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BRICS: A China-Led Group Looking for Relevance

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BRICS: A China-Led Group Looking for Relevance

Everything that is being proposed at the BRICS summit is already being done – often more effectively – at the bilateral level by China.

BRICS: A China-Led Group Looking for Relevance

From left: Brazilian President Lula, Chinese President Xi Jinping, South African President Cyril Ramaphosa, Indian Prime Minister Narendra Modi, and Russian Foreign Minister Sergey Lavrov attend the 15th BRICS summit in Johannesburg, South Africa, Aug. 24, 2023.

Credit: Indian Ministry of External Affairs

As an organization that seeks a common purpose, BRICS – the grouping of Brazil, Russia, India, China, and South Africa – is desperate for notoriety and relevance. For a group of countries that want to “create a new global order,” it is too ironic that the group’s name originated from an acronym coined by Jim O’Neill, a former chairman of Goldman Sachs Asset Management – one of the historical symbols of what the BRICS stands against.

Even with the addition of new members, BRICS will still struggle to gain the relevance it wants. Nothing unites its members, except the desire to find something that makes them a cohesive group with global importance in geopolitical decisions.

Given the current geopolitical situation, with tensions between the United States and China and Russia’s ongoing invasion of Ukraine, BRICS gains an interesting aspect, but one that goes far beyond the public narrative its members maintain in the bloc. Each one has a reason for joining and an important goal to achieve within the group. The problem is that these reasons aren’t enough to make the bloc into a harmonious union, much less justify the “new global order” narrative.

China knows that it is the leader of the group. When the grouping was established, the rationale for China was clear: Then-leader Hu Jintao saw an opportunity to catapult China’s global influence and still keep its main regional rival, India, close by.

However, current leader Xi Jinping has considerably diluted the group’s purpose. BRICS is now one star in a constellation of China’s global leadership gambits, alongside the similarly expanding Shanghai Cooperation Organization (SCO), the Belt and Road Initiative (BRI), and the direct funding China has given to developing countries. The end result has been to dilute BRICS’ purpose.

However, to keep other members’ goals alive, the relevance of BRICS must emanate from China, which is by far the largest member economy.

In an environment where geopolitical tensions with the United States continue to deepen, BRICS does have a purpose: It helps China to coordinate its interests more easily with Brazil and Russia, in addition to having a forum to closely monitor India.

Brazil and Russia are mid-tier countries that are dependent on China. Brazil is commercially dependent, to the point that the decisions made in Beijing regarding Brazilian agriculture are more important and decisive than those made in Brasilia. BRICS is one mechanism for translating this commercial dependency into geopolitical influence. China always makes the same offer to Brazil – support for becoming a permanent member of the U.N. Security Council, which has been a recurrent debate since 2004 – and, in exchange, receives a neutral to negative positioning of Brazil toward the United States.

Russia is economically dependent on China as well, and that dependency increased with the invasion of Ukraine. For Xi Jinping, Russian President Vladimir Putin being the villain of the world is a great thing, as a belligerent Putin takes the spotlight away from Xi. In addition to that, with the war in Ukraine and the sanctions applied against Russia, China gained a continuous flow of natural gas and imports of aluminum, lithium, and other commodities at a bargain price.

If Putin needs a platform to speak, BRICS has become the perfect venue, and for China, it is yet another incredible bargain. Putin can play the attack dog and earn the West’s condemnation while China gets more information on the West’s playbook.

The accession of Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, the United Arab Emirates into BRICS starting next year brings other interesting benefits for China in the geopolitical sphere. If BRICS was considered irrelevant as a group in the past, today it is of great relevance for China and the world’s pariahs, such as Russia and Iran.

Since the middle of Donald Trump’s government, U.S. relations with Middle East countries have deteriorated. Trump’s unilateral decision to withdraw the United States from the P5+1 deal with Iran turned out to be one of the dumbest moves in global geopolitics in recent years – not only has it given Iran free hand to advance its nuclear program, but it also ended up handing China a source of strong influence in the Middle East. Under the agreement, Iran had held back the advancement of its nuclear program in exchange for the lifting of some sanctions. With the dismantling of the deal, China has become a key partner of Iran, offering lines of credit through which payments are made regularly with barrels of oil, as well as economically revitalizing the Ayatollah regime.

For Iran, joining BRICS represents its golden chance to gain a friendly stage to speak its mind and defend its domestic actions. Notably, Iran also joined the Shanghai Cooperation Organization – another China-led multilateral grouping – this summer.

With Saudi Arabia, the situation is different in that the Saudis do not have economic problems. However, in this case as well, a vacuum left by the United States in the relationship was quickly filled by China. Western pressures against human rights violations end up uniting Saudi Arabia and China in a narrative of contestation. On top of that, China has been collaborating with the Saudis on economic diversification projects, including the exploration of uranium reserves. In its search for a friendlier relationship, joining BRICS comes in handy for Saudi Arabia.

Argentina’s accession, on the other hand, is an excellent smokescreen for what is happening in the country. On the day of the announcement, supermarkets and retail stores in Buenos Aires were looted due to the economic chaos that has been building in recent weeks. With the country on fire, the invitation to be part of an international organization with wealthy colleagues could not be denied.

The topic has become a subject of debate as Argentina heads toward general elections in October. Javier Miles, right-wing presidential candidate, and Patricia Bullrich, center-right candidate, have already made it clear that they do not think Argentina’s entry into BRICS is a good idea. With incumbent Economy Minister Sergio Massa risking defeat, it remains to be seen how Argentina will fare in this new club.

For the other members, the opportunity to have bilateral meetings once a year with China’s Xi Jinping is already a win. This has been the great value of the BRICS in recent years: The possibility of having high-level bilateral meetings, in addition to those of the United Nations. As a networking group, there is no denying that BRICS is very interesting.

A key point raised at this last meeting needs to be highlighted: China’s motion for operations in international trade to stop depending on the U.S. dollar and start using the Chinese yuan. Among the new and old BRICS members, there are countries that are not happy with the dominance of the dollar or are involved in sanctions. The creation of a parallel financial ecosystem, where the yuan would work as a base currency, is a big idea for the Chinese. The other members would celebrate the end of their reliance on the dollar in order to gamble with the yuan.

The idea is good, but in practice it will not happen soon.

For Russia, Iran, and Ethiopia, using the yuan instead of the dollar is their only way out. Argentina, meanwhile, prefers the dollar, but when it is scarce, the yuan is a great opportunity. India, however, is unlikely to join this shift toward the yuan so easily. And as South Africa’s finance minister pointed out, embracing another currency “presupposes losing independence on monetary politics,” which is a hard sell. Complex bureaucracies also serve to rein in radical ideas, even if their presidents speak in favor of them.

India’s participation in BRICS lacks enthusiasm in general, even if New Delhi is not exactly turning against the group. India did not stand against BRICS expansion, but not did it commit to anything meaningful. India keeps an eye on China, maintains a military relationship with Russia, and continues to establish growing cyber and pharmaceutical cooperation with the United States. They work with everyone and anyone to maintain their independence.

Everything that is being proposed at the BRICS summit – replacing the dollar with the yuan, offering lines of credit parallel to the traditional ones of the IMF and the World Bank, etc. – is already being done in one way or another at the bilateral level and led by China. Beijing replicates its own policies, already in execution, as if they were group initiatives. This is smart, as it lends a bit of agency to a group whose members can have more in common with the supposed enemies of BRICS than with each other.

Yuanization is already underway, regardless of BRICS. Russia already trades with the yuan, Iran trades with China using the yuan as a reference, and credit line agreements between China and Argentina already include transactions in the yuan, among other currencies.

As for credit offers, China already offers extensive financing through the Belt and Road Initiative and its Asian Infrastructure Investment Bank. China’s individualized credit offers will never be overshadowed compared to what the BRICS bank can offer. Thus, the New Development Bank continues to be an auxiliary line of credit supply that China manages and executes.

Likewise, BRICS will not be the path to review the U.N. Security Council membership policy. It is an easy thing to offer as an initial premise precisely because there is not risk of follow-through. Nor will BRICS be the catalyst for a change in the world order. If that happens, it will be because of what China does individually and not through an alliance with Russia, Brazil, and other mid-power countries.

The main point of interest in what has been happening within BRICS, then, revolves around China’s objective of consolidating its leadership. India is the only truly independent country among its old and new members, while the others will see their dependence on China deepen. Whether this is good or bad depends on your point of view.