What you need to know about the BRICS 7-point action plan

A few weeks ago, industry ministers from the BRICS countries (Brazil, Russia, India, China and South Africa) met in Hangzhou, China. The meeting resulted in the establishment of a seven-point action plan being put in place.  Read more.

Why was the plan put in place?
The 7-point BRICS action plan was developed to “deepen industrial co-operation among the BRICS nations, particularly in the manufacturing industry”. According to South Africa’s Minister of Trade and Industry Rob Davies, the action plan also aims to facilitate and put into motion the agreements reached at the very first gathering of the BRICS industry ministers (that took place in Moscow two years ago). The outcome of this meeting involved the expansion of industrial co-operation in key areas and joint actions, making it beneficial for all of the BRICS nations.

How does the plan benefit South Africa and its relations with the other BRICS nations?
Amidst the global financial crisis, sectors like the industrial, manufacturing and service sectors have been noted as sustainable, hence the motive to take aggressive action in these areas. Jointly, the BRICS nations would take full advantage of rich natural and human resources, broad domestic markets and vigorously carry out co-ordination and matchmaking in the fields of industrial capacity and policies, and co-operation in such fields , i.e developing new industrial infrastructure, making technological changes, as well as innovation within small and medium-sized enterprises.

How this enhances South Africa’s relations with its fellow BRICS partners is that SA is already
rich in natural and human resources and further co-operation can help strengthen different sectors, which in turn benefits the economy and leads to further job creation.

Why is this plan necessary?
One cannot ignore the emergence of the new industrial revolution (digitalisation, networking and intellectualisation) which affects the traditional production flows and business models and makes way for newer, more modern ways of industrialisation.

What does the 7-point action plan entail?
– Strengthening industrial capacity co-operation.
– Strengthening the co-ordination and matchmaking in the field of industrial policies.
– Promoting the co-operation in the development of new industrial infrastructure.
– Expanding co-operation in technological development and innovation.
– Deepening co-operation in the field of SMEs.
– Strengthening co-operation in standard area.
– Facilitate all-round co-operation with the UN Industrial Development Organisation.

– Additional source: IOL

China’s ‘big four’ banks to raise billions for Belt and Road deals

HONG KONG – China’s major State-owned commercial banks are raising tens of billions of dollars to fund the country’s Belt and Road investment push, according to people familiar with the matter.

The people said China Construction Bank Corp, the country’s second-biggest bank by assets, was raising at least 100 billion yuan ($15 billion) for a fund to specifically finance Belt and Road investment.

The people added CCB was raising cash onshore and offshore, and has already been running roadshows with investors.

Bank of China, another major State bank, aims to raise around 20 billion yuan for a similar fund, according to two of the people.

The cash, raised via banks’ private equity or other investment platforms, is part of a broader push sponsored by China’s central bank to use onshore yuan capital for offshore investments, including Belt and Road deals, according to one of the people.

The other two of China’s “big four” banks – Industrial and Commercial Bank of China Ltd and Agricultural Bank of China Ltd – are considering similar fundraising plans, two of the people said.

The people could not be identified as they are not authorized to speak to the media.

The four banks and the People’s Bank of China did not immediately respond to Reuters’ requests for comment.

President Xi Jinping pledged in May to boost financial support for the Belt and Road Initiative.

An additional 100 billion yuan will be injected into the Silk Road Fund, while China Development Bank and the Export-Import Bank of China will set up special lending plans respectively worth 250 billion yuan and 130 billion yuan to support Belt and Road cooperation.

Beijing is trying to contain overseas deals after some extravagant purchases in recent years, but while private spending on deals has slumped, acquisitions by Chinese companies in countries that are part of the Belt and Road Initiative are soaring, totalling $33 billion as of mid-August.

That compares with a $31 billion tally for all of 2016, showed Thomson Reuters data.

The sources said CCB and BOC would raise US dollars for the offshore portion of their funds and yuan from onshore investors. Some of the onshore capital could be used offshore for Belt and Road deals overseas, two of the people said.

Reuters – China Daily

Moving from health challenges to collaborations

[In association with BRICS Journal and the National Institute for the Humanities and Social Sciences]

Access to affordable healthcare is a priority for all the BRICS countries. Dr Aquina Thulare looks at how BRICS is faring and how further collaboration would benefit everyone involved.

Health is a state of complete physical, mental and social well-being and not merely the absence of disease or infirmity. Good health is an indispensable prerequisite for poverty reduction, sustained economic growth and socio-economic development.

Placing  health within a globalised, market-based capitalist system results in a dialectical interplay between social classes and the exact nature of whichever social force is best able to set the agenda differs from country to country. These conditions explain why differential exposure and vulnerabilities have an impact on health and wellness and how these have distinctive consequences on populations. These are the “causes of the causes” of common health challenges.

BRICS is home to 42% of the world’s population and contributes 29.5% to global GDP. Notwithstanding the general economic prosperity and improvements in demographic and epidemiological profile since 1990, profound socio-economic inequalities and public health challenges persist within BRICS countries. Over the years, the different BRICS countries have followed diverse evolutionary trajectories in improving the performance of their health systems.

Health has been placed on the BRICS agenda through the social justice, sustainable development and quality of life dimensions as a key area of development and co-operation. Moreover, BRICS ministers of health are mandated to pursue the agenda of ensuring healthy lives and promoting the well-being of populations in their countries by reaffirming public health financing as an essential element for socio-economic development.

They have committed to:

  • Ending epidemics of communicable diseases;
  • Prevention and relevant treatment of non-communicable diseases (NCDs);
  • Prevention and treatement of substance abuse;
  • Decreasing the number of injuries and deaths from road traffic accidents; and
  • Achieving universal health coverage (UHC) and high-quality healthcare systems.

BRICS would also focus on social determinants of health (SDHs) while also introducing UHC strategies that are appropriate for each country’s context. The concept of “health as a human right” and “health in all policies” pervades much of BRICS’ engagement in contributing towards better global health underpinned by several United Nations (UN) frameworks.

Written by: Dr Aquina Thulare
This is an extract of the full article Moving From Health Challenges to Collaborations, found in Issue 3 of BRICS Journal.

China issues commemorative stamps for BRICS Summit

XIAMEN – China Post issued a stamp on Saturday to commemorate the BRICS Summit in Xiamen of East China’s Fujian province.

The stamp bears logo of the summit as well as the letters “BRICS” and “2017 China”. It also shows the scenic Gulangyu island, which was included into the UNESCO list last month, as well as other iconic sites of Xiamen like Xiamen University.

“It shows the features of Xiamen,” said Zhang Zhijun with the Xiamen branch of China Post. “With the sea we would like to imply that the summit is a new starting point for the countries to sail into a bright future.”

Philatelist can buy eight-stamp sheets or individual stamps. The small sheet is made of silk, with a panorama picture of Gulangyu island by a local photographer Zhu Qingfu.

Price of one stamp is 1.2 yuan (about 18 cents).

The leaders of Brazil, Russia, India, China and South Africa will meet in Xiamen in early September for the 9th BRICS Summit.

China previously has also issued stamps for the G20 Hangzhou Summit and the Belt and Road Forum for International Cooperation.

– China Daily/RepubHub

The ARC of the New Development Bank opens its doors

Yesterday marked an important day on the BRICS calender.  It was the official launch of the African Regional Center (ARC) of the New Development Bank (NDB) in Sandton, Johannesburg. The event was dubbed as a milestone in the country’s history – one that has been on the BRICS agenda for a long time.

Dignitaries in attendance included President Jacob Zuma, Mr Kamath, the President of the New Development Bank,  Minister of Finance, Malusi Gigaba, Minister of International Relations and Co-operation, Ms Maite Nkoana-Mashabane and Programme Director,  Minister of Science and Technology, Naledi Pandor.

In an effort to cut costs and to boost strategic alignment and collaboration between South Africa and the NDB, SA’s Director-General of the National Treasury Dondo Mogajane has been appointed as the director of the NDB representing the country.

Below is an extract from the President, Mr Jacob Zuma’s address:

The launch of the Africa Regional Centre of the New Development Bank is a historic occasion as it marks the strengthening of the BRICS formation and also underlines the BRICS commitment to the development of the African continent and emerging markets.
This is a critical milestone not only for South Africa, but for the African continent as a whole. We  are thus celebrating it as a shared achievement.
The idea of establishing a new Bank with a new mission and orientation was first discussed in Durban in 2013, when we had the honour of hosting the BRICS forum.
We later agreed to establish a centre in Africa to take care of the important developmental needs of this continent.
The launch of the Africa Regional Centre is testament to our commitment that BRICS and the New Development Bank should benefit not only BRICS countries, but should also benefit the whole of Africa and the developing world as a whole.
This is therefore truly a proud moment which points to a brighter future for the people of our continent and the developing world in general.

Notable achievement in this regard includes the signing the founding agreement of the New Development Bank, which paved the way for the opening of the Bank’s head office in Shanghai, China. The issuance of the first set of loans – amounting to 1,5 billion dollars (approximately 20 billion rands) in total – to fund renewable energy projects in member countries is a significant step forward.
The Bank’s very first green bond issuance in the Chinese capital market, mobilising about 450 million dollars in the process is also noteworthy.
And most recently, the approval of a general strategy that will guide the Bank’s operations in the next five years demonstrates that we are on the right path.

Economist: BRICS exceeds expectations

The economic performance of the five leading emerging economies of the BRICS group exceeds expectations of the man who first came up with the acronym, the inventor of the term told Xinhua in a recent interview.

Former Goldman Sachs chief economist Jim O’Neill coined the acronym BRIC in 2001 to cover the nations Brazil, Russia, India and China (South Africa later joined to make the term BRICS) as economies which would blossom in the 21st century and take the lead in global business.

“Sixteen years later the BRICS share of global GDP (gross domestic product) is bigger than every scenario I projected,” O’Neill said.

His comments came weeks ahead of the ninth BRICS summit which is to be held in the Chinese city of Xiamen early next month.

O’Neill predicted in his 2001 paper “Building Better Global Economic BRICS” that the BRICS nations by now would have a combined economic worth of about 11.6 trillion US dollars. Their actual worth is about 16.6 trillion dollars this year.

The first decade of this century was a period in which the group reached and then more than fulfilled the potential that O’Neill foresaw in 2001, and which has made the world sit up and take notice.

Average annual growth rates for the BRICS nations from 2001-2011 were, according to the International Monetary Fund (IMF) – Brazil 3.8 percent, Russia 4.8 percent, India 7.8 percent, China about 10.7 percent and South Africa 3.7 percent.

The second decade has seen less stellar progress for the nations, as the world economy recovers from the financial crisis and nations like China are embarking on a different phase of development.

The nations have collaborated and now meet regularly as a group. They have set up a development bank called the New Development Bank, based in Shanghai.

O’Neill also noted a very recent development in bilateral trade between China and Germany, one of Europe’s leading economies.

In 2016, China became Germany’s largest trade partner, with trade between the two nations surpassing 150 billion dollars.

“It’s good. A lot of these forces are happening. Here’s an important statistic about global trade – China became Germany’s largest trading partner. Hugely symbolic for BRICS countries,” said O’Neill, who believed the BRICS success story is for the long term.

O’Neill hits back at those who have said that the BRICS is losing its shine.

To focus merely on a slowdown in the combined growth of the economies is missing the point, said O’Neill.

China’s economy continued its steady expansion in the first half of this year with its GDP up 6.9 percent year-on-year to about 38.2 trillion yuan (5.6 trillion dollars), according to the country’s National Bureau of Statistics.

Russia and Brazil suffered recessions in recent years, but Brazil’s economy grew again in the first quarter of this year after a protracted recession and Russia achieved a growth rate of 2.5 percent year-on-year in the second quarter.

“The fact they have slowed down is an irrelevance if they are still way bigger than I thought 16 years ago – primarily because of China but also because of India, and not withstanding the problems that Brazil and Russia have had.”

“So these people that say it is not so important because they have grown less, it is ridiculous,” he said.

What’s more, O’Neill has his eyes set on other nations that could also surprise the world in the coming decades.

“I would say going to 50 years in the future, there are probably four countries with potential to be as big as Russia or Brazil,” said O’Neill.

“Definitely Indonesia, possibly Mexico, possibly Turkey and, excitingly, possibly Nigeria. But let us see – just because they have the potential it does not mean it will happen.”

“The BRICS countries have already said they are open to other members. But I would not do that any time soon until we see clear evidence of any of those four becoming a lot bigger,” he said.

They are an unequal group in economic volumes, with China leading the way and South Africa being the smallest economically.

O’Neill had always had misgivings about South Africa being in the group, but thinks it should be there, despite its economy being the smallest at about 300 billion dollars a year.

“China creates another South Africa (economically) every six months, how on earth can South Africa be economically in the same class?” the economist said.

– China Daily/Repubhub

Thriving marble business is built with the help of BRICS

Caldeira runs a marble business in China and knows how important the country’s ties are with the Latin American nation.

“The BRICS Summit will further strengthen trade between Brazil and China and is a great opportunity for me to expand my business,” he said about next month’s summit.

Caldeira came to Xiamen City in east China’s Fujian Province from Vitoria in eastern Brazil two and a half years ago to learn Mandarin.

He found the Chinese coastal city very familiar since it is similar in climate and environment to his hometown.

Inspired by the pro-business environment in the city, Caldeira soon started his own business for exporting Chinese stone products to South America.

Xiamen, a major trade port in Chinese history, is China’s largest stone import center, while Brazil is a major stone exporter. But Caldeira imports processed marble products from Xiamen, and sells them to Brazil and other overseas markets.

“Brazil is rich in stone, but the prices are high. The quality of China’s artificial stone is very good and much cheaper, and is very popular in Brazil,” he said.

In only two years, Caldeira’s business has grown into one of the largest companies in China that export marble to Brazil. Its export value reached more than $10 million in 2016.

The BRICS countries-Brazil, Russia, India, China and South Africa-have become a major driving force in the global economy. With 44 percent of the world’s population, the five account for nearly one-quarter of global economic output and half of the world’s economic growth.

Caldeira said the BRICS countries are playing an increasingly important role in trade, not only driving regional growth but also helping to lift the global economy.

“I hope the BRICS Summit can further promote trade between Brazil and China and reach more reciprocal deals,” he said.

In addition to finding success, Caldeira has also found love in China. He and his wife have just moved into a new house during the Spring Festival.

“China is my lucky place, and Xiamen is where my happy life unfolds. I love Xiamen,” Caldeira said. “I believe my business will be even better this year.”

In addition to the growing share of the BRICS economy as a part of global gross domestic product, or GDP, trade between the countries is also expanding rapidly.

In the first half of this year, China’s imports from the other four BRICS countries exceeded $70 billion, 33.6 percent higher than the same period last year.

Chen Tanxiang, a general manager of a textile company in Xiamen, has benefited from the close ties between BRICS countries.

In 2010, he switched from making plastic bags to manufacturing non-woven fabric, a then-emerging industry. But the sector became blighted by overcapacity, so he decided to expand his business to Africa.

Chen entered the South African market in late 2012 at an exhibition in Johannesburg, and his company has developed steadily in the country.

He built a sales network with local stores, wholesalers and agents, providing products, including disposal and shopping bags, and storage supplies. The annual sales volume of his company grew from $100,000 in 2012 to more than $2 million dollars today.

For him, the BRICS Summit between Sept 3-5, means more business opportunities.

“The BRICS Summit to be held in Xiamen is a great chance for South Africans to know the city and will bring trade ties between Fujian and the BRICS countries even closer,” Chen said.

“Many African countries have limited the use of plastic bags, so I hope I can replicate my business model in South Africa in other countries of the region,” he said.

– Repubhub/China Daily

China and Brazil to upgrade ties

Zhong Nan in Shanghai
Displayed with permission from China Daily

Action Plan to help Latin American nation build modern service sector

China and Brazil signed a memorandum of understanding on Tuesday to diversify service trade to upgrade their commerce structure from commodity and goods exchanges.

The MOU, or the Two-Year Action Plan, is designed to encourage the two countries to improve service trade in eight areas including engineering, architecture, e-commerce, banking automation and tourism, to enrich bilateral trade ties over the next two years.

“Signing this Two-Year Action Plan will help Brazil build a modern service sector, as well as create new e-commerce and financial activities to boost the economy,” said Marcelo Maia, secretary of commerce and services at Brazil’s Ministry of Development, Industry and Foreign Trade.

The plan is expected to provide experiences for BRICS countries to promote services trade cooperation.

Even though China-Brazil trade is heavily focused on commodity and goods trade including soybeans, beef, iron ore, construction machinery, chemicals, garments and vehicle products, service trade has not notably featured in bilateral trade.

Chinese companies invested $8.39 billion in Brazil last year, an increase of 13 percent year-on-year. Both countries have already begun to intensify their cooperation in infrastructure, energy and telecommunication business development, data from the Ministry of Commerce show.

“Supported by rich natural resources, Brazil has been keen to upgrade service trade and related sectors such as logistics, tourism, shipping, healthcare, education, finance and smart city development,” said Wang Haifeng, a researcher with the Institute for International Economic Research at the National Development and Reform Commission.

The deal was sealed during the trade ministers’ meeting from the five BRICS countries – Brazil, Russia, India, China and South Africa in Shanghai on Tuesday and Wednesday, ahead of next month’s leaders summit in Xiamen, Fujian province.

China is expected to further open its market to imports from Brazil, Russia, India and South Africa, and spearhead an anti-trade protectionism campaign. In the past six months, China’s imports from these countries surged 33 percent year-on-year.

“We hope that BRICS countries can further expand their cooperation with economies related to the Belt and Road Initiative. This will help to better meet the challenges brought by the uncertainties of the global economy and generate new growth momentum,” said Zhong Shan, China’s commerce minister.

Vice-Minister of Commerce Wang Shouwen said while protectionists have doubts about multilateral trade, BRICS countries, as major developing economies, can tackle the skeptics as a united team and build a sufficient trade mechanism.

To strengthen trade links, Wang said China will host an international imports exhibition from 2018 in Shanghai and it will help with trade and stimulate investment.

“China will further open its market to other BRICS countries and increase imports, as they are highly complementary in trade,” said Wang.

Trade ministers from the five countries will discuss topics including trade and investment facilitation, enhancing economic and technology cooperation, as well as supporting a multilateral trade system in Shanghai.

– Repubhub/China Daily