted in this sense: "We need to advocate a new global economy, support the multilateral trade system, oppose protectionism and balance economic globalization so as to make it more inclusive and equitable". This does not mean overturning the liberal postwar order but, rather, adapting it to the current distribution of global power, reforming the old Bretton Woods institutions - such as the International Monetary Fund (IMF) and the World Bank -, and creating and expanding new ones. It is no coincidence that one of the most significant results of the summit was the announcement that the BRICS New Development Bank (NBD) will finance four large infrastructure projects worth 4 billion US dollars.

In addition to this, at Beijing’s initiative, the leaders of Mexico, Egypt, Guinea (which chairs the African Union), Thailand (in charge of the Asia Cooperation Dialogue forum) and Tajikistan were invited to attend the BRICS meeting. Although it is not the first time that a host country invites other countries, the Chinese invitation gave cause for some talk about a "BRICS plus" - that is, a bloc which could add new permanent members. Of course, there is nothing chancy in this: Egypt and Tajikistan are important countries for China’s New Silk Road megaproject - the Belt and Road Initiative -, and the inclusion of Mexico can be read as a direct message to the United States: "the victims of your protectionism are welcome here".

But not all is cooperation and cordiality among the so-called emerging countries. The BRICS summit witnessed also a good deal of friction between its two most important members: China and India. The crossfire between Beijing and New Delhi was played out in a recent episode of military tension in the border area of Doklam - a disputed territory – which resulted in the Indian Prime Minister Narendra Modi’s non-attendance.

It appears that Brazil's current aim is to assure the BRICS that it is "reliable" enough to deserve its place in the bloc. 

Disagreement, in fact, dates way back and is not limited to the border dispute: at the 2016 summit, India tried to get a joint declaration labeling Pakistan a "terrorist state". China and the other members opposed it. This is, in fact, the crux of the matter: Pakistan is key for the geopolitical layout of the maritime part of the Silk Road, for it allows Beijing to access the port of Gwadar. This, of course, does not win much sympathy in New Delhi. In fact, nationalist Modi decided not to participate in a summit on the Belt and Road Initiative organized by China a few months ago and is currently talking to Japan with the aim of designing an alternative connectivity project between Asia and Africa.

Let us look now at what happened with the Latin American countries attending the summit. In the case of Brazil, its critical domestic situation is severely limiting its international role. In Xiamen, Brazilian President Michel Temer confined himself to exposing his program of economic reforms and assured members that "the economic crisis does not exist". It appears that Brazil's current aim is to assure the BRICS that it is "reliable" enough to deserve its place in the bloc. But the truth is that the role of the yellow-and-green country is so blurred that it did not even pronounce itself on the subject of Mexico’s invitation to attend the meeting. Gone are the days when the Brazilian Ministry of Foreign Affairs held the key for the rest of Latin American countries to access the BRICS (as Argentina knows only too well). In any case, as a result of its “friendly” gestures to foreign investments, Temer flew back from Xiamen with the BRICS commitment to open an office of the New Development Bank in Sao Paulo or Rio de Janeiro.

As for Mexico, its attendance at the summit took place in a context where the renegotiation of NAFTA threatens nearly 75% of its exports. Obviously, diversifying its external economic links is a way of counteracting its overwhelming dependence on the US market. A sure indication that this is happening is the share that China has been gaining in the Mexican automotive and oil markets, particularly since Peña Nieto’s ending of the state monopoly on hydrocarbons. The problem for the Aztec country is its overwhelming trade balance deficit with China, which contrasts with the surplus it still enjoys with the United States. Beyond this first move, it remains to be seen if the "BRICS plus", with Mexico included, will actually materialize. As in any club, being a guest is quite different from participating as a full member.

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