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
A book worth-while reading for academics and practitioners Professor Gerhard Stahl* is a colleague with a lot of experience from the EU and academia in China – certainly meaning a perfect professional background for writing a book on such a complicated topic as “China: Dangerous Rival or Cooperation Partner”. The same conclusion can be drawn from the subtitle of the book: “How can EU-China relations develop in a changing world with geopolitical conflicts?”
Worth reading in many respects In my view, the book deals with an issue that each and every European (Western) CEO, strategic or marketing manager with commercial interest in China should have dealt with already five or ten years ago – or should do so at least by now. Also financial and corporate analysts could look deeper into the descriptions and conclusions of Stahl’s book.
China’s position as the world’s largest or second largest economy – depending on the calculation method – not only includes GDP but also the global lead for exports (before Trump) and economic sectors such as car production, internet and mobile use, etc. Unfortunately, China is also known as a global leader in CO2 pollution – despite quite some progress in recent years. In other words: China has a lot of areas that should be interesting also to readers who are not daily influenced by Chinese decisions – or may be so only indirectly.
Stahl looks in his book both into past, current and future Sino developments and relations to the Western hemisphere. This kind of multi-temporal approach is definitely necessary for the understanding of China as a political superpower – but also as a market or strategic corporate partner. In this respect, one still can recognize considerable shortcomings in Western analysis. The analysis in Stahl’s book fills this gap.
History is well explained but the real value-added of Stahl’s book for Western readers can be found in the description of today’s China – politically, socially, culturally and economically. In my view, this multilateral approach is really needed for understanding China sufficiently. For this reason, single short-term indicators such as, for instance, the PMI or industrial production cannot tell us enough about the real state or trend of the Chinese economy – indicators that global financial markets, however, usually focus too much upon.
Furthermore, it should be emphasized as laudable that Stahl clearly explains the importance of China’s intransparent local decision makers and processes. This institutional condition is frequently neglected by foreign analysts – but at the same time, for example, very relevant for the understanding of China’s critical debt situation and the still limited central impact on the execution of fiscal policy.
Everyday experience One of the major benefits of Stahl’s book are the exemplifications of Chinese everyday life. Such kinds of narratives make the cultural understanding of countries and their inhabitants much easier which, of course, is ineluctable for the understanding of a foreign country more generally and, consequently, also of corporate relations. The ongoing emancipation process of China’s female labor force appears as particularly interesting – a process that still seems to be confronted with completely different conditions for Chinese women in the metropolitan areas and the countryside.
Actually, I would have appreciated reading more about this specific gender issue – and also about ordinary people’s concern about the still dangerous CO2 pollution. The usual Chinese way of defending its enormous, world-leading pollution of CO2 – predominantly by pointing at much lower per-capita pollution than in the U.S. – does not make things better on, for example, the neighboring Japanese island of Okinawa which, for example, in winter may be affected very negatively by CO2 emissions from mainland China.
Watching China’s economic development – a difficult act of balance between admiration and criticism Stahl tries to be fair in his judgment on China’s economic development in the past decades. Everyone who during the past 10-20 years has visited the “Middle Kingdom” at least a few times should have recognized the enormous modernization of the country that has taken place – despite still existing regional disparities. However, the rapid improvements of economic conditions on a relatively broad scale could not happen without sacrifices, harm and damage.
Stahl’s discusses all these issues in his book – issues that certainly are not an easy call. The interpretation of China’s economic development should – in my opinion – be regarded as a difficult act of balance between admiration and criticism. Stahl manages this challenge indeed nicely.
Stahl’s conclusion that China’ policy planners always interlink politics and economics is certainly one of the most important ones of the whole book – and I would like to mention additionally the organic ties between politics and the Communist party and ultimately with its leader Xi Jinping.
Exactly for this political reason, I would interpret the described New Silk Road Initiative – a major Chinese infrastructural project – as less benign for non-Chinese interests than expressed in the book. In my view, China’s increasing economic expansion all over the globe should be considered as more challenging for the involved emerging and advanced countries than described by Stahl.
China and the EU The EU will have a challenging future with China, not only the U.S. China is a country with very different rules and institutions, different from the ones we appreciate and are used to in our part of the world. Since Stahl is an expert on both the EU and China, his conclusions on future EU-China relations should be particularly interesting.
In this specific context, Stahl explains convincingly that the EU nowadays is acting in a completely different world with all these new political and economic conditions – and that the EU benefits more from open markets than others. Stahl writes that the EU needs a clear strategy towards China and the United States “which has not yet been achieved”.
But is such a new European China strategy achievable and how could it look like? Stahl favors co-operation to confrontation. This is understandable and probably right when it comes to general mutual governmental relations and the obvious interdependence of the EU and China. Furthermore, President Xi Jinping seems to be the only leader being able to tackle President Putin which could be positive for Europe. However, if Stahl elaborated more on the issue how business contacts between corporate China and corporate EU could be developed more fairly and promisingly one of the few
What do we really know about China? Finally, I would like to quote in this review of Stahl’s interesting book an appreciated colleague from a university in Hong Kong who – about 25 years ago – repeatedly admonished me to be humble when presenting and pretending my own knowledge or ideas about China. He often adjusted me by hinting at the following deeply rooted question: “What do we really know about China?” These words could still be applied as a ”Leitmotiv” by China analysts.
Sure, today we certainly know much more about China than a quarter of a century ago. However, China still shows up quite frequently as a kind of conundrum. But it is no exaggeration to conclude that Gerhard Stahl’s book about China makes the “China conumdrum” less mysterious. This is why I wholeheartedly recommend to read Gerhard Stahl’s illuminating book on the “Middle Kingdom”.
Hubert Fromlet ——————-
*Gerhard Stahl had different occupations at the EU – among them as the Secretary General of the European Committee of Regions. He works currently as a visiting professor at Peking University HSBC Business School in Shenzhen, China.
The Chinese yuan (also called renminbi, RMB or CNY) has weakened visibly one more time vis à-vis the American dollar (USD), this time since last fall – though not very lately for (temporary?) stabilization reasons. The current depreciation (trend?) against the euro, however, started only in the first days of February 2025, two weeks after the inauguration of President Trump.
One may wonder whether the latest yuan movements have been caused directly by President Trump’s trade policy or/also as the result of a strategic Chinese depreciation policy already since 2022 in order to improve competitiveness and exports as a reaction on insufficient domestic growth since a few years ago. Probably, both aspects matter.
Sizeable weakening of the yuan
Some numbers may give a hint on the trend of the RMB vis-à-vis the USD and the euro:
The graph shows that the RMB has weakened by around 12 percent in the past three years compared to 3-4 percent since last fall. This should underline the assumption that there has been a Chinese depreciation strategy against the USD not only because of expected and verified American tariff action but already since some years ago – the latter explanation probably because of insufficient domestic demand.
# EUR/CNY: Jul 9, 2022: 6,81; Jul 15, 2023: 8,81; Aug 17, 2024: 7,91; Feb 1, 2025: 7,45; April 17, 2025: 8,30; May 16, 2025: 8,05
If we go back in time a couple of years, one can recognize that the RMB obviously has weakened substantially vis-à-vis the euro but some negative Trump effect since the beginning of 2025 can be noted for the CNY/EUR rate as well.
Depreciation strategy also before Trump
It can be summarized: Certain weakening developments of the yuan were visible already before President Trump’s second entry into the White House, for example vis-a-vis the American dollar (buck). For this reason, it may be premature to draw definite conclusions on the occasionally mentioned theory that China has – and still is – manipulating its currency just because of the ongoing trade war with the U.S. Official Chinese statements on this issue are, of course, not available.
In general terms, I would like to argue that China already for quite some time has preferred a weakening trend of the yuan, particularly when it comes to the downward trend of the yuan against the dollar which has been rolling on already since spring 2022. In this context, it could be helpful to explain somewhat further how China conducts the suspected (orderly) manipulation of its currency. Therefore, it may be appropriate to make some general remarks on Chinese exchange rate policy.
After having applied a more or less fixed-rate policy against the USD through many years, China’s central bank – the PBoC (People’s Bank of China) – conducts since a decade ago an exchange policy that limits daily CNY fluctuations to 2 % up or down with reference to a basket of 24 currencies. Experts call this approach often “managed floating”. The dollar dominates in this basket (share 22,4%), followed by the euro (16,3%) and the yen (11,4%). This basket is technically valid in homeland China but the offshore yuan in Hong Kong (CNH) is not controlled and usually quite closely following the CNY.
What could be observed in recent quarters is according to certain analysts is a decrease of the official currency reserves in Beijing and at the same time an increase of dollar assets by China’s state-owned commercial banks – meaning that the net of these two positions has been negative for the exchange rate of the yuan.
The point with this (new?) kind of intervention policy should probably be that yuan-weakening purchases of USD papers by the commercial banks tend to be much more hidden and unobserved than the activities of the central bank PBoC – a transparency shortcoming that I have been confronted with in this analysis as well. But the importance of this possible manipulation strategy should not be exaggerated.
Conclusion: Chinese exchange rate policy remains a conumdrum Poor transparency impedes from finding good or safe guidelines as regards current Chinese exchange-rate policy. But I would believe all the same that the recent yuan depreciations do not reflect random but were – or are – instead intended by China’s political leadership.
However: To what extent this policy approach can be interpreted as an (anticipated) answer to Trump’s (expected) tariffs against China or as an already earlier decided strategy might be interpreted as a conundrum. My own analysis on the other hand points, however, at both views, i.e. that there has been a Chinese depreciation strategy not only since Trump 2 – despite the strong probability that also Trump 2 serves as an argument for a weaker yuan in recent quarters. But this seems having been strived with cautious and not too provoking forex management by the political leaders!
It should not be forgotten that Chinese political leaders in the longer run still want to transform the renminbi into an attractive global currency. Such an objective does not allow for an irritating competitive depreciation strategy.
Hubert Fromlet Affiliate Professor at the School of Business and Economics, Linnaeus University
