China Research

Originally, BRIC was started as a financial investment idea in promising emerging markets. In other words, BRIC was in the beginning a financial construction for investing in well-growing emerging markets. B stood for Brazil, R for Russia, I for India and C for China. Later, also South Africa – representing the S in BRICS – was enabled to join.

New conditions

What initially seemed to be an interesting innovation, has in the meanwhile developed into a completely different and in many (financial) aspects into a financially obsolete product.

Growth and other economic conditions have changed profoundly since the start of BRICS. Chinese growth has been slowing down considerably, Russia suffers from burdening war effects, Brazil is economically unstable though recently improving somewhat and India, on the other hand, has more strongly moved in the right direction.

In other words: We have seen that the BRIC(S) countries did not have a homogeneous development in recent years. Rather the opposite – but not as a positive contribution in a diversification sense.   

More lately, BRICS countries have also suffered from President Trump’s tariffs and increasing global uncertainty about particularly emerging markets. These tendencies should lead to the question what may happen to BRICS in the future. Will BRICS recover as an important but not very powerful group of emerging markets or move into a different direction with China as an increasingly active driving force, favoring its own political interest and influence?

Conclusion:  My own guess is that the latter alternative seems to be the most probable one since China already since a number of years ago has demonstrated an increasing strategic political interest in modernizing emerging and less developed countries. These countries may be particularly relevant when they can provide China with important commodities.

We know by now that Chinese decision makers are excellent strategist both when it comes to short-term and long-term strategies.

BRICS fits well into this specific context.

Hubert Fromlet
Affiliate Professor at the School of Business and Economics, Linnaeus University