Monday, 17 October 2016

G20 Hangzhou summit offers impetus to BRICS’ greater role in global economic governance

In World Economy News 17/10/2016

The eighth BRICS summit is being held in India’s Goa, a month after the Group of 20 (G20) Hangzhou summit. It is widely expected that the G20 consensus would boost BRICS’ participation in global economic governance.
During the G20 summit in China’s Hangzhou, Chinese President Xi Jinping urged BRICS countries — Brazil, Russia, India, China and South Africa — to make joint efforts to improve global governance while attending a BRICS leaders’ meeting on the sidelines of the G20 summit.
The top Chinese leader called on BRICS members to promote the reform of the governance structure of the International Monetary Fund (IMF) and the World Bank, with an aim to boost the representativeness and say of emerging markets and developing countries.
At the BRICS meeting in Hangzhou, leaders agreed on the prospects and momentum of their economies and the fact that they will continue to be strong engines of the world economy.
The countries are committed to promoting emerging economies and developing countries to play a bigger role in international affairs and global governance, which will contribute to building a robust and more balanced global economy, said the statement after the BRICS meeting.
BRICS leaders said that the IMF quotas fail to reflect current global economic realities, urging G20 members to step up efforts with the IMF to increase quota resources and review the distribution of quotas and votes to ensure a fair reflection of emerging and developing economies.
They called for the completion of the 15th general review of quotas and the creation of a new quota formula before the 2017 IMF annual meeting.
“Despite skepticism, the BRICS were able to put pressure on the IMF and the World Bank to increase the voting share in these global institutions,” Srikanth Kondapalli, professor in Chinese Studies at India’s Jawaharlal Nehru University, said during an interview with Xinhua.
BRICS gathers the world’s five major emerging economies, which represent nearly 3 billion people or about 40 percent of the global population, with four of its members (excluding South Africa) among the world’s top 10 most populous nations.
In December 2015, the U.S. Congress eventually ratified the IMF’s 2010 quota and governance reform plan, which had been blocked for years. After that, China became the third biggest shareholder of the IMF, and Brazil, India and Russia were also included among the top 10 shareholders of the institution.
Swaran Singh, professor for diplomacy and disarmament at India’s Jawaharlal Nehru University, said “BRICS presents an alternative voice with great potential for making a valuable addition to global governance.”
“BRICS leaders must ensure that they do not lose out on this great opportunity to make a difference,” he added.
At the G20 Hangzhou summit, Xi also called upon members of the emerging-market bloc to drive the BRICS New Development Bank (NDB) to implement the first batch of projects and boost the bank’s management level and financing capabilities.
The bank should promote the capabilities of macro research on the contingent reserve arrangement in order to enhance financial security for BRICS countries, he said.
Kondapalli praised Xi’s proposal. “As a concrete proposal, the New Development Bank of BRICS has taken off with projects now being evaluated for execution,” he said.
Back in 2012, facing the plunge in commodity prices and a sluggish global recovery, BRICS economies generally experienced slowing growth rates, and some even saw negative growth. However, combined domestic and international pressure inspired a strong will among the five emerging countries to strengthen their cooperation.
So far, the BRICS have developed over 60 cooperative mechanisms, covering various fields such as economy, trade, finance, agriculture, education, science and technology, culture, and think tanks. The cooperation in finance has become the most fruitful, with the NDB as a good example.
Over the past year, the NDB has become a tangible force behind the mutually beneficial cooperation within the BRICS. It has also pushed forward a reform of the international financial system, which could no longer objectively reflect the profound changes in today’s global economic order.
The NDB has also set forth a new set of operating rules for the international financial system with an emphasis on equality both within the BRICS and between donor countries and recipients, which set up a new model of international aid and a new type of partnership, said Wang Lei, a researcher on BRICS cooperation with Beijing Normal University.
But there’s still room for the bank to improve itself in financing, according to experts. For example, the NDB should offer more financial aid to developing countries in Latin America to give them more options, said Bruno De Conti, economics professor at the University of Campinas in Brazil.
“This could help those countries to avoid some harsh requirements imposed by the IMF and the World Bank without losing chances of development,” he said.
While hosting a BRICS foreign ministers’ meeting on the sidelines of a series of UN conferences in New York on Sept. 20, Chinese Foreign Minister Wang Yi said that with the support of the BRICS nations, the G20 Hangzhou summit was a success and provided ample direction for the future development of the world economy.
He urged BRICS nations to take the lead in implementing the agreements reached at the G20 summit while remaining an engine for global economic growth.
The G20 Hangzhou summit has endorsed a 2030 action plan for sustainable development and proposed an initiative to support industrialization in Africa and the world’s least developed countries.
The BRICS bloc should urge the developed world to deliver on its promises to developing countries, helping them reach development goals, Wang said.
“Coming soon after the G20 meet in Hangzhou, which gave a great brainstorming opportunity to BRICS leaders, the Goa summit should be able to rejuvenate the spirit of BRICS with several new initiatives and announcements in various sectors,” Singh said.

Source: Xinhua