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8 June 2017, Gateway House

Evaluating BRICS @ 11: views from Shanghai

Speakers at the ‘1st BRICS Think Tank Forum on Pragmatic Cooperation’, held in Shanghai last month, discussed ways to tackle new challenges as globalisation moves into the next phase where the BRICS countries will take the lead

Researcher, Geoeconomic Studies Programme and Manager, Research Office, Gateway House

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BRICS turns 11 in 2017, and China, which holds the presidency of the grouping this year, is hosting a series of meetings in the run up to the 9th BRICS Summit, to be held later this year in Xiamen, China. One of them was the ‘1st BRICS Think Tank Forum on Pragmatic Cooperation’, convened in Shanghai on May 25-26, 2017, by the Shanghai Community of BRICS Studies (Centre for BRICS Studies, Fudan University, Shanghai Academy of Social Science, and Shanghai Institutes for International Studies). It took place at the Fudan Development Institute, housed in the impressive Think Tank Building at Fudan University.

The forum brought together experts from leading think tanks, academics, former government officials and representatives of the business community and multilateral financial institutions from the BRICS countries. The theme was ‘Globalisation in the Time of Transition: Shared Opportunities, Challenges and Responsibilities for BRICS’. Parallel sessions, held over one and a half days, were aimed at making pragmatic policy recommendations to BRICS leaders to facilitate cooperation in the following spheres: Economic and Development Cooperation, Sub-Regional Cooperation and Institution Building, and Education and Think Tank Cooperation.

The session on Economic and Development Cooperation on the first day was the most engaging. Speakers re-affirmed that the BRICS countries should now be a driving force in the global economic market at a time of rapid globalisation. New technologies have the potential to revolutionise international trade and commerce and experts called for an “efficient liquidity and payment transactions tool”, such as block chain, to accelerate intra-BRICS trade. India and China, with a booming IT industry and a well-developed internet finance sector, can lead this effort.

Trade between BRICS nations is not balanced and one interesting suggestion was to create mechanisms to facilitate transactions in gold. Experts called for the creation of gold reserves for BRICS nations and made a case for a BRICS gold benchmark, based on the Shanghai Gold Benchmark Price, or the Shanghai Gold Fix. There was a proposal for a clearing centre for BRICS along the lines of the ASEAN Clearing Union.

Highlighting the need for de-dollarisation, participants made a significant push for BRICS to consider its own mechanisms for settling financial transactions. Experts discussed the need to strengthen local currencies and applauded the achievements of existing mechanisms, such as swap agreements between BRICS countries and the Contingency Reserve Arrangement.

Representatives of the New Development Bank spoke about its success since inception. They gave the forum a glimpse of its General Strategy Document, highlighting the outline of its new five-year plan. The bank’s focus areas for the next five years will be: a) boosting infrastructure investment by raising funds from public and private sources; b) promoting green finance for infrastructure and sustainable development; c) improving the global financial architecture; d) strengthening the NDB’s research capacity; and e) enabling currency cooperation by strengthening the local currencies of BRICS countries.

Scholars acknowledged the importance of the services sector in member nations and advocated the need to reduce market access requirements and other barriers to services trade. India has already taken the lead by tabling a concept note at the WTO for a ‘Trade Facilitation Agreement in Services’ and it was agreed that the BRICS countries must back this effort.

Participants identified the need for major banks from the BRICS nations to increase their cross-border commercial presence in the other four countries and work towards strengthening banking sector cooperation. Such cooperation can be achieved by leveraging the strong domestic banking sector within each country and creating an enabling domestic, regulatory and legal environment. Another suggestion was to have preferential bank licensing policies for BRICS nations. As part of the BRICS Inter-Bank Cooperation Mechanism, the China Development Bank Corporation now provides support to SMEs and is creating a scholarship fund to support young talent coming to China. Other major banks too must take similar steps.

The priority areas identified to further the ‘Strategy for BRICS Economic Partnership’ were: trade and investment, science and technology (health care, big data, space), manufacturing and engineering, energy, agriculture, and communications. One expert mapped the national industrial policy priorities of the BRICS countries to reflect the commonalities in these areas.

There was consensus on the view that BRICS should aim at reforming the existing systems and not be disruptive. However, one expert argued that any reform effort or push for an alternative financial architecture, led by BRICS, is likely to be so. She made a case for a BRICS credit ratings agency, but also challenged its feasibility in light of the recent downgrades in the ratings of BRICS nations, the marked economic slowdown across the grouping, and the dominance of the ‘Big Three’ credit rating agencies of the West.

A non-BRICS participant suggested the institutionalisation of the BRICS grouping. He said that the West prefers to deal with individual countries instead of an informal bloc: BRICS may therefore benefit from functioning as an institution rather than in its current form.

Participants agreed that BRICS must take the lead in setting the global agenda for development cooperation, something that is still in the hands of the West. She proposed an alternative development finance institute or committee in the Global South, led by BRICS nations that will set the rules, which too is currently led by the West.

The second day began with a session on ‘Education and Think Tank Cooperation’. Experts discussed the creation of a research network in the BRICS think tank ecosystem, which will focus on the following areas: a) banking and finance with a focus on micro financing; b) infrastructure development; c) agriculture and food security; and d) medicine and medical technology advancement

One scholar proposed a global, digital, independent, institutionalised BRICS think tank, led neither by any one of the BRICS countries nor based in any one of them. He suggested that its website should be its principal outreach mechanism, containing all the research and data available on developing countries and emerging markets. It must be the go-to website for any scholar researching the BRICS, enabling access to a wider, standardised pool of research, thereby avoiding duplication.

There was unanimity on the need for BRICS to focus on improving the quality of education, infrastructure and the capabilities of academic institutions and think tanks, instead of obsessing over the ratings given to them by the West.  An immediate outcome of the forum was a proposal to have leading think tanks from the BRICS countries  write advisory letters to the incipient research facility within the NDB, sharing ideas for further analysis. They must produce policy papers and research briefs that will feed into its research base and support the NDB in fulfilling its mandate.

The scholars endorsed the forum’s importance and the need to make it an annual feature on the BRICS calendar. They felt that their counterparts from the western countries should also be invited to allow for a variety of perspectives and the sharing of experiences. Ideas coming out of such Track 1.5 deliberations can be the think tank community’s contribution to furthering pragmatic cooperation among the BRICS nations.

Purvaja Modak is Researcher, Geoeconomic Studies, and Assistant Manager, Research Office, Gateway House: Indian Council on Global Relations.

Purvaja Modak, and Anoop Singh, Distinguished Fellow, Geoeconomic Studies, Gateway House attended the 1st BRICS Think-Tank Forum on Pragmatic Cooperation in Shanghai hosted by the Shanghai Community for BRICS Studies, and organised by the Center for BRICS Studies, Fudan University.

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