The BRICS Studies

Given their immense potential for development and representation of a

new international political and economic order, the BRICS countries have
become a strong nascent force on the global stage. However, as overall eco-
nomic growth continues to slow down, and the geopolitical situation becomes
more complex, the BRICS countries are facing a series of new challenges that
require further development in the way they cooperate with one another.
This volume offers a panoramic view of cooperation between the BRICS
countries in the light of these new challenges. The editors reveal that policy
coordination has been strengthened, bringing into play complementary
advantages as viable ways for promoting robust, sustainable, and balanced
growth in the world economy. They argue that the experience gained, and
lessons learned in the development of and cooperation between the BRICS
countries has offered a positive role model for cooperation between other
countries as well as providing valuable lessons for research in international
politics.
Students and scholars in international relations and politics will benefit
from this volume.

Xu Xiujun, PhD in International Politics, is a Senior Fellow; Head of the

Department of International Political Economy and Executive Director of
the Center for the BRICS Studies, Institute of World Economics and Politics
(IWEP), Chinese Academy of Social Sciences (CASS); professor at the
University of Chinese Academy of Social Sciences; and Secretary-​General of
the China Society of Emerging Economies. He was a post doctoral researcher
in world economy at CASS from 2009 to 2011 and a visiting scholar at George
Washington University in 2017. His research interests cover international pol-
itical economy, Asian and Pacific cooperation, development and cooperation
of emerging economies, and global economic governance.
China Perspectives

The China Perspectives series focuses on translating and publishing works by

leading Chinese scholars, writing about both global topics and China-​related
themes. The series covers Humanities and Social Sciences, Education, Media
and Psychology, as well as many interdisciplinary themes.
This is the first time any of these books have been published in English
for international readers. The series aims to put forward a Chinese perspec-
tive, give insights into cutting-​edge academic thinking in China, and inspire
researchers globally.

Recent titles on politics:

On East Asian Regional Cooperation II

Ideality and Reality
Zhang Yunling

U.S.-​China Relations in Strategic Domains

Travis N. Tanner, Wang Dong

Global Studies: Volume 1

Globalization and Globality
Tuo Cai, Zhenye Liu

Global Studies: Volume 2

Global Process and Global Governance
Tuo Cai, Zhenye Liu

The BRICS Studies

Theories and Issues
Xu Xiujun

For more information, please visit www.routledge.com/​series/​CPH

The BRICS Studies
Theories and Issues

Edited by
Xu Xiujun
This book’s publication is subsidized by the project of China Classics International
First published in English 2020
by Routledge
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The right of Xu Xiujun to be identified as the author of the editorial material, and of
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without intent to infringe.
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A catalogue record for this book is available from the British Library
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ISBN: 978-​0-​367-​49220-​5 (hbk)
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Contents

List of figures  vii

List of tables  viii
List of contributors  ix
Preface by Zhang Yuyan  xi
Acknowledgements  xiv

1 The BRICS studies: academic approach and frontier issues  1

XU XI U J U N

2 Non-​neutrality of international regimes and the BRICS

cooperation  20
XU XI U J U N

3 Theoretical explanations for the origin of BRICS

cooperation  43
RE N L I N AN D Y I N JI WU

4 BRICS cooperation in the game of countries  68

Z H OU FAN G YI N

5 International structure and the BRICS cooperation  86

J I AO C H UAN KA I

6 Practice theory and China’s participation in BRICS

cooperation  100
G AO S H AN G TAO

7 The BRICS countries and global economic governance  117

XU XI U J U N
vi Contents
8 The BRICS countries and the global financial governance  130
WAN G H AO

9 Construction of free trade zones in the BRICS countries  149

C AI C H U N LI N

10 The BRICS countries and new international direct

investment rules  163
H UAN G H E

11 The BRICS countries and international energy cooperation 

181
L I U WE N G E A N D WA N G LEI

12 The BRICS countries and international cooperation on

climate change  196
K AN G XI AO

13 The BRICS countries and global cyberspace governance  215

SH E N YI

14 The BRICS countries and the construction of New

Development Bank  232
XU XI U J U N

15 Cooperation among the BRICS countries for developing

emerging industries  246
L I N YU E QI N

References  260
Index  276
Figures

11.1 The revised game model of the BRICS countries on energy

cooperation 190
13.1 Percentage of global Internet users from 2001 to 2013 223
13.2 Percentage of Internet users by region in 2013 223
13.3 Distribution of data generation in cyberspace in 2012 224
13.4 Rise of emerging markets 225
Tables

1.1 Changed economic aggregates of the BRICS 2

1.2 Main cooperation fruits of the BRICS summit meetings 4
3.1 Different types of variables used in studies on BRICS
cooperation 48
3.2 Mechanisms of action for the origin of BRICS cooperation 49
3.3 IMF members’ quota and voting power 54
5.1 Comparison of elements of strength among BRICS countries 89
8.1 Categories and rankings of the cities of the BRICS and
developed countries in the Global Financial Centres Index 138
10.1 Scale and share of direct investment among the BRICS
countries in 2011 165
10.2 Four major cross-​border M&As by Chinese SOEs in 2014 166
10.3 Number of overseas acquisitions by Chinese companies
by sector/​industry in 2005–​2012 167
10.4 Top 8 cross-​border M&A transactions in the oil and gas
industries by multinational companies from developing
and transition economies, 1987–​2005 169
10.5 Multinationals headquartered in the BRICS among the
200 largest non-​financial multinationals 170
10.6 Changes and adjustments of foreign investment policies
and regulations in different countries from 2000 to 2011 173
11.1 Game payoff matrix for energy cooperation among the
BRICS countries 188
14.1 Voting rights of the BRICS countries in regional multilateral
development institutions 238
14.2 Aims and functions of the world’s major multilateral
development institutions 242
15.1 Comparison among the BRICS countries in innovation
indexes 251
Contributors

Cai Chunlin, PhD in Economics, Director and Professor of the Institute of

Emerging Economies, Guangdong University of Technology, Deputy
Secretary-​General of China Society of Emerging Economies, and President
of Guangdong Provincial Society of Emerging Economies
Gao Shangtao, PhD, Professor, and Director of the Middle East Studies
Center, China Foreign Affairs University.
Huang He, PhD in Economics, postdoc in Theoretical Economics, postdoc
in Political Science, Professor of International Politics, School of
International Relations and Public Affairs, Fudan University.
Jiao Chuankai, PhD in International Relations, Associate Professor of the
College of Humanities, Donghua University.
Kang Xiao, PhD in International Relations, Associate Professor, School of
International Relations and Diplomacy, Beijing Foreign Studies University,
and supervisor of master students.
Lin Yueqin, PhD in Economics, Director and Senior Fellow of the Second
International Department of the Social Sciences in China Magazine, and
Deputy Secretary-​General of China Society for Emerging Economies.
Liu Wenge, PhD in Economics, Professor and Dean of School of International
Studies, Liaoning University.
Ren Lin, PhD in Political Science, Director and Senior Research Fellow of
Department of Global Governance, the Institute of World Economics and
Politics, Chinese Academy of Social Sciences.
Shen Yi, PhD in International Politics, Director of the BRICS Research
Center, and Fellow of the Department of International Politics, Fudan
University.
Wang Hao, PhD in Economics, postdoc in Public Management, Associate
Fellow of Department of World Development Strategy Studies, Central
Compilation and Translation Bureau.
x Contributors
Wang Lei, PhD in Economics, Associate Professor, School of International
Trade and Economics, Shandong University of Finance and Economics.
Xu Xiujun, PhD in International Politics, postdoc in World Economy, Senior
Fellow of the Institute of World Economics and Politics, Chinese Academy
of Social Sciences.
Yin Jiwu, PhD in International Politics, Professor of the School of
International Relations, Renmin University of China.
Zhang Yuyan, PhD in Economics, Member of the Chinese Academy of Social
Sciences (CASS) and Senior Fellow and Director of the Institute of World
Economics and Politics, CASS.
Zhou Fangyin, PhD in International Relations, Dean and Professor of the
School of International Relations, Guangdong University of Foreign
Studies.
Preface

Understanding the international order and BRICS cooperation

To determine whether the existing international order is different from the
past may, first of all, require an examination over whether the basic variables
affecting the international order have changed. As I see it, there are three
things that remain unchanged. First, a third world war is highly unlikely. As
the world’s major nations all possess some sort of nuclear weapons, the pos-
sibility that they resort to war as a way to resolve disputes is diminishing.
Second, countries are increasingly interdependent, and the price of seeking
isolationism is just too high. Third, there is not a world government. There is
a continuing trend of multipolarization in international politics and, mean-
while, the world nowadays needs public goods to be shared more than ever
before. These three basic variables, or rather unchanged facts, determine that
the main approach to game among nations is to safeguard and expand their
own interests through the establishment of international rules or orders, while
also taking into account the interests of others.
Order is, in essence, a set of rules. The game between countries is played
under specific international rules, and the outcome of the game largely
depends on the strength of the players. This makes a fair amount of sense, but
not enough, because the outcome could also hinge on the rules. For example,
in the 100-​meter race, no one in the world runs faster than Usain Bolt from
Jamaica; but if you modify the rules, for example, the runner must stop to solve
two math problems at halfway before continuing, the result could be totally
different. This may be an extreme example, but it demonstrates that, in some
cases, it is the rules that determine the outcome of the game; in other words,
the player’s strength may be greatly undermined if the rules go against him.
An important feature of rules is that the vast majority of them are “non-​
neutral,” that is, to different countries the implications of the same set of
rules may vary. This indicates that the future global order will be determined
through games between countries, especially between the major powers or
blocs. Everyone wants to shape the international rules to their own benefit,
because as long as others accept rules that are more favorable to me, I would
at least have an edge in the game, if that edge does not help me win the game.
xii Preface
If we dig a little bit further, we come to the question: What are the key factors
that determine a country’s influence in international rule-​making? One answer
is: the material strength of a country, especially its total economic output and
total trade volume, as well as its military strength, which is closely associated
with its economic strength.
The basic variables or facts that lead to changes in the global order lie
in the gradual change of balance between the major powers. The United
States and the European Union are the two most productive economies in
the world today, which provides them with the material basis for their dom-
inance in international rule-​making. In the past 30 years, major emerging
economies, especially China, have caught up in terms of economic size,
thanks to their economic growth rate and country size. Although there is
still a gap between having economic strength and having the influence to
make the rules, it is inevitable that the future world order will be adjusted,
if not profoundly changed, due to the rapid growth of emerging econ-
omies. If it seems reasonable that changes in power contrast lead to those
in the international order, the discussion over the future international order
can be translated into that over the long-​term economic growth of major
powers.
There are roughly six factors that determine the long-​ term economic
performance of a large country, that is, technological advance, quantity
and quality of the population, resource endowment, market size, economic
system, and currency-​circulation area. Technological advance includes the
introduction, imitation, and digestion of advanced technologies in addition
to independent innovation. A large population is one of the prerequisites for
becoming a great power. The quality of population mainly refers to the state
of human capital, especially the education level and working attitude of the
people. The abundance of resources and energy is good news for long-​term
economic growth but, in reality, it could also be a double-​edged sword. The
use efficiency of resources and energy largely depends on the institutional
infrastructure, which refers to the level of protection for property rights and
the level of respect for covenants in the international institutional environ-
ment. Market size affects the degree of professionalism and division of labor,
thus having a bearing on the improvement of labor productivity. The currency
circulation area refers to the extent to which a country’s currency is used in
global transactions, which mainly refers to the proportion of the currency
used for valuation, settlement and reservation. The unprecedented global use
of the US dollar has made the United States the largest beneficiary of the pre-
vious round of globalization.
In light of the three basic facts mentioned above, the dominant force of
today’s global order –​that is, the vested interests of the developed countries,
led by the United States –​has only one way out in the face of continuously
changing power contrast, that is, developing international rules in its own
favor to gain a new competitive edge over emerging countries. In this regard,
developed countries have established the Trans-​Pacific Partnership Agreement
 Preface xiii
(TPP) and the Transatlantic Trade and Investment Partnership (TTIP), as
important parts of their re-​globalization efforts.
The emerging countries represented by the acronym BRICS (Brazil, Russia,
India, China and South Africa) have initiated an endeavor to change the non-​
neutral international system. A typical example is the reform in voting rights
and quotas carried out in the IMF and the World Bank. The establishment
of the New Development Bank by the BRICS countries can also be taken
as an effort to challenge the international financial system dominated by the
developed countries. However, any attempt to shatter vested interests has
always been hardly assumed to be easy. The increasingly non-​neutrality of
international rules also compel emerging countries to consider how to live
with the current and future global order. For the BRICS countries, building
an alternative system that is parallel to and competitive with the one built by
the Western developed countries is definitely not an option, because an open
international trading system is needed by all. China, in particular, may need it
more than anyone else at the current stage of development.
At a time when the global order is under transition, the BRICS countries
also constitute one of the main variables that bring forth transformation. The
economic and political size of the BRICS countries is huge and developing
rapidly. It has already impacted the established international landscape and
“threatened” vested interests led by the United States, thereby becoming a
force America cautions against and exerts existing and potential constraints
on. For this reason, the BRICS countries need to make good use of their
cooperative mechanism to cope with and mitigate these pressures. In other
words, the BRICS countries must deepen cooperation in all areas to enable
the rise of emerging economies and developing countries as a whole.
So far, the BRICS countries have been passively accepting the current inter-
national rules. But as their strength grows, the BRICS countries will naturally
seek to make international rules more neutral. It is also worth noting that the
change of the international system will not happen overnight. Revolutionary
changes to the non-​neutral international order are neither realistic nor neces-
sary. What the BRICS countries need and can do in the next ten years is to
unite with other major emerging economies and seize opportunities to make
partial improvements to the existing international rules in a gradual and
orderly manner so that, over time, a real difference can be made.
For emerging countries like the BRICS, it is not only a necessity but also
a responsibility to assume greater international roles. The BRICS countries
need to abide by three principles when assuming international responsibil-
ities: one is that their responsibilities must be commensurate with their rights;
another is that they must take into account their national conditions, capabil-
ities and needs; the third is they must balance between short-​term and long-​
term benefits, as well as fractional and overall interests.
Zhang Yuyan
Member of the Chinese Academy of Social Sciences (CASS)
and Senior Fellow and Director of the Institute of
World Economics and Politics, CASS
Acknowledgements

As a nascent force in the global political and economic systems, the BRICS
countries are all emerging with great development potential and vitality. On
many major international and regional issues, the BRICS countries have
similar, if not the same, standpoints and views. All committed to promoting
world economic growth, improving global economic governance, and making
international relations more democratic, these countries have been active in
the establishment of new international political and economic orders. Since
the inception of the BRICS leaders’ meeting mechanism in 2009, the BRICS
countries have made remarkable achievements in practical cooperation in
many fields. A shining example is the establishment of the New Development
Bank and the BRICS Contingent Reserve Arrangement, which advanced the
BRICS to a new stage of institutional cooperation.
The complex geopolitical and economic situations nowadays have presented
many new challenges to the BRICS cooperation. Within the cooperative
mechanism, the overall economic growth of the BRICS countries continues
to slow down and diverge, which has become a constraint for maintaining
strong momentum of mutual cooperation. As time goes by, it will be increas-
ingly difficult for the BRICS countries to make major breakthroughs in new
areas of cooperation. This problem is also shared by many other international
negotiation and cooperation mechanisms after the “early harvests” are
achieved. Externally, unfavourable factors have emerged to hamper the devel-
opment of and cooperation between the BRICS countries. The obstruction
of some vested interests and blocs of countries makes it extremely difficult
for the BRICS countries to play an effective role in global governance. Worse
still, the new round of large-​scale exclusive economic and trade agreements
dominated by advanced economies is having an increasingly obvious impact.
As a result, voices about the collapse of the BRICS have emerged time and
again to undermine the motivation and confidence of the BRICS countries.
In the face of challenges, the BRICS countries choose not to retreat, but to
respond actively through closer cooperation. It was these common challenges
that enabled the BRICS countries to come together to communicate, col-
laborate, and support each other. And every major progress made through
cooperation has been achieved in the process of dealing with various risks
 Acknowledgements xv
and challenges and overcoming various obstacles. The BRICS countries
have strengthened policy coordination and brought into play complemen-
tary advantages as a viable way to promote robust, sustainable, and balanced
growth of the world economy. These efforts will lay a solid foundation and
create new opportunities for the cooperation between the BRICS countries
and will also exert positive influence on other countries.
The experience and lessons learned in the development of and cooperation
between the BRICS countries, as well the evolution of the BRICS coopera-
tive mechanism, have provided excellent materials for research. As a platform
for emerging economies to participate in global governance, the BRICS is a
new entry in the study of international issues. Serious research is worthwhile
in either the achievements it has made or the challenges it faces. Research
on the BRICS will not only focus on a series of realistic policy issues, but
also serve to expand the theoretical horizons, if not stimulating innovations
in theories. As the subject matter is comprehensive and interdisciplinary, we
have invited young and middle-​aged scholars from Chinese universities and
research institutions who have done a fair amount of research on the BRICS
countries to co-​author this book, so as to provide a panoramic view of the
BRICS cooperation.
This book is a result of the collective wisdom of every contributor.
Zhang Yuyan, Director of the Institute of World Economics and Politics,
the Chinese Academy of Social Sciences, and Director of BRICS Research
Base, put forward many constructive suggestions for the writing of this book
and composed an inspiring preface. The authors of each chapter have always
been supportive and cooperative to ensure the publication of this book. These
authors are: Xu Xiujun for Chapters 1, 2, 7, and 14; Ren Lin and Yin Jiwu for
Chapter 3; Zhou Fangyin for Chapter 4; Jiao Chuankai for Chapter 5, Gao
Shangtao for Chapter 6; Wang Hao for Chapter 8; Cai Chunlin for Chapter
9; Huang He for Chapter 10; Liu Wenge and Wang Lei for Chapter 11; Kang
Xiao for Chapter 12; Shen Yi for Chapter 13; and Lin Yueqin for Chapter 15.
The book was organized by Xu Xiujun. As the designer of the framework of
this book and the coordinator of writing, I witnessed the dedication and sin-
cere commitment of the scholars to promoting the cause of BRICS research.
When book was written and reviewed, Chen Guoping, Ding Yifan, Fan
Yongming, Feng Weijiang, Gao Haihong, He Liping, He Xinhua, Huang Wei,
Jia Zhongzheng, Li Dongyan, Liu Chang, Lu Tong, Pu Xiaoyu, Ren Lin, Song
Hong, Sun Jie, Tian Feng, Tian Ye, Wang Dexun, Wang Xin, Xi Yanju, Xiong
Aizong, Xue Li, Yao Zhizhong, Yu Yongding, Yuan Zhengqing, Zhang Bin,
Zhang Ming, Zhu Jiejin, Zou Zhibo, among others, provided the much-​needed
guidance and help. The reviewers of international issue research at the Chinese
Social Sciences Library offered many useful comments and suggestions for
the revision of this book. Some of the periodic results of the findings have
been published in World Economics and Politics, Journal of International
Studies, Foreign Affairs Review, International Review, International Forum,
International Economics and Trade Research, Comparative Economic & Social
newgenprepdf

xvi Acknowledgements
Systems, Frontiers, Financial Regulation Research, Social Sciences in Hunan,
Journal of Shenzhen University(Humanities & Social Sciences), among other
academic journals.
These journals have not only provided constructive suggestions directly for
the first draft of this book, but also served as a platform for extensive solicita-
tion of opinions for its revision and improvement. The book is funded by the
Innovative Academic Publication Project launched by the Chinese Academy
of Social Sciences. In addition, Dr. Wang Yin from China Social Sciences
Press contributed a great deal to the successful publication. The present
English version is published by Routledge. Here, we would like to express our
sincere thanks to all of them.
Last but not least, it is worth mentioning that although many have
contributed to the writing and publishing of this book, mistakes and omissions
may still be inevitable. We look forward to receiving any of your criticism and
suggestions for future revision and improvement.
1 
The BRICS studies
Academic approach and frontier issues
Xu Xiujun

Since Jim O’Neill put forward the concept of “BRIC”1 in 2001, the term has
invited extensive attention internationally, and more and more scholars have put
the BRICS countries (Brazil, Russia, India, China and South Africa) together
for BRICS studies. In 2009, the leaders of Brazil, Russia, India and China held
their first meeting in Yekaterinburg, Russia, and since then cooperation among
the four countries and their cooperation with the outside world has gradually
been on top of BRIC agendas, and BRIC studies have become increasingly
extensive and in-​depth. Currently, such studies involve a wide variety of areas
with a particularly prominent discipline-​crossing characteristic, and this offers
rich materials for academic exploration through BRICS studies. To clearly pre-
sent a picture of academic studies over the past 15 years on the issues concerning
the BRICS’s development and cooperation, and to promote further studies in
the future, this book, based on the review of the development and cooperation
of the BRICS countries –​South Africa joined in 2010 –​explores academic
approaches to BRICS studies. This book does so from the perspective of the
evolution and expansion of study topics, study perspectives, study methods,
study paths and study levels, and puts forward some hot research topics and
frontier issues based on contentious academic viewpoints.

1. New trend of BRICS’s development and cooperation

In general terms, the BRICS countries came together to form a close grouping
because of the shared interests of the five countries. Despite divergences in
terms of their history, cultures and social systems, the BRICS countries boast
a huge development potential as vigorous emerging-​market countries and
constitute both a new force in the global economic system and as an active
builder of the new international political and economic order. On numerous
significant international and regional issues, the BRICS countries share the
same or similar views and are all dedicated to pushing for world economic
growth, improving global economic governance, promoting democratization
of international relations and maintaining world peace. Since the founding of
the BRICS cooperative mechanism, the five member countries have achieved
a series of pragmatic cooperation fruits in the fields of trade, investment,
2 Xu Xiujun
finance, economic development and people-​to-​people exchanges and have
continuously pushed the cooperative mechanism towards a new stage. In the
meantime, the development and cooperation of BRICS has also encountered
some new problems and challenges.

1.1 A continuous rise in economic strength but with differentiated

economic growth
As a representative mechanism of global emerging economies, BRICS’s rise
has drawn extensive attention from the international community. The term
“rise” means the full elevation of comprehensive national strength, including
economic, political, military, scientific and technological and cultural
strength, but the rise of BRICS is particularly reflected in the rapid expan-
sion of its economic scale and the continuous increase of its comprehensive
economic strength. According to data from the International Monetary Fund
(IMF), the GDP of the BRICS countries calculated according to market-​
based exchange rates was $2.72 trillion in 2000, and it rose to $16.48 trillion
by 2015 –​6.1 times that of 2000 –​and the share of the BRICS countries cor-
respondingly rose from 8.2 per cent to 22.5 per cent of global GDP aggregate.
During the same period, the GDP of the BRICS based on the purchasing
power parity (PPP) calculation increased from 18.7 per cent of global total to
30.8 per cent (see Table 1.1).
Nevertheless, it should also be noted that the economic growth of the
BRICS has generally slowed down, which will be a drag on the robust driving
force of mutual cooperation among the BRICS countries. IMF data indicate
that the GDP growth rate of the BRICS was approximately 5 per cent in 2014,
much slower than the over 11 per cent in 2007.2 Alongside the general eco-
nomic deceleration, the BRICS countries have also witnessed differentiated
economic growth rates. According to the IMF data, India, China and South
Africa registered economic growth of 7.3 per cent, 6.9 per cent and 1.3 per
cent respectively in 2015, while the economic growth rate in Russia and Brazil
was -​3.8 per cent and -​3.7 per cent.3 Russia’s considerable economic slide was

Table 1.1 Changed economic aggregates of the BRICS

Year GDP calculated on market-​based GDP based on PPP

exchange rates

Scale ($100 Percentage of Scale Percentage of

million) global total (%) ($100 million) global total (%)

2000 27229 8.2 91709 18.7

2005 50350 10.7 145641 21.8
2010 117676 18.0 238925 27.1
2015 164838 22.5 349911 30.8

Sources: IMF, WEO, April 2016.

 BRICS studies: academics and frontiers 3
to a large extent linked to the economic sanctions it suffered from the West,
but its differentiated economic growth rate from other BRICS countries will
undoubtedly aggravate the divergent policy targets of the BRICS as a whole,
and add difficulties to economic policy coordination among the BRICS coun-
tries. Against this backdrop, some believe the “original colour” of the BRICS
has faded, and the pessimistic outlook, such as comparing the BRICS to a
combination of “gold” and “bricks”, has gradually become popular.

1.2 New breakthroughs achieved in pragmatic cooperation

in spite of growing challenges
As a group, the BRICS has developed into a multi-​layered cooperative mech-
anism that comprises summit meetings and other levels of meetings in various
fields, with ever-​ deepening cooperation among member states. A series
of cooperation outcomes achieved at the summit meetings has facilitated
more pragmatic cooperation among the BRICS countries (see Table 1.2).
A review of the main results of the BRICS summit meetings will find that
the cooperation of the BRICS has increasingly attached importance to pol-
icies’ planning and their implementation. Since the fourth summit meeting
in 2012, the five BRICS countries have begun formulating corresponding
action plans while issuing joint declarations, which has not only pointed to
the direction for next-​stage cooperation, but also offered bases for evaluation
of cooperation effects. It should be noted that two years after the leaders of
the BRICS countries decided in 2013 to set up the BRICS new development
bank and emergency reserve mechanism, this bank was formally opened (in
July 2015) and the emergency reserve arrangement was also formally put into
effect, meaning the cooperation of the BRICS begins to march towards the
stage of materialization.
Undeniably, just like the slow progress that many international negotiating
and cooperative mechanisms suffer in their late stages (although remarkable
progress has been achieved in their early stages), the BRICS is expected to
face increasing difficulties in its efforts to make major breakthroughs in some
new areas, as time goes by and previous space for cooperation is already filled.
The BRICS countries face a wide variety of cooperation areas, and in the
areas where they share common interests and concerns and where consensuses
could be easily reached, remarkable progress has been made. However, in
those areas where only slow progress has been achieved, they usually face
relatively large disputes or issues that are difficult to overcome. At the same
time, some unfavourable factors in the external world are disturbing the pro-
cess of the BRICS’s development and cooperation –​including obstruction
from some vested interest countries and groups of countries, which makes it
difficult for the BRICS to play its due role in global governance. For instance,
the failed implementation of the measures for IMF and World Bank reforms
has to a large extent restricted the voice of the BRICS in international affairs.
The exclusion of the BRICS countries from such large-​scale economic and
 newgenrtpdf
Table 1.2 Main cooperation fruits of the BRICS summit meetings

No. Time Venue Main fruits

1st meeting June 2009 Yekaterinburg Issuing a joint statement and ratifying a joint statement on global food security.
2nd meeting April 2010 Brasilia Issuing a joint statement on the second formal meeting of BRICS leaders, and holding an
entrepreneurs’ forum, a forum of banks and cooperatives and a meeting of think tanks.
3rd meeting September 2011 Sanya Publishing the Sanya Declaration and signing a framework agreement on financial cooperation
among the banks of the BRICS countries.
4th meeting April 2012 New Delhi Issuing the Delhi Declaration and its Action Plan, signing a general accord on multilateral local-​
currency credit authorization under the cooperative mechanism of the BRICS banks and an
agreement on multilateral letter of credit protection and conversion services, and discussing the
possibility of setting up a new development bank.
5th meeting March 2013 Durban Issuing the Durban Declaration and its Action Plan, publishing a cooperative framework on trade
and investment of the BRICS countries, setting up a business council and a think tank council of
BRICS countries, and deciding to set up the BRICS new development bank and an emergency
reserve mechanism.
6th meeting July 2014 Fortaleza Issuing the Fortaleza Declaration and its Action Plan, signing the agreements on the establishment
of the BRICS new development bank and emergency reserve and signing an accord on bank
cooperation among the BRICS countries, and a memorandum of understanding on technical
cooperation among export credit and insurance agencies of the BRICS countries.
7th meeting July 2015 Ufa Issuing the Ufa Declaration, formulating an economic partnership of the BRICS countries, passing
an e-​commerce cooperation framework, signing an inter-​central bank accord on the BRICS
emergency reserve arrangement, and holding the first council meeting of the newly established
BRICS new development bank.
8th meeting October 2016 Goa Issuing the Goa Declaration, signing of the Regulations on Customs Cooperation Committee of the
BRICS, signing of the MoU for Establishment of the BRICS Agricultural Research Platform,
endorsing the Goa Action Plan
9th meeting September 2017 Xiamen Issuing the Xiamen Declaration, endorsing BRICS Action Agenda on Economic and Trade
Cooperation, BRICS Action Plan for Innovation Cooperation (2017–​2020), Action Plan 2017–​
2020 for Agricultural Cooperation of BRICS Countries, and Action Plan for the Implementation
of the Agreement between the Governments of the BRICS States on Cooperation in the Field of
Culture (2017–​2021)

Source: Based on the website of China’s Foreign Ministry.

 BRICS studies: academics and frontiers 5
trade agreements as the Trans-​Pacific Partnership (TPP) and the Transatlantic
Trade and Investment Partnership (TTIP), dominated by developed econ-
omies represented by the United States, will bring negative impacts to the
economic and trade development of the BRICS.
A review of the development and cooperation conditions of the BRICS
will find that the grouping faces both positive and unfavourable factors, thus
resulting in differentiated perceptions and appraisals of the BRICS. Optimists
still approve of the huge development and cooperation potentials of the
BRICS and its positive role in international society, while pessimists usually
excessively focus their sights on the differences and disputes among the BRICS
countries as well as numerous problems and challenges BRICS’s development
and cooperation have encountered. For researchers, what is inspiring is that
ever-​growing disputes on this issue have attracted more and more scholars to
join the studies on and discussions about the issues related to BRICS, thus
giving rise to diverse topics and methods for BRICS studies and bringing new
trends for such studies.

2. Academic approaches to BRICS studies

BRICS studies can be roughly divided into two stages, with the first meeting of
the leaders of Brazil, Russia, India and China in Russia, in 2009, as the water-
shed. BRICS studies before this time mainly focused on discussing the devel-
opment issues of BRIC as a representative of the emerging markets, in which
the four countries, all possessing unique characteristics, were put together
for the BRIC studies. In the second stage, studies have been expanded to
discussions on cooperation of BRICS as a representative of emerging nations.
In these studies, the BRICS countries are put together, since the five countries
share common interests and concerns. The continuous scope expansion of
BRICS studies has offered sufficient materials for academic discussions about
such studies. Given that the BRICS studies have not formed a research discip-
line in the international academic circle, we would like in the following –​based
on the development reality of domestic and foreign studies of BRICS –​to
trace its development and evolution. Through the review of academic studies
on the development and cooperation of BRICS over nearly 15 years, we will
show that the evolution of these studies is mainly embodied in the evolu-
tion and expansion of study topics objects, study perspectives, study methods,
study paths and study levels.

2.1 Study objects: from “country-​specific study”, to “trans-​regional

cooperation” and “global governance”
The BRICS studies started from country-​specific studies, which have so far
remained important components of the studies in this area. Country-​specific
studies on BRICS mainly concentrated on country-​ specific comparative
studies, making comparisons between the BRICS countries and between
6 Xu Xiujun
them and other economies to find out similarities and differences and explain
BRICS’s long-​term outstanding economic performance. Since Jim O’Neill
raised the concept of a set of four counties, more and more scholars have
acknowledged the increasingly important role of BRICS in international eco-
nomic and political domains, and country-​specific studies under the concept
of BRICS have so far been one of the basic components of the studies on the
BRICS-​related issues. Such studies involve not only economic growth and
development topics of the BRICS but also the foreign economic exchanges
of the five countries and their influences.4 Many of these studies centre on
making comparisons within the BRICS and making comparisons between the
BRICS countries with other countries in the economic and social fields.5 Since
BRIC’s first foreign ministers’ meeting in 2006, there have been increasing
numbers of studies on BRICS’s cooperation from the perspective of trans-​
regional matters. These studies involve both analyses of the basis, dynamics
and prospects of that cooperation from a practical perspective and the scru-
tiny of and discussion on such a new-​type of cooperation model from a theor-
etical perspective.6 As increased attention is paid to issues concerning global
governance after the 2008 international financial crisis, and with the establish-
ment of the BRICS leaders’ meeting mechanism, more works have appeared
that analyse, from a global perspective ,the influences of the BRICS cooper-
ation on global governance and the world order. These works are among the
hot topics of BRICS studies.7

2.2 Study perspectives: from “economics” to “international

political economics”
As emerging-​market economies, the BRICS first drew extensive attention from
the economic circle, and the fruits of early-​stage BRICS studies were almost all
from the experts and scholars in this domain. Aside from Jim O’Neill and the
Goldman Sachs team, some domestic economists have also analysed the value
and influence of the BRICS from an economic perspective and the challenges
it faces.8 Since the founding of its leaders’ meeting mechanism, the BRICS has
realized an essential transformation from an economics concept to a dialogue
and cooperation platform. The creation of such a new-​typed cooperative
model has given rise to some theoretical and practical issues difficult to elu-
cidate in pure economics theories, thus broadening academic visions on the
BRICS studies and causing researchers in international strategy, international
politics, international relations and diplomacy to shift their attention to those
studies and discuss the building of the BRICS cooperative mechanism and
its strategic role.9 In recent years, the two strands of research personnel have
increasingly converged with each other and integrated, and the BRICS studies
under international political economics have been booming. Some made pro-
found analyses of the influences of the BRICS on international relations, the
transformation of the world order as well as the changed international polit-
ical economics topics and paradigms.10
 BRICS studies: academics and frontiers 7

2.3 Study fields: from investment to multi-​fields

The concept of the BRIC originated from good-​looking economic growth
performances of the four emerging-​market economies and their relatively
huge economic growth potentials that were viewed as markets with a broad
investment prospect.11 As a representative of the emerging markets and
developing economies, the investment markets of the BRICS countries
have received extensive attention on the grounds that the BRICS coun-
tries can offer tempting investment returns, and that the investment studies
on the BRICS can offer an important enlightenment to other emerging
markets.12 The tradition of viewing the BRICS as an investment concept
gains its continuity from the scholars engrossed in investment studies
and the economists engaged in investment analyses. With the deepening
of such studies, the fields of study have continuously expanded. In the
field of trade, study topics include the economic and trade cooperation
mechanisms of the BRICS countries, trade facilitation, prospects of trade
as well as feasibility analyses regarding the establishment of free trade
zones and so forth.13 Concerning monetary and financial cooperation,
study topics involve the financial development of the BRICS and its finan-
cial and monetary cooperation.14 In the field of energy, study topics cover
the BRICS’s energy consumption and its cooperative mechanisms and pol-
icies.15 In the area of politics and security, study topics include geopolitics
and military security as well as the influences of BRICS cooperation on the
international security pattern.16 Besides, there have also emerged some new
study areas, including innovative development, corruption, cyber govern-
ance and so forth.17

2.4 Study paths: from “policy studies” and “strategic analysis”

to “approach discussions”
Policy studies on the BRICS mainly comprise two aspects, namely studies
on the decision-​making of the BRICS investment and operation on the
corporate level and studies on the BRICS foreign policy studies at the gov-
ernment level. At the corporate level, relevant studies mainly focus on ana-
lyses of the development status quo of the BRICS, its business environment
and operation, as well as its investment opportunities, to offer supports for
enterprises’ decision-​making.18 On the government level, researchers mainly
come from the government departments of the BRICS countries and the
research institutes under their financial supports, and relevant studies focus
on the analyses of the BRICS’s cooperation status quo, problems and poten-
tial, to put forward policy proposals on deepening and expanding the BRICS
cooperation, based on study results. After the process of the BRICS cooper-
ation was started, the topics of policy studies began to be elevated to the
strategic level for discussions, and since then strategic analyses have become a
8 Xu Xiujun
new focal point of attention. Studies in this aspect both include scholars from
the BRICS countries –​who mainly focus their studies on the development
and cooperation of the BRICS from a strategic perspective –​and scholars
from the United States and European countries –​whose studies mainly centre
on the analysis of the strategic influences of the BRICS on the regional and
global level. In recent years, there has also emerged another branch of BRICS
studies, one which seeks to make theoretical explanations on the development
and cooperation issues of the BRICS to promote their theoretical advance-
ment and innovation. These studies try to explain the motivation of the
BRICS cooperation and the prospect of its mechanisms building from the
perspectives of state power, common interests, identity consciousness, system-
atic non-​neutrality, and political games, and based on a corresponding theor-
etical framework.19

2.5 Study levels: From “physical level” to “institutional and idea levels”
The evolution of the levels of the BRICS studies can be divided into
three: physical level, institutional level and idea level, if seen from the per-
spective of transverse section or a static state. From a historical or dynamic
perspective, the academia paying attention to the themes of the BRICS
studies have reflected the trend of such studies evolving from the physical
level to institutional level and idea level. Currently, those studies still exist
that focus on the changes of the investment value and economic strength of
the BRICS countries, and they constitute a major team of the BRICS studies.
However, as the BRICS countries actively participate in the making of inter-
national rules, there have emerged some new studies on the BRICS, such as
those on the influence of the BRICS cooperation on the identity awareness of
the BRICS countries, on international systems and rules, and on conceptual
innovation of international cooperation. For example, such studies include
not only analyses of the BRICS cooperative system and its role in the forging
of international systems and rules, but also analyses of the influence of the
BRICS on international cooperation, innovation of the global governance
model and concepts as well as the forging of the international order.20
All in all, the studies on the development and cooperation of the BRICS
has continuously evolved in the past ten-​plus year, gradually shifting from
unitary-​dimensional studies to multilayered, diverse and systematic studies,
and making the BRICS studies increasingly become a new, transdisciplinary
study field.

3. Main topics of current academic contentions

In recent years, the BRICS countries have had differentiated economic
performances, thus giving rise to divergent perceptions on their develop-
ment prospects. Meanwhile, with the continuous expansion of the team of
the BRICS studies and the deepening of such studies, the perceptions in the
 BRICS studies: academics and frontiers 9
academic circle on the BRICS’s cooperation status quo and cooperation
prospects have also gradually become diverse and even diametrically opposite
on some issues. Concerning the future development of BRICS, current aca-
demic disputes are mainly reflected in five aspects, as described in the following
sections:

3.1 Driving force of the BRICS: weakened or strengthened?

In recent years, the emerging economies, including the BRICS countries, have
generally witnessed economic slowdown, and the important factors that previ-
ously bolstered their economic growth have experienced cyclical changes. For
example, the previous low interest rates-​based credit cycle, the cycle of high
prices-​marked commodity prosperity, the large-​scale investment cycle, the cycle
of reforms aimed at releasing economic potentials, and the multilateralism-​
featured global open-​up cycle are all undergoing adjustments.21 Because of a
continuous declining and differentiated economic growth of the BRICS coun-
tries, along with the negative effects resulting from some geopolitical factors,
pessimistic viewpoints on the BRICS, such as a “fading BRICS”, a “BRICS
in recession” and “five fragile countries”, have increasingly run high. Such
tones are over-​pessimistic, but objectively speaking, the existence of nega-
tive factors alongside positive ones will inevitably produce certain negative
influences on the future development and cooperation of the BRICS.
Regarding economic development, the long-​term factors that bolstered
the economic growth of the BRICS have experienced cyclical changes, and
the general economic slowdown of the BRICS countries is very likely to be
a middle-​and long-​term trend, which will inevitably weaken the foundation
and impetus of the BRICS cooperation. On the other hand, given that the five
BRICS countries have all started a new round of reform plans, encompassing
measures to advance structural adjustments and upgrading, to promote
industrial growth and to improve the business environment, the “dividends”
expected to be released by these reforms will help to continuously maintain
the current sustainable middle-​and high-​speed economic growth. Generally,
the BRICS countries will still maintain relatively high economic growth, and
the demographic, resources and market advantages they enjoy will sustain
their long-​term economic development. The ongoing economic slowdown has
underscored the necessity and importance of deepened cooperation among
the BRICS countries, especially in the fields of global governance and mutual
pragmatic cooperation.
Due to different national conditions and being relatively far apart geo-
graphically, along with their differentiated economic growth, the BRICS
countries face varying interests and concerns and, thus, have divergent policy
agendas and arrangements. Of the five countries, Russia views the Eurasian
Economic Union and the BRICS as two prioritized targets of its foreign eco-
nomic cooperation; India hopes to use the BRICS cooperative mechanism
as a platform to help it play a big-​power role and enhance its importance in
10 Xu Xiujun
developing ties with the United States. South Africa hopes to take advantage
of the BRICS cooperative platform to boost its international clout and pro-
mote its economic development. However, due to domestic political factors,
South Africa’s role in advancing BRICS cooperation would be limited. Brazil’s
policy priority is to promote South American regional cooperation, so cooper-
ation with other BRICS countries is not a prioritized target of its foreign
economic cooperation. At the same time, the BRICS countries view a wide
variety of areas for cooperation, and some significant progress has already
been made in areas where consensuses can be easily reached. Meanwhile, in
other areas where they have relatively large differences, they face more barriers
to cooperation. Under these circumstances, how to dig out common interests,
coordinate mutual disputes and tap new development potential pose as major
challenges for the BRICS countries to further advance cooperation.

3.2 Orientation of the BRICS: economic partners or political allies?

From a realistic perspective, there exist numerous contradictions and
disputes among the BRICS countries in terms of political systems, reli-
gion, culture and military security. Due to this reality, some scholars hold
that the BRICS countries should aim their cooperation at establishing
partnerships –​economic partnerships in particular –​other than political
cooperation on the deeper level, which they believe is neither realistic nor
necessary.22 In reality, economic cooperation has always been a prioritized
agenda of the BRICS on which most notable progress has been achieved.
At the July 2015 Ufa summit meeting in Russia, the leaders of the BRICS
countries approved a document on the establishment of economic partner-
ship and comprehensively mapped out an interconnectivity development
pattern such as integrated markets; multilayered circulation; interlinked sea,
land and air transport; and broader cultural exchanges, further ramping up
the BRICS economic partnership.
Meanwhile, the leaders of the five BRICS countries are dedicated to
forging an all-​round partnership. At the seventh BRICS summit meeting in
2015, Chinese president Xi Jinping elaborated on the connotations of the
BRICS partnership and defined it in four aspects: a partnership aimed to
maintain world peace, to promote common development, to carry forward
multiple civilizations and to strengthen global economic governance.23
Since the Ukraine crisis, Russia has more valued the political and strategic
role of the BRICS mechanism, hoping to take advantage of the BRICS
platform to deal with the threats and pressures from the United States
and the European countries; to ease its ongoing economic, political and
security dilemmas; and to maintain its international status as an important
polar of the world. To guarantee stability and sustainability of cooperation
and play a bigger role in the international society, other BRICS countries
also hope to set up a de facto economic bloc or alliance in which they can
give each other mutual support.
 BRICS studies: academics and frontiers 11
It is worth noting that in recent years correlation of global economic and
political issues has become increasingly enhanced, and it is difficult to separate
political considerations from economic issues. In this context, even if BRICS
orientates its cooperation in the economic realm, but with the deepening
of such kinds of cooperation, the spillover effects on the political field is
unavoidable. It is exactly because of this that some scholars view the BRICS
as an economic and political union.24 As important regional powers, the five
BRICS countries are all aspired to maintain or become a political power aside
from their endeavours to realize economic rise and seek a higher international
status. It is relatively difficult to build a political alliance in traditional term
at a time when peace is generally maintained among global powers and there
still exists political competition among some BRICS countries, but it seems
to be a trend of deepened cooperation to include political and security issues
in the BRICS cooperative framework.

3.3 Mechanism of the BRICS: informal or formal?

Some international institutions founded by the developed economies
represented by the United States after World War II, such as the United
Nations, the International Monetary Fund, the World Bank and the World
Trade Organization, are all formal bodies that have regular headquarters
and independently running mechanisms. Due to their explicit constitutions
and rules that have a binding force on member states, such formal bodies
usually exert greater influence. The very existence of these international
bodies facilitate Western countries maintaining their hegemonic status
and vested interests. Meanwhile, informal forum mechanisms have also
emerged such as the Asia-​Pacific Economic Cooperation (APEC), G20 and
the BRICS, the creation of which illustrates from another side the exist-
ence of numerous faults in established international economic and political
mechanisms, and it is difficult for them to resolve the new problems facing
international society. This also testifies that the prevailing international
economic and political systems are still under adjustment, reform and
transformation, and far from taking shape. At a time when comparison of
international powers is under constant change, it is difficult for any single
country to completely dominate the establishment of a new, formal global
international organisation.
There always exist two different views on the prospect of institutionalized
development of the BRICS. One view is that the BRICS should keep its
current form as an informal forum and become a loose, but not disintegrated
economic cooperation mechanism or economic-​interest community. The
reason, this view claims, is that the BRICS does not yet possess a founda-
tion for becoming a formal mechanism, and its priority should be to seek
areas where they can conduct pragmatic cooperation and achieve substan-
tial progresses. Without essential cooperation as a prop, any rush to embark
on institutionalized development may into a kind of restraint or barrier.
12 Xu Xiujun
On the other hand, the present cooperative framework can satisfy the
BRICS countries’ demands for dialogue and consultations at various levels.
Furthermore, an informal forum is more flexible and can offer a broader
space for the BRICS countries to make policy adjustments. The other view is
that the BRICS countries should be devoted to establishing a formal organ-
isation, because that informal forum is relatively loose and lacks a binding
force, which will not only affect their efficiency of decision-​making, but will
also undercut the implementation of any decisions. Currently, the BRICS
countries have set up a new development bank and an emergency reserve,
which will lay a foundation and accumulate experience for institutionalized
cooperation of the BRICS. Therefore, this view insists, under the current
BRICS cooperative framework –​which comprises the leaders’ summit
meeting as the core, the ministers’ and special senior officials’ meeting as
the prop, and the annual meeting of think tanks as the supplement –​it is
not difficult for the BRICS to set up the secretariat, which is believed to be
particularly necessary to promoting mutual cooperation and expanding its
international influences.
For better cooperation, the five BRICS countries should weigh the pros
and cons of the formal and informal mechanisms and make a prudent choice
between the two. It is expected that, in the foreseeable future, debates will
continue involving whether the BRICS should formulate its organizational
constitution for its cooperative mechanism and set up a secretariat (if it does),
when and how will it lay down corresponding rules.

3.4 Membership of the BRICS: open or exclusive?

Since the establishment of its cooperative mechanism, the BRICS has always
adhered to an “open and inclusive” approach to ties with other countries,
which can be reflected by the following two milestone events.
The first is the absorption of South Africa into its cooperative mechanism,
which realized the BRIC’s expansion of member states for the first time since
its establishment. At the G20 Seoul summit in November 2010, South Africa
applied to join the BRIC. In December of the same year, the four BRIC coun-
tries accepted South Africa as a formal member, expanding the BRIC to the
BRICS. The inclusion of South Africa makes the BRICS a cooperative mech-
anism that is more representative of the emerging markets and developing
economies. From a geographic perspective, the BRICS countries range from
Asia, Europe and Africa to South America, four of the five continents; from
a demographic perspective, the population of the BRICS countries accounts
for nearly 51 per cent of the total population of the developing countries;
from the perspective of land area, the BRICS countries occupy approxi-
mately 40 per cent of the total land area of developing countries. When it
comes to economic size, the BRICS countries account for over 60 per cent of
the total GDP of the developing countries if calculated according to market
exchange rates.
 BRICS studies: academics and frontiers 13
The second is the creation and expansion of the “BRICS plus” recip-
rocal cooperation model. In recent years, the BRICS has held an “open and
inclusive” approach, continuously expanding mutual beneficial cooperation
with more countries and regions, and successfully exploring a “BRICS plus”
cooperative model with the BRICS as the core. After their fifth meeting, the
leaders of the BRICS countries held a dialogue in March 2013 with the leaders
from 15 African countries, themed “releasing African potentials: cooperation
between the BRICS and Africa in infrastructure”, discussing the path of open
cooperation. In July 2014, the leaders of the BRICS and Latin American coun-
tries held a dialogue, themed “a sustainable solution program for inclusive
growth”, establishing a platform to connect the BRICS to the Latin American
market. In July 2015, the leaders of the BRICS countries and the Shanghai
Cooperation Organization members and observer nations, the Eurasian
Economic Union, and invited countries and international organizations held
a dialogue, extending the BRICS’s reciprocal cooperation with the outside
world to the Eurasian continent.
Despite above-​mentioned moves, the openness of the BRICS is still under
suspicion, such as suspicions over non-​transparent standards on the BRICS
membership, and suspicion over the BRICS no longer accepting new members,
which is interpreted as a plan to develop itself into an exclusive mechanism.
Following South Africa’s inclusion, Mexico and Egypt also expressed a desire
to join the BRICS. Concerning the issue of the BRICS’s membership expan-
sion, one viewpoint holds that BRICS should keep its current membership
scale unchanged, and not absorb new members within a certain period of
time, and that those with a wish to join can be accepted as observers. The
reason for this viewpoint is that new members may add difficulties to their
mutual accommodation, and to mutual policy and interest coordination.
Another viewpoint holds that BRICS should expand its membership at an
appropriate time because, it argues, only after BRICS absorbs more members
and brings in more developing countries can it have a larger voice on the
international stage. Which viewpoint is more scientific and more applicable to
BRICS is yet to be confirmed, but the formation of scientific standards and
rules for accepting new members is not an easy task.

3.5 Functions of the BRICS: constructive or alternative?

It has always been a contentious topic whether the BRICS is a builder of
or a challenger to the established international economic and political order,
and positions have become particularly heated since the establishment of the
BRICS new development bank and emergency reserve arrangement. To meet
funding demands from the BRICS countries themselves –​and from other
emerging markets and developing countries –​for infrastructure construction
and sustainable development projects, the leaders of the BRICS countries
signed an agreement in July 2014 on the establishment of a BRICS devel-
opment bank, headquartered in Shanghai and with an authorized capital of
14 Xu Xiujun
$100 billion. The new bank was formally opened in July 2015. At the same
time, the leaders of the BRICS countries also inked an emergency reserve
arrangement with an initial fund of $100 billion and smoothly completed
domestic ratification procedures, officially making the agreement effective.
For the BRICS countries, the establishment of the new development bank is
aimed to make up for the fund gap in global infrastructure construction and
sustainable development, while the emergency reserve arrangement is to offer
liquidity through currency swaps to deal with the pressures resulting from
actual and potential short-​term payment imbalances and to strengthen the
global financial security network.
In this sense, the bank and the reserve can both serve as supplements to global
multilateral and regional financial institutions in the field of development,
other than a challenge or an attempt to fundamentally change the extant inter-
national monetary and financial facilities. However, quite a few people hold
that the BRICS countries do try to challenge the established international
monetary and financial system and seek replacement of the current inter-
national establishments. In the broader scope of international economic and
political institutional reforms, many scholars acknowledge that the BRICS
has played a supplementary and constructive role in addressing the unfair and
unreasonable aspects of the international system rather than seeking to con-
front the international system led by developed countries.25 Meanwhile, some
other scholars argue that the BRICS countries are building, parallel to the
established system, a regime that will fundamentally change the structure of
the existing international system.26 In addition, some believe that the BRICS
cooperation is only an expedient and thus is difficult to shape as a united
entity to play an important role on the world stage.27
The rise of the BRICS will unavoidably change the global balance of
power in various fields. The breaking of the established equilibrium, as the
paramount anchor of the world order, will cause other world powers to take
a series of countermeasures until a new balance is re-​established. Under such
logic, the rise of the BRICS will be a road to starting the transformation or
rebuilding of the world order. In the trade, investment, monetary and finan-
cial domains, either emerging markets and developing countries or developed
economies are dedicated to building a new system of rules that can best reflect
their interests and concerns. However, undeniably, developed economies will
still play a major role in the building of the future’s world economic order. For
the BRICS, still in the process of rising, this will be a precondition to, and also
a restraint on, the re-​forging of the world economic order. Based on above
analyses, the BRICS’s path to the re-​forging of the world economic order
embodies two forms if reflected in institutional reforms. The first is ameliora-
tive institutional reforms, such as advancing governance reforms of the IMF
and the World Bank, and the second is constructive institutional supplemen-
tation, namely exerting its own role and influences through setting up new
mechanisms and agencies. Therefore, from the perspective of the BRICS, the
 BRICS studies: academics and frontiers 15
future world economic order will evolve in either of two directions –​setting
up an upgraded version of the established world economic order or setting
up a new order that runs parallel to the established world economic order.
Nevertheless, whichever economic order results will be decided by the polit-
ical game within the BRICS and between the BRICS and the dominant coun-
tries of the established world order. Under either of the two scenarios, the
BRICS will have to face huge challenges from both within and outside itself.

4. Conclusion
As emerging forces of international society, the BRICS countries not
only have a common foundation and numerous shared characteristics and
concerns in their economic development and foreign cooperation, but also
have numerous differences. It can be said that the BRICS is a community of
“solidarity but not uniformity”. It is just because of this that the BRICS, as
a new object of study, has undergone extensive academic controversies and
disputes, especially under the new circumstances brought about by the devel-
opment and cooperation of the BRICS. In a sense, it is exactly such hard-​
to-​bridge disputes that have exhibited the huge value and charisma of the
BRICS studies and attracted scholars from different disciplines to join the
team of the BRICS studies.
The BRICS studies mainly involve three disciplines: development eco-
nomics, international/​world economics, and international relations. However,
in terms of study objects, study perspectives, study methodology, study paths
and study levels, the BRICS studies have always been in the process of con-
tinuous expansion and deepening and have achieved numerous significant and
propulsive progress. As an important contribution, current BRICS studies
have promoted mutual references and blending of these disciplines and
formed a bond that connects national economic development, foreign eco-
nomic behaviours and the vicissitudes of the international structure, which
have constituted a general development artery of the BRICS studies. After
15 years of studies and accumulation, the academic circle has framed a rela-
tively comprehensive system for the BRICS studies.
For future’s BRICS studies, those hotspot issues of extensive concern are,
as usual, issues full of controversies. Currently, the academic circle is still
widely divided on such issues related to the BRICS studies as the impetus
of the BRICS’s development and cooperation, its orientation, the nature of
the BRICS cooperative mechanism, the openness of the BRICS, as well as
the function of the BRICS cooperative mechanism. Undoubtedly, discussions
and debates on these issues not only enable people to more thoroughly per-
ceive and understand the reality and future of the BRICS, but also can make
researchers from different disciplines and different fields review current the-
ories and methods, thus offering new fodders for theoretical innovations of
the BRICS studies and an area for new breakthroughs.
16 Xu Xiujun
All in all, with the profound adjustments of the global economy and the
BRICS economies, the economic strength comparison between the BRICS,
including China and the developed economies (including the United States)
will assume a new setting, and a new international economic and political
environment will bring numerous new challenges and uncertainties to the
development and cooperation of the BRICS. Meanwhile, the springing up of
a number of new circumstances, new problems, new fields and new proposals
has also offered space for studies on the challenges facing the BRICS cooper-
ation and the methods for settlement of these challenges. However, further
academic efforts are yet to be made to forge a theoretical framework that
can explain the emergence and development of the BRICS cooperative
mechanism.

Notes
1 Jim O’Neill, “Building Better Global Economic BRICs”, Global Economics Paper
No. 66, New York: Goldman Sachs, 2001.
2 The GDP growth rate of the BRICS is based on the weighting calculation of the
GDP aggregates of the five BRICS countries based on their PPP, and data from the
International Monetary Fund-​World Economic Outlook (IMD-​WEO) database.
3 IMF, World Economic Outlook Update: Slower Growth in Emerging Markets, a
Gradual Pickup in Advanced Economies, July 2015.
4 Sang Baichu, Zheng Wei and Tan Hui, “Comparative Studies on the BRICS’s
Service Trade Development”, Economist, No. 3, 2013; Ouyang Xiao, “The Big-​
Nation Effects of the Rise of the BRIC”, Economic Studies of Large Countries, Vol
2, 2010.
5 Chen Jiagui, “Comparative Studies on The Development Models of the BRIC”,
Outlook Weekly, No. 3, March 2010; V. Nadkarni and N. C. Noonan, Emerging
Powers in a Comparative Perspective: The Political and Economic Rise of the BRIC
Countries, New York & London: Bloomsbury Academic, 2013; Uwe Becker (ed.),
The BRICs and Emerging Economies in Comparative Perspective: Political Economy,
Liberalisation and Institutional Change, London & New York: Routledge, 2014.
6 Lu Feng, Li Yuanfang and Yang Yewei, “Cooperation Backgrounds and Prospects
of the BRICS”, International Politics Quarterly, No. 2, 2011; Yang Jiemian,
“The Purposes, Spirits and Institutional Building of the BRICS Cooperation”,
Contemporary World, No. 5, 2011; Wang Wei, “New Trends of Multilateral
Economic Cooperation”, Asia-​Pacific Economic Review, No. 2, 2012.
7 For relevant studies, see Huang Renwei, “The Rise of the BRICS and the Global
Governance System”, Contemporary World, No. 5, 2011; Huang Renwei, “The
Reform of the Global Economic Governance System and the New Opportunities
for the Rise of the BRICS”, Journal of International Relations, No. 1, 2013;
Pang Zhongying and Wang Ruiping, “Strategic Perception of the Relationship
Between the BRICS Cooperation and Improving Global Economic Governance”,
Contemporary World, No. 4, 2013; Fan Yongming, “The BRICS Cooperation under
the New Global Governance Pattern”, International Outlook, No. 4, 2014; Sijbren
de Jong, et al., New Players, New Game?: The Impact of Emerging Economies on
Global Governance, Amsterdam: Amsterdam University Press, 2012.
 BRICS studies: academics and frontiers 17
8 Stefano Pelle, Understanding Emerging Markets –​Building Business Bric by
Brick, London: Sage Publications, 2007; Li Yang, “The BRIC and International
Transformation”, Social Sciences Academic Press, 2011; Zhang Yansheng,
“Responsibilities of the BRICS in Promoting Even Development of Global
Economy”, Economic Monthly, No. 5, 2011; Li Xiangyang, “Common
Opportunities and Challenges Facing the BRICS”, Qiushi, No. 8, 2011.
9 Yang Luhui, “The BRICS: Mechanism, Character and Transformation”,
Theoretical Horizon, No. 11, 2011; Smith, J. A., “The BRIC becomes the
BRICS: Emerging Regional Powers? Changes on the Geopolitical Chessboard”,
Global Research, January 16, 2011; Zhao Kejin, “The BRICS Cooperation from
the Perspective of China’s International Strategy”, International Review, No.
3, 2014.
10 See: Dina Jaccob, Emerging Economies and Transformation of International
Relations: Evidence from the BRICS Members, Berlin: LAP LAMBERT Academic
Publishing, 2013; Vai lo Lo and Mary Hiscock, The Rise of the BRICS in the Global
Political Economy: Changing Paradigms?, Cheltenham & Northampton: Edward
Elgar Pub, 2014; Li, Xing (ed.), The BRICS and Beyond: The International Political
Economy of the Emergence of a New World Order, London: Ashgate Publishing,
2014; Wang Zhengyi, “A Study of BRICS Cooperation from an IPE Perspective”,
a speech delivered to an academic seminar sponsored by Fudan University titled
“Western Sanctions on Russia and their Influences on BRICS Cooperation”, Jan
22, 2015.
11 Goldman Sachs (ed.), The BRICs and Beyond, London: Goldman Sachs, 2007.
12 Zhang Yong, “Comparative Studies on the Reform and Development Models of
the BRIC –​Empirical Analysis from an Investment and Institutional Perspective”,
Research on Economics and Management, No. 12, 2008; Lawrence Wegeman Jr.,
BRIC, an Investment Tool, Pittsburgh: Dorrance Publishing Co. Inc., 2009; Julian
Marr and Cherry Reynard, Investing in Emerging Markets: The BRIC Economies
and Beyond, Chichester and West Sussex: John Wiley & Sons, 2010; Svetlana
Borodina and Oleg Shvyrkov, Investing in the BRIC Countries: Evaluating Risk
and Governance in Brazil, Russia, India, and China, New York: McGraw-​Hill
Education, 2010.
13 Cai Chunlin, A Study on the Economic and Trade Cooperative Mechanism of BRIC,
China Financial and Economic Publishing House, 2009; Liu Junmei, “BRICS
Studies Series –​Trade Facilitation: Consensuses on BRICs Cooperation”, Shanghai
People’s Publishing House, 2014; Xue Rongjiu, “Characteristics of Goods Services
of BRICS and Their Vision of Cooperative Development”, International Trade,
No. 7, 2012; Liu Wenge and Wang Wenxiao, “Analyses of the Feasibility of the
Establishment of FTA within BRICS and its Economic Effects”, International
Economic and Trade Research, No. 6, 2014.
14 N. Mwase and Y. Yang, “BRIC’s Philosophies for Development Financing and
Their Implications for LICs”, IMF Working Paper, WP/​12/​74, Washington
D.C.: IMF, 2012; Chen Yulu, “Economic and Financial Development of
BRICS: A Comparative Review –​Financial Development Characteristics
and Trends of BRICS (First half)”, View Financial, No. 5, 2012; Chen Yulu,
“Economic and Financial Development of BRICS: A Comparative Review –​
Financial Development Characteristics and Trends of BRICS (Second half)”,
View Financial, No. 6, 2012; Sang Baichuan, Liuyang and Zheng Wei, “Financial
Cooperation of BRICS: Status Quo, Problems and Prospects”, International
18 Xu Xiujun
Trade, No. 12, 2012; Huang Lingyun and Huang Xiujia, “A Study of the Influences
of BRICS Financial Cooperation on Global Economy –​A Empirical Simulation
Based on GTAP Model”, Economist, No. 4 2012; Liu Wenge and Lin Yueqin, “A
Road to Currency Cooperation of BRICS”, Capital Markets, No. 1, 2013.
15 Li Zhiguo and Du Xiuer, “Empirical analyses of Clean Energy Utilization in
BRICS and Its Energy Consumption Structure”, Asia-​Pacific Economic Review,
No. 3, 2012; Cao Guangxi, “Carbon Emission, Energy Consumption and
Economic Growth of BRIC”, Asia-​Pacific Economic Review, No. 6, 2011; Zhao
Qinsi, “Problems and Path of Energy Cooperation of BRICS”, International
Studies, No. 5, 2013; Liu Wenge and Wang Lei, “Analyses of Energy Cooperative
Mechanism and Policy Paths of BRICS”, Comparative Economic & Social
Systems, No. 1, 2013.
16 Kwang Ho Chun, The BRICs Superpower Challenge: Foreign and Security Policy
Analysis, London: Ashgate Publishing, 2013.
17 J.E. Cassiolato and V. Vitorino, BRICS and Development Alternatives: Innovation
Systems and Policies, London and New York: Anthem Press, 2009; Ning Youjun,
“Puzzlement of High Corruption and High-​ Speed Economic Growth –​An
Empirical Analysis of BRIC”, China Market, No. 5, 2011; Shen Yi, “Global
Cyberspace Governance and BRICS Cooperation”, International Review, No.
4, 2014.
18 Xinhua and Wikipedia, BRICS: A Guide to Doing Business in Brazil, Russia, India,
China and South Africa, Intercultural Publishing, 2012; Renata La Rovere et al.
(eds.), Entrepreneurship in BRICS: Policy and Research to Support Entrepreneurs,
Springer International Publishing Switzerland, 2015.
19 Samuel Twum Kwakye, The BRICS States and the Responsibility to Protect
Norm: Dynamics of State Power and Self-​ Interest, Berlin: LAP LAMBERT
Academic Publishing, 2014; Fabiano Mielniczuk, “BRICS in the Contemporary
World: Changing Identities, Converging Interests”, Third World Quarterly, Vol.
34, No. 6, 2013, pp. 1075–​1090; Xu Xiujun, “Systematic Non-​Neutrality and
BRICS Cooperation”, World Economics and Politics, No. 6, 2013; Gao Shangtao,
“Practical Theory and Practical Model: An Analysis of the Process of China’s
Participation in BRICS Mechanisms”, Foreign Affairs Review, No. 1, 2015; Zhou
Fangyin, “How Far Does BRICS’s Cooperative Mechanism Go? –​An Analysis of
the Process of State-​to-​State Power Games and the Basis of Interests”, People’s
Tribune, No. 22, 2014.
20 Wang Houshuang, Guan Hao and Huang Jinyu, “The Influences of the BRICS
Cooperative Mechanism on the Innovation of Global Economic Governance
System and Mechanism”, Asia-​ Pacific Economic Review, No. 3, 2015; Fan
Yongming and He Ping, “Concept of ‘Inclusive Competition’ and BRICS Bank”,
International Review, No. 2, 2015; Oliver Stuenkel, The BRICS and the Future of
Global Order, Lexington: Lexington Books, 2015.
21 Anders Åslund, “Why Growth in Emerging Economies Is Likely to Fall”, Peterson
Institute for International Economics Working Paper, No. 13–​10, November 2013.
22 Michael A. Glosny, “China and the BRICs: A Real (but Limited) Partnership in a
Unipolar World”, Polity, Vol. 42, No. 1, 2010, pp. 100–​129.
23 Xi Jinping, “Jointly build a partnership and create a beautiful future –​A speech
to the Seventh Leaders’ Meeting of BRICS Countries”, People’s Daily, July 10,
2015, p. 3.
 BRICS studies: academics and frontiers 19
24 Rich Marino, The Future BRICS: A Synergistic Economic Alliance or Business as
Usual?, Hampshire and New York: Palgrave Macmillan, 2014.
25 Zhu Jiejin, “Transformation of The BRICS Cooperative Mechanism”,
International Review, No. 3, 2014; Zhang Haibing, “BRICS Cooperation under
the Adjustments of the World Economy Pattern”, World Outlook, No. 5, 2014.
26 See: General L. Ivashov, “BRICS and the Mission of Reconfiguring the World: An
Alternative World Order?” The 4th Media, June 17, 2011; Cedric de Coning et al.
(eds.), The BRICS and Coexistence: An Alternative Vision of World Order, Oxon &
New York: Routledge, 2014.
27 Beausang-​Hunter, F.A., Globalization and the BRICs: Why the BRICs Will Not
Rule the World for Long, Hampshire & New York: Palgrave Macmillan, 2012.
2 
Non-​neutrality of international regimes
and the BRICS cooperation
Xu Xiujun

In June 2009, top leaders of Brazil, Russia, India and China held their
first meeting in Yekaterinburg, Russia, where they agreed on establishing
an annual meeting mechanism. This marked the shift of “BRIC”1 from an
abstract economic concept to a concrete international dialogue and cooper-
ation platform. Within two years, the BRIC cooperation expanded its mem-
bership for the first time to incorporate South Africa, the largest economy in
Africa, thus making “BRIC” into “BRICS”. The addition of South Africa
made BRICS a more representative cooperative mechanism for emerging
economies. Geographically, the BRICS countries are located respectively in
Asia, Europe, Africa and South America. The population of the five coun-
tries accounts for more than 50 per cent of that of all developing countries
and the total territorial area accounts for 40 per cent. Economically, the five
countries contribute about 60 per cent of the nominal GDP (measured by
market exchange rates) of all developing countries.2 The rise of the BRICS
countries reflects their growth in economic, political, cultural terms, among
other aspects, and marks a gradual shift of the BRICS’ role in global affairs
from peripheral to central. More importantly, the rise of the BRICS countries
will catalyze changes to the unreasonable distribution of interests in the inter-
national community and to certain unreasonable international rules.
In Historical Research, Arnold J. Toynbee uses a simple yet explanatory
model, that is, the concept of “Challenge and Response”, to explain how
civilizations rise and fall.3 This model reveals that the development and pro-
gress of a civilization, a state, or an institution are accomplished in the process
of continuously responding to external challenges. Likewise, the rise of the
BRICS countries and the formation of the BRICS cooperative mechanism
are precisely the results of their continuous response to the challenges in the
international community. This glaring example serves as further corrobor-
ation of the model. As latecomers to the international system, emerging coun-
tries stand in a relatively disadvantageous position in many fields. Therefore,
the existing global landscape constitutes an external challenge for their devel-
opment and progress. However, it is precisely because of these persistent
challenges that the BRICS countries put forward a shared strategy, that is,
 Non-neutrality of international regimes 21
cooperation among the five countries, as an important means to address the
common challenges. As they collectively respond to these challenges, the
BRICS countries have risen as a group.
The formation and development of the BRICS cooperative mechanism are
undoubtedly of paramount significance for strengthening economic and trade
cooperation and policy coordination among the five countries. However, the
international community has varied understandings and evaluations of the
BRICS cooperative mechanism and its future. Optimistic analysts believe that
at the national level, the BRICS countries have great investment potential and
broad prospects for economic development, which constitute the solid foun-
dation for the BRICS cooperation.4 At the international level, the BRICS
countries are breaking the long-​term monopoly of a few established powers
in the global economy, a robust trend that truly reflects the development
and progress of the international community.5 On the other side, pessimistic
scholars are more tempted to emphasize that the differences of the five coun-
tries in the political system, size of the economy, economic structure and cul-
tural legacy will undermine their potential to form a united whole.6 Among
the pessimists, Joseph S. Nye, an esteemed American scholar, has produced
several publications, in which he points out that the reason it is difficult for
the five countries to form a close alliance is that there is no “glue” that can
make the five countries stick together while mitigating their divergences and
differences.7 One of the focuses of these debates is how to evaluate the multi-
lateral cooperative mechanisms established during the rise of the BRICS
countries and their far-​reaching impact on the world today. This issue not
only entails an objective analysis of the status quo and future of the BRICS
countries, but also triggers rational thinking about the changes to global-​
governance mechanisms in this new era.
In some traditional power-​based theories, the global landscape takes shape
based on the comparison of national strength and the ranking of coun-
tries thus determined in the international system.8 Moreover, as American
hegemony has been established since the United States replaced the British
Empire as a superpower after World War II, some scholars have constructed
the “hegemonic stability theory” and the “hegemonic cooperation model” to
serve as the theoretical support for the so-​called “Pax Americana”.9 Among
them, Charles P. Kindleberger was the first to propose that the stable operation
of the international economic system requires a hegemonic state to bear the
“public costs”, based on the theory of public goods.10 According to this logic,
for an open and free world economy it is necessary to have a dominant power
as a supreme presence to ensure stability and development of the international
economic system. In a certain historical period, these theories provided a con-
cise explanation for the reality of the international community. However, since
the 1970s, the American hegemony has been on a downward slide.11 Although
the debate over the decline of American hegemony still lingers, the relative
decline in its strength has become an indisputable fact. According to the IMF,
22 Xu Xiujun
the share of GDP (measured by market exchange rates) contributed by the
United States had dropped from 35 per cent in 1985 to around 22 per cent in
2012.12 Therefore, the hierarchy of global economic governance established
by hegemonic powers is facing greater challenges: on the one hand, the rise
of emerging economies is challenging the absolute superiority of hegemonic
powers in terms of economic strength; on the other hand, the declining rela-
tive strength of the hegemonic powers has led to their weakening ability to
control international regimes and the rising costs to maintain the existing
system. These challenges have made the limitations of the traditional power
theories increasingly prominent. Therefore, it is time to reconsider the future
direction of the world and produce new theories to explain and evaluate the
rise of cross-​regional global-​-​governance mechanisms among emerging coun-
tries such as the BRICS cooperation.
In an increasingly institutionalized and interdependent world, inter-
national regimes are deeply embedded in the international community, and
state behaviours are often constrained by these regimes. But in essence, the
international regimes reflect the conflicting interests and demands of the
international actors. If the global landscape is defined as the relatively stable
or balanced rights and interests formed by a country or a group of coun-
tries in the world, then the status and role of a country or a group of coun-
tries is reflected by its rights and interests when dealing with other countries
in the world and subject to change when these rights and interests change.
Taking this as a logical starting point, this chapter attempts to examine the
reality and future of the BRICS countries from the perspective of regimes
and interests.

1. Multilayered BRICS cooperative mechanism

Today the global economic and political landscapes are witnessing accelerated
adjustments and changes, especially after the global financial crisis in 2008. In
the process, although the developed countries still dominate the current inter-
national order, there are obvious signs that the world’s political and economic
centres are shifting towards emerging countries. As a new force in global gov-
ernance, the BRICS cooperative mechanism has become an important plat-
form for consultation and dialogue among the five countries for addressing
global issues and therefore has a non-​negligible influence on the global-​
governance system. Since its inception a few years ago, the BRICS coopera-
tive mechanism has continuously made new progress.

1.1 Bilateral and multilateral cooperative mechanisms

At present, the BRICS countries are cooperating in a variety of ways,
including cooperation in global international organizations and institutions,
and through multilateral coordination mechanisms to complement one
another and seek common interests. They also endeavour to strengthen
 Non-neutrality of international regimes 23
political, economic and trade ties with one another through regional, cross-​
regional and bilateral cooperation, thus jointly building an effective network
of institution-​based cooperation.
First, the BRICS countries continue to expand bilateral cooperation
channels for enhanced mutual partnerships. Preliminary statistics show
that, from 1993 to 2013, eight pairs of partnerships were established among
the BRICS countries, and the partnerships between some countries have
been upgraded. For example the bilateral relationships between China and
Russia, China and South Africa and Russia and South Africa have grad-
ually developed from the original basic-​level partnerships into comprehen-
sive strategic ones.
Second, in the traditional global political and economic landscape, the
BRICS countries have continuously enhanced their influence and voice
in international political and economic affairs through mutual cooper-
ation and support. In the past decades, the BRICS countries were actively
supporting the United Nations as the core player in promoting international
peace and cooperation and were committed to developing cooperation and
exchanges within the framework of the UN system. As members of the
United Nations and the World Trade Organization, the five BRICS coun-
tries are collaborating on relevant areas through the International Monetary
Fund, the International Development Association, the International Bank
for Reconstruction and Development (World Bank), the World Health
Organization, the International Atomic Energy Agency and the World Trade
Organization. In so doing, they are playing an important role in addressing
and responding to global issues.
Third, the BRICS countries have established and joined various forms of
multilateral coordination and dialogue mechanisms based on their own real-
ities. In addition to the BRICS coordination mechanism, the Group of 77
(G77), the Group of 20 (G20) and the Group of 5 (G5) are also important
platforms for cooperation and coordination among the BRICS countries.
In recent years, a number of issues-​oriented coordination mechanisms have
also been established within the five countries. For example on the issue
of climate change, Brazil, China, India and South Africa have formed the
“BASIC”; on regional security and energy issues, China, India and Russia
have established a tripartite summit mechanism; on issues such as trade and
development, India, Brazil and South Africa have established the India-​
Brazil-​South Africa Dialogue Forum. These multilateral coordination and
dialogue mechanisms serve as new platforms for strengthening BRICS
cooperation and enhancing the status of developing countries in the global
political and economic system.

1.2 The institutionalization of the BRICS cooperation

The BRICS has gradually developed from a concept in the investment field
to a multilateral cooperative mechanism of emerging economies that plays an
24 Xu Xiujun
important role in the current international arena. In the process, the cooper-
ation between the BRICS countries has been enhanced and the mechanism
has been improved. At present, it has developed from a single-​layer foreign
ministers’ meeting to a multilayered cooperative mechanism featuring summit
meetings and covering varied fields.
Step one: The foreign ministers’ meeting mechanism was established. In
September 2006, as proposed by Russia, the foreign ministers of Brazil, China,
India and Russia held their first meeting during the UN General Assembly and
decided to hold a meeting annually thereafter. In May 2008 in Russia, the four
foreign ministers held their first meeting on the sidelines of the UN General
Assembly, where they issued a joint communiqué. In September 2011, the for-
eign ministers of the expanded BRICS gathered in New York for the first time
to exchange their views on the hottest issues in the international community,
such as the Libyan civil war, the Syrian civil war, the Palestinian–​Israeli conflict,
the reform of the international financial system, climate change, sustainable
development and counterterrorism. The establishment of the BRIC foreign
ministers’ meeting mechanism in 2008 strengthened the pragmatic cooperation
and international coordination between the member countries. More import-
antly, it foretold and facilitated the formation of the BRIC leaders’ meeting
mechanism.
Step two: The BRICS leaders’ meeting mechanism was established. In June
2009 in Yekaterinburg, Russia,, leaders of Brazil, China, India and Russia
held their first meeting to exchange views on the international situation, the
G20 Summit, international financial institution reform, food security, energy
security, climate change and future development direction of BRICS dialogue
and cooperation. As a result, the Joint Statement of the BRIC Countries’
Leaders was issued. The successful convening of the first meeting of the five
BRIC leaders marked the formation of the BRIC cooperative mechanism. By
2013, the BRICS leaders had met for five consecutive years. At these meetings,
the leaders proposed a series of specific measures to strengthen their cooper-
ation and coordination and promote pragmatic cooperation among the five
countries and developed plans for the positioning and future cooperation of
the five countries. These efforts served to promote the maturity of the dia-
logue and cooperative mechanism of the BRICS countries.
Step three: Multilayered consultation and exchange mechanisms were
established. In addition to foreign ministers’ meetings, the BRICS coun-
tries have established multilayered cooperative mechanisms such as regular
meetings of senior security representatives, meetings of ministers from specific
fields, meetings of facilitators and irregular communication between resident
multilateral agencies, under the overall framework of the leaders’ meetings.
During the leaders’ meetings, relevant departments and organizations
of the BRICS countries also hold various forms of supporting activities
such as entrepreneur forums, banking associations, cooperative forums,
think -​tank meetings, financial forums, business forums and economic and
 Non-neutrality of international regimes 25
trade ministerial meetings. These activities provide effective platforms for
strengthening cooperation and exchanges in various fields.
Step four: The BRIC cooperation expanded to incorporate another
member. Since the inception of the BRIC cooperative mechanism, its huge
development potential has aroused the attention of the international com-
munity, especially emerging countries. In November 2010, during the G20
Summit in Seoul, South Korea, South Africa filed a formal request to join
the cooperation. In December 2010, Brazil, China, India and Russia unani-
mously decided to incorporate South Africa as a full member of the BRICS.
This marked the first expansion of the cooperative mechanism since its estab-
lishment. The expansion demonstrates not only the attraction and vitality of
the mechanism, but also that the BRICS cooperation is becoming deeper and
wider.13
In short, the BRICS cooperative mechanism has step by step developed
an informal multilayer cooperative structure that allows flexible decision-​
making and stresses practicality. Nevertheless, the development and improve-
ment of the cooperative mechanism might still be affected, if not interfered
with, by both internal and external factors, and these factors could increase
the difficulty and complexity of establishing an even-​closer and more-​efficient
cooperative mechanism among the BRICS countries. But overall, there are
more positive factors than negative ones. The BRICS cooperative mechanism
still has great potential for further development in the next few years. The
BRICS countries stick to the principles of “openness, solidarity and mutual
assistance” in their joint effort to advance inclusive and non-​confrontational
cooperation in a gradual and practical manner. These principles and attitudes
show strong attraction and vitality in creating positive factors for the devel-
opment of the cooperative mechanism and will ensure that the BRICS has a
greater role to play in global governance.

2. Non-​neutrality of international regimes and BRICS’s

demand for interests
In terms of global governance, the current international rules of the Charter
of the United Nations and the economic and financial rules of the Bretton
Woods system were all formulated under the leadership of developed countries
that have been taking firm control of major international institutions. Due to
the non-​neutrality of international regimes, these rules and institutions have
become important means and tools for developed countries to reap benefits
for themselves. The advance of the BRICS mechanism and the rising role and
status of the BRICS countries will inevitably facilitate changes to the unfair
and unreasonable distribution of interests in the world today and mitigate
the adverse effects of non-​neutral global governance. Traditional hegemonic
power groups consisting of one or more major powers will find it more diffi-
cult to accommodate the world’s ever-​changing political and economic system.
26 Xu Xiujun
The global landscape will witness a major shift from a traditional one fea-
turing dominance-​obedience relationships to a democratic one characterized
by equal participation, mutual benefits and win-​win results.

2.1 Non-​neutrality of global governance due to the

non-​neutrality of international regimes
Douglass C. North defines regimes as “the rules of the game in a society”, and
“they are the humanly devised constraints that shape human interaction”.14
It includes both formal rules such as a constitution and law, property rights
systems and contracts, and informal rules, such as norms, codes of conduct
and custom. In the most basic sense, regimes refer to a set of rules. The non-​
neutrality of regimes refers to a situation in which

the same regime treats people differently. In other words, what individuals
gain from the regime varies. Those who have already benefited from the
established regimes or may benefit from future regimes will undoubtedly
endeavour to maintain or fight for them.15

In other words, these regimes reflect the uneven distribution of rights and
interests. This can be understood in two ways: on the one hand, for the whole
society, the potential benefits or losses brought by a particular regime vary
by individual or group. Some groups or individuals benefit from the regime,
while others may suffer loss. On the other hand, for those who benefit or
suffer loss from a regime, the benefits or losses can be different. Moreover,
the non-​neutrality of regimes is ubiquitous in human society, not only for a
social group or a country, but also for the international community. Although
the establishment of most international regimes has been recognized by par-
ticipating countries that are said to be able to enjoy equal rights, the rules, the
decisions, and the actions taken accordingly usually mean different benefits
and losses for different participants.
In the era of economic globalization, the international structure is
different from that in the period when nation-​states depended less on
one another. It cannot be reflected simply by the sum of the absolute
strengths of all countries or a mechanical distribution of relative strengths,
but rather by an extremely complex international social network, which
is materialized in international regimes of various forms and functions.
Stephen D. Krasner has given a more comprehensive definition of inter-
national regimes. He believes that “international regimes can be defined
as sets of implicit or explicit principles, norms, rules and decision-​making
procedures around which actors’ expectations converge in a given area of
international relations”.16 Principles are beliefs of fact, causation and rec-
titude. Norms are standards of behaviour defined in terms of rights and
obligations. Rules are specific prescriptions or prescriptions for action.
Decision-​ making procedures are prevailing practices for making and
 Non-neutrality of international regimes 27
implementing collective choice. These principles, norms, rules and decision-​
making procedures may all lead to the transfer of national sovereignty,
infringement of state autonomy and restrictions on state behaviours, thus
posing varied challenges to the interests of nation-​states.
The advance of globalization will pose even more global challenges for
human society. These challenges go beyond the boundaries between countries
and cannot be properly addressed by any country alone. Therefore, it is neces-
sary for all countries in the world to join hands in facing these challenges. It
was in this context that global governance came into being. Global govern-
ance is a movement towards political consultation and cooperation among
governments, international organizations and citizens of different countries
to maximize their common interests. The key to global governance should be
improving and developing a new international political and economic order
dedicated to safeguarding security, peace, development, welfare, equality
and human rights. That order includes global rules and regimes that deal
with international political and economic issues.17 Therefore, international
regimes have an inseparable connection with global governance. Despite
the many legitimacy-​ related flaws, international regimes have developed
into an important carrier of global governance in the process of global-
ization.18 Representing the coordination and cooperation based on a com-
monly recognized international institutional framework, global governance
relies primarily on institutional networks of formal and informal rules. In
this sense, global governance is a collective action under an international-​
relations structure consisting of various international standards, norms and
mechanisms. However, due to the non-​neutrality of regimes, mechanisms
followed by global-​governance actions bring varied benefits or loss to different
countries or groups. That is essentially why global governance is branded as
“non-​neutral”.

2.2 Vested-​interest groups in global governance

In China, an interest group refers to “a minority group in the society who have
shared interests”.19 The goal of these groups is to create favourable conditions
for themselves by influencing national legislation or government decisions. It
is also possible for them to reap benefits by organizing governments or mon-
opolizing legislative bodies. A vested-​interest group is a special-​interest group
formed by illegal means or unreasonable institutional design. In other words,
it is formulated by people who enjoy vested interests in order to safeguard
those interests. A vested-​interest group only represents the rights and interests
of a limited group of people in the society and usually runs counter to the
public interest.
In the international community, there are also vested-​interest groups that
establish or monopolize international regimes to safeguard and realize the
interests of the group’s members by formulating international rules and
norms favourable to themselves. The existence of these groups mainly stems
28 Xu Xiujun
from three reasons. First, the international community has been an anarchic
society without a central authority. For a long time, the competition between
countries has followed the “jungle rule”, where the superpowers are able to
leverage their comprehensive strengths to build an international political
and economic order at their own will. Second, the international community
does not have effective monitoring and restraint mechanisms in place. The
substantial imbalance of the distribution of rights among participants in
the international regimes undermines their effectiveness. On the one hand,
weak and powerless participants are forced to accept the established regimes;
on the other hand, the strong and powerful have the privilege to transcend
these regimes.20 Due to the lack of effective supervision and restraints on the
established powers, it is difficult for latecomers to challenge the authority
of vested-​interest groups and rectify the unfair and unreasonable distribu-
tion of interests. Third, the public resources in the international community
are unreasonably distributed. For historical reasons, vested-​interest groups
have controlled most of the public resources in the international community,
including the pricing power of material resources and the right to formulate
international rules.
The unreasonable or illegitimate, yet objective, existence of these vested-​
interest groups have three characteristics: First, they are inadequately rep-
resentative of all countries. These groups represent only the interests of
a small number of countries, mostly developed countries and fall short
of representing the common interests of all countries in the world, or the
public interests of human society. Second, they are illegitimate. The vested-​
interest groups reap their benefits, that is, wealth and power, through abso-
lute strength and monopoly, rather than through equal, fair and reasonable
means. Third, these groups are ineffective in the distribution of benefits.
The vested-​interest groups’ protection and pursuit of their own rights and
interests have aggravated the unequal distribution of international social wel-
fare, resulting in the irrational allocation and waste of social resources and
net losses of social welfare. Therefore, the vested-​interest groups constitute
the greatest obstacle to the establishment of a new international political and
economic order. The reason is twofold: On the one hand, in order to maxi-
mize the interests of the group as a whole or of a particular member, vested-​
interest groups often ignore or disregard the global interests or those of other
countries; on the other hand, these groups have essentially dominated the
international community and enjoyed the absolute right to make decisions,
thus becoming the source of unfairness and instability in the international
community.
The most important and influential global-​ governance mechanisms
are established under the leadership of developed countries. In fact, in
the existing global-​ governance system, advanced economies are vested
interests that enjoy the lion’s share of the benefits generated from global
governance. In monetary and financial terms, the foreign exchange reserves
of all countries are mainly using the currencies of developed countries such
 Non-neutrality of international regimes 29
as the Euro, Yen and Pound in addition to the US dollar. The developing
countries remain vulnerable under the current monetary system because
the international community often exerts much more stringent financial
regulations on them than on developed countries. In terms of trade, as
developed countries have already established a sound industrial system
after a long-​term industrialization process, they enjoy an absolute com-
petitive advantage in the foreign trade of most commodities. On the other
side, as most developing countries have just started their industrialization
process, the influx of foreign products will undoubtedly have a huge impact
on their industries still in the development stage. Furthermore, certain
international rules such as textile quotas and agricultural subsidies are all
favourable to the developed countries. In terms of climate change, some
developed countries leverage their advantages in capital and technology
to connect climate change with trade policies and intellectual property
rights in the formulation of new international rules that are difficult for
developing countries to abide by –​doing so in an effort to consolidate and
develop their own vested interests.
Since the 2008 global financial crisis, the voice calling for reform in the
global-​governance mechanism has been rising, and certain reforms and
adjustments are moving towards a direction that is favourable to the emer-
ging markets and developing economies. But, overall, the international mon-
etary, financial and political security framework formed after World War II
has not yet seen any fundamental changes. Thanks to its stout comprehensive
strengths, the vested-​interest group composed of a few developed Western
countries establishes and leverages the international rules to protect and
expand its vested interests. Within this group, the United States is the most
influential and aggressive power. The way in which international rules are
established and implemented is obviously region-​specific and not subject to
a predefined standard. The vast majority of developing countries are forced
to accept the unfair international rules, as well as the production means and
lifestyles preset by developed countries.21
In short, the process of establishing a global-​governance mechanism and
implementing governance rules is bound to generate groups with varied
interests in the international community. At present, as the major beneficiaries
of the current mechanism, developed countries have formed a vested-​interest
group that monopolizes the distribution of international rights and interests.
Although the non-​neutrality of regimes is not necessarily inappropriate, the
inability of these non-​neutral institutions in coordinating and addressing the
inequality and unfairness reflected in the distribution of interests may cast a
shadow over the legitimacy of these regimes, thereby causing changes to them.

2.3 The BRICS’s interest appeals in global governance

In the early 1990s, in the aftermath of the Cold War, the world gradually
merged into a huge unified market. In the following decade, due to the
30 Xu Xiujun
reluctance of the BRICS countries to participate in global governance,
some scholars and analysts believed that those countries, as a cross-​
regional emerging economy group, had difficulty in achieving consensus in
global governance through coordination, and that the contradictions and
divergences among the five countries trump the consensuses. Although it
exaggerated the divergences of interests among the BRICS countries, this
view was not irrelevant.
For a long time, whether the BRICS countries can form a community of
interests has been widely questioned due to several reasons. First, the trade
ties among the BRICS countries were not close enough. Mutual investments
were maintained at a low level. Financial cooperation was in its infancy.
Cooperation in investment needed to be improved. Second, the BRICS coun-
tries varied greatly in terms of the political system and values. The BRICS
countries were different in their social systems, forms of government, religious
beliefs and values, as well as national character and consciousness. Third,
the BRICS countries were subject to external environmental constraints. In
many areas, BRICS countries were subject to the direct or indirect influence
of developed countries. As developed Western countries had long dominated
the international economic order, they feared their leadership in the global
economy might be challenged as the BRICS countries rose. Therefore, they
did not want the BRICS countries to form a community of common interests
and concerted actions.
Despite the above influence and interference, the BRICS countries had
already created the basic conditions for participating in global govern-
ance thanks to the continuous improvement of their own strengths and the
external environment. They increasingly made their own voices heard in the
international community. Consensus among them started to exceed their
divergences, and common interests were established. Therefore, they began to
seek changes to their long-​standing disadvantageous position in global gov-
ernance, which had increasingly highlighted the sensitivity and vulnerability
of their interests and constrained the further development of the BRICS
economy. The BRICS countries often stood at a disadvantageous position in
the global efforts to stabilize commodity prices, prevent financial regulation
from failing, establish a reasonable exchange-​rate mechanism, break invest-
ment and trade barriers, and promote trade balance. Even worse, they were
considered as having a submissive role in the international community. More
importantly, due to the non-​neutrality of global governance and the control
of the vested-​interest group over global governance, the position and role of
the BRICS countries in the international community had become incommen-
surate with their strengths. In recent years, with the improvement of their
strengths and the continuous expansion of their demand for interests in the
international community, the BRICS countries have begun to leverage global-​
governance platforms to put forward their plans and ideas. Voicing their own
demands and safeguarding their common interests have become necessities if
 Non-neutrality of international regimes 31
they seek further economic development and improvement of strength. There
are several reasons for this.
First, the BRICS countries aspire to continue enhancing their economic
strengths. In recent years, they have made substantial progress in economic
development. The BRICS economy has been increasing its contribution to
the world economy. Certain BRICS countries have achieved leap-​frog devel-
opment to occupy pivotal positions in the global economy. However, the per-​
capita income of the BRICS countries still falls far behind that of developed
countries. According to the 2012 data of the World Bank database, the nom-
inal GDP per capita of the G7 countries in 2011 was above US$36,000. That
of Canada and the United States reached US$50,300 and US$48,100 respect-
ively. In comparison, among the BRICS countries, Russia had the highest
nominal GDP per capita (US$13,000) and India the lowest (US$1,509).22 In
addition, the BRICS countries still pale in comparison with developed coun-
tries in terms of overall socioeconomic development. After the international
financial crisis in 2008, the BRICS countries were faced with the deterioration
of the external economic environment, shrinking export trade and the slow-
down of economic growth, among other challenges. Therefore, they had the
shared aspiration to stabilize the external environment, promote global eco-
nomic recovery and maintain rapid economic growth.
Second, the BRICS countries have shared interests in addressing the
challenges encountered in the economic globalization process. The advance in
economic globalization has accelerated the transnational flow and allocation
of goods, services, capital, technology and information and closely linked the
economic activities of countries around the world. At the meantime, however,
economic globalization has brought risks and challenges to many countries
and triggered a series of global issues. For example it is possible for economic
problems within one country to trigger a global financial and economic crisis
that causes huge losses to other economies. As the BRICS countries are still in
the growth stage, with fragile domestic economic systems and underdeveloped
economic policies and institutions, they are more vulnerable to the influence
and impact of other economies. Especially at a time when some developed
countries are faced with serious latent risks in their national economy, they
may be tempted to pass on their domestic problems or crises to the less-​
experienced emerging economies in order to alleviate their domestic economic
pressures and achieve domestic economic goals. In this context, the cooper-
ation among the BRICS countries can serve to effectively break through the
limitations of individual countries and form a synergy to handle global issues,
thus better safeguarding their own interests.
Third, the BRICS countries have a common desire to continue enhancing
their international status and advance global governance along a more equit-
able and rational track. In the current international political and economic
system, the vested-​interest group led by the United States is the major benefi-
ciary, while the overwhelming majority of emerging and developing countries
32 Xu Xiujun
are not entitled to fair treatment and opportunity to exert influence commen-
surate with their own strengths. This is mainly manifested in the following
two aspects: One is that the emerging and developing countries represented by
the BRICS countries still stand at a submissive position in the international
monetary finance and trading systems; and the other is that these countries
are subjected to the substantial imbalance of rights and obligations in global
governance. The BRICS countries have assumed more responsibilities in
resolving the problems faced by all countries than the rights they are able to
enjoy and the voice they are allowed to have. In the 2008 international finan-
cial crisis, the BRICS countries took on the huge economic disaster and made
great contributions to the global economic recovery. But, still, they could not
gain the approval of international organizations to exert due supervision and
restrictions on the economic operation and the financial and monetary pol-
icies of developed countries represented by the United States. In this context,
the BRICS countries have formed consensuses on the necessity to reform the
global-​governance system.

3. Inclusive interests and the BRICS cooperation

What the BRICS countries have established is a new type of partnership in
keeping with the modern era, rather than an anti-​Western political alliance.23
At the Third BRICS Summit held in April 2011, the leaders of the five countries
explicitly stated that BRICS cooperation is “inclusive and non-​confrontational”
and that the BRICS countries are willing to strengthen cooperation with other
countries, especially with emerging and developing countries, and relevant
international and regional organizations.24 This shows that the pursuit of
inclusive interests is a consensus formed by the BRICS leaders in the process
of brewing and advancing the BRICS cooperative mechanism.

3.1 Non-​zero-​sum game and inclusive interests in the global economy

A game can be understood as a “strategy” or a “rule”. It can be divided into
a zero-​sum game and a non-​zero-​sum game according to the gain or loss of
utility. In a zero-​sum game, the players are in opposition to each other, and one
player’s gain means the other player’s loss. In a non-​zero-​sum game, regard-
less of whether the return is a non-​zero constant or subject to change with
the strategy mix of the players, each player will gain their profits in a win-​win
situation for all players. In the international community, as “players” in many
areas of the global economy, the participating countries are no longer playing
a zero-​sum game whereby one’s gain is another’s loss, but rather a non-​zero-​
sum game that leads to all-​win or all-​loss situations. The main reasons are as
follows.
First, global economic interdependence is strengthening. The development
of capitalism has facilitated the formation of a world market, where production
and consumption activities are conducted across national borders. Especially
 Non-neutrality of international regimes 33
since the mid-​twentieth century, economic globalization has swept across all
developed capitalist countries and spread further to the developing countries.
The accelerated development of globalization has tightened the economic
ties between countries, making it difficult for a country to unilaterally control
its own economy. The production of commodities in one country requires
import of raw materials from other countries. The expansion of investment in
one country needs the inflow of capital from other countries. Even the devel-
opment of economic policies in one country may require the cooperation of
other countries. Globalization has become an irreversible trend in the world
economy, where international economic exchanges have been expanding, with
international economic management organizations and economic entities
constantly emerging. Regional economic integration has shown a good
momentum of development and has promoted transnational communication,
collision and integration of different cultures, lifestyles, values and ideologies.
The irreversible trend of globalization has made different countries’ econ-
omies increasingly interdependent and even changed world politics. In other
words, we have ushered in an era of interdependence.25 In the late twentieth
century, economic globalization experienced a flourish on a truly global scale.
Whether it was raw materials, capital, labour, or information, management
and organization, a level of internationalization had been achieved. The free
flow of production factors across national borders became an important phe-
nomenon in the development of the global economic landscape. In today’s
world, the rapid development of high technologies such as information tech-
nology has narrowed the gaps between countries. The economies of different
countries and regions become increasingly intertwined and mutually influen-
tial on their way to becoming an integrated whole.
Second, the complementarity of the global industrial structure is
strengthening. Since the 1990s, due to technological progress and international
division of labour, a new round of global industrial transfer has been in the pro-
cess, thereby further enhancing the complementarity of the global economy.
The global industrial transfer is progressing faster and at a scale larger than
ever. As of 2011, the nominal global trade volume of goods reached US$18.2
trillion, more than 360 times that in 1948, or a 4.2-​fold and a 1.9-​fold increase
compared with 1991 and 2001. Global foreign direct investment (FDI) flows
(inflows) reached US$2.0 trillion in 2007 just before the global financial crisis,
9.1 times that of 1990; and stocks (inflows) reached US$17.9 trillion, 7.6
times that of 1990.26 Although global trade and investment cooperation was
weakened due to the global financial crisis in 2008, it had basically returned to
pre-​crisis levels by 2010. Furthermore, regional industrial transfers go hand in
hand with cross-​regional industrial transfers on the basis of a global division
of labour, greatly enhancing the complementarity of intra-​and inter-​regional
industrial structures. On the one hand, regional economic integration has
developed rapidly, and intra-​regional resource allocation and factor flows
have accelerated. Regions such as the European Union, North America and
East Asia have shown the strongest momentum of global industrial transfer
34 Xu Xiujun
and continued to promote the advance of global industrial structure. On the
other hand, cross-​regional economic ties have strengthened, facilitating the
global distribution of industrial chains and high-​degree specialization of the
international division of labour. This is mainly reflected in the structural com-
plementarity in the vertical division of labour among developed and emerging
markets and in the complementarity among developed countries thanks to
the division of labour within particular industries.
Third, global issues are posing greater challenges. The advancement of
science and technology and the development of industry have enabled man-
kind to better transform nature and have allowed the creation of increasingly
developed material and ideological civilizations. However, they have also
generated many negative effects on human society. More than a century ago,
Engels warned: “Let us not, however, flatter ourselves overmuch on account
of our human victories over nature. For each such victory, nature takes its
revenge on us”.27 In recent decades, nature has punished human beings more
frequently, posing some serious global challenges to human society. These uni-
versal challenges have a bearing on human survival and development and can
only be solved by the joint efforts of all countries in the world. Today global
issues appear more prominent than ever, for example population explosions,
food shortages, inadequate energy supplies, environmental damage, deple-
tion of resources and outbreaks of massive economic crises. These problems
endanger the common interests of all mankind and require the cooperation
of all countries in the world to address. In this sense, the emergence of global
issues has enhanced the global consciousness to seek common ground while
shelving differences and pursuing peaceful coexistence. Hence, the confronta-
tional mindset in the political and economic realms changes to one that values
cooperation, compromise and concessions. In addressing global issues, the
development of each country has become increasingly related to the progress
of the whole world, making all countries indivisible stakeholders in a joint
endeavour.
The interdependence and complementarity of the global economy deter-
mine that the foreign policy for each country in the world should pursue
cooperation rather than competition. “Competition can be constructive
or destructive. Even when it is constructive, competition is no better than
cooperation”.28 This remark of Alfred Marshall more than half a century
ago cannot be more relevant for the world today. The countries of the
world not only have common interests to be jointly maintained, but also
inclusive interests because they are an indivisible whole. Inclusive interest
means that a participant of the game does not seek their own benefits
at the expense of others, or they may even facilitate the realization of
other participants’ interests. In this case, each participant’s interests are
essentially in alignment with another’s. The inclusive benefit is both a
non-​exclusive benefit and a shared one. For a particular group of coun-
tries, inclusive benefit is a broader concept than common interest. On the
one hand, members and non-​members of a group are not contradictory
 Non-neutrality of international regimes 35
or competitive. Members of a group should not pursue common interests
at the expense of non-​members. On the other hand, members and non-​
members of a group can form a win-​win relationship. The pursuit of
common interests by members of the group can create conditions for
non-​members, thereby ultimately producing win-​win results. Therefore,
the inclusive interest not only focuses on the common interests of a given
group, but also takes into consideration the interests of non-​members.
In other words, inclusive interest is a broader concept of interest rela-
tionship. For emerging countries, it is more important to seek inclusive
interests. Studies show that if the plans of emerging countries to seek
leadership in global governance can accommodate the interests and ideas
of other countries, they will be better accepted, supported and followed.29
Therefore, for the cooperative mechanism between emerging countries to
success, the pursuit of inclusive interests is both an inevitable require-
ment and a practical option.

3.2 BRICS cooperation for inclusive interests

Unlike traditional alliances in the international community, the BRICS
cooperation is not an effort to oppose any other country or to seek exclusive
benefits. It will not worsen the already imbalanced distribution of interests
in the international community. Quite the contrary, the BRICS cooper-
ation is aimed to promote more extensive cooperation and exchanges in the
developing world and to facilitate the rational transformation of the global-​
governance structure by making up for the flaws of international regimes,
thereby fundamentally eliminating the roots of conflicts between different
blocs or groups in the international community. This fully demonstrates the
distinctive inclusiveness of the BRICS cooperation. To be specific, such inclu-
siveness is primarily reflected in the following seven aspects.
First, the BRICS members are diversified. The current five members of
the BRICS cooperation are respectively from Asia, Europe, Africa and South
America. All of them are big countries with major influence in their respective
regions, meaning that they can best represent the interests of other countries
in their regions. The diversity is more profoundly reflected in the domestic
realities and characteristics of the BRICS countries. In political terms, the five
countries have different national, political and judicial systems. In economic
terms, they are different in the development model, economic structure,
overall strength and per-​capita income. In cultural terms, they have distinct
cultural traditions, customs and religious beliefs. The inclusiveness of BRICS
membership demonstrates the openness and non-​discrimination of the five
governments in foreign policy. Therefore, BRICS is not an exclusive group
dedicated to pursuing its own interests, but rather a cross-​regional community
of diversified interests.
Second, the cooperation is open-​ended. As a coordination platform for
emerging economies, the BRICS cooperative mechanism has always been
36 Xu Xiujun
open to developing countries. Since its inception, BRIC cooperation has
drawn the attention of other emerging economies, some of which have
expressed their willingness to join. When the BRICs expanded for the
first time to incorporate South Africa as a full member, it showed that the
BRICS cooperation would be an open-​ended mechanism with the flexibility
to absorb other developing countries that meet certain criteria in terms of
economic strength, population size and regional and global influence. The
introduction of the “BRICS+N”30 cooperation model provides a shining
example for the BRICS cooperation to further enhance its representative-
ness and global influence, and better promote cooperation among emerging
economies.
Third, the cooperation is dedicated to pursuing win-​win results. This
is a basic consensus reached by the BRICS leaders. In this regard, Hu
Jintao, former Chinese president, explicitly stated that the purpose of the
BRICS cooperation is to achieve “mutual benefits and common develop-
ment”.31 President Xi Jinping further explained that the common wishes
and responsibilities of the cooperation are “to pursue peace, develop-
ment, cooperation, and win-​win results”.32 Based on these consensuses, the
BRICS countries will continue to firmly safeguard their common interests
and strengthen coordination in fields such as economics, finance and devel-
opment as part of an effort to enhance the status and roles of developing
countries in global governance, and to promote the establishment of a new
international political and economic order of fairness, equity, inclusive-
ness, and coherence.
Fourth, this cooperation covers a wide spectrum of fields. Strengthening
pragmatic cooperation in all fields has been a BRICS fundamental principle.
In terms of trade and investment, the BRICS countries have jointly promoted
global trade liberalization and investment facilitation and opposed protec-
tionism and unreasonable investment barriers. In financial and monetary
terms, the five countries have jointly promoted effective regulation of global
finance and diversification of reserve currencies and fought against finan-
cial egoism and monetary hegemony. In science and technology and climate
change, among other fields, they have continued to strengthen cooperation for
in-​depth development. At the 2013 BRICS Summit in Durban, the leaders of
the BRICS countries signed off on an action plan for political, economic, cul-
tural, scientific and technological cooperation in almost all fields that have a
bearing on the socioeconomic development of the five countries. Nine poten-
tial areas for cooperation were also proposed, including the establishment of
a public diplomacy forum, anti-​corruption efforts and cooperation among
state-​owned enterprises.33
Fifth, the cooperation is multilayered. The BRICS countries have
established a multilayered cooperation framework, covering leaders’ meetings,
ministerial meetings, experts’ meetings and grassroots forums. Ministerial
meetings include the meetings of the BRICS high representatives for security
 Non-neutrality of international regimes 37
issues, the foreign ministers’ meetings, the meetings of the BRICS finance
ministers and central bank governors, the BRICS trade ministers’ meetings,
the BRICS health ministers’ meetings and the meetings of the BRICS
ministers of agriculture and agrarian development. The experts’ meetings
cover a wide range of topics, including agriculture, scientific and techno-
logical innovation and financial cooperation between development banks.
Grassroots forums are aimed to strengthen cooperation and exchanges in
industry and commerce, urban cooperation, sports and culture. The multi-
layered cooperation framework provides effective channels for communica-
tion among governments, the academia, business community and private
sectors, which thereby is conducive to strengthening the relations between
the five countries.
Sixth, cooperation is a constructive effort. The BRICS countries are an
important emerging force that can drive the development of the existing inter-
national political and economic system. The BRICS cooperation is condu-
cive to the establishment of a fairer and more rational international system.
In Western history, rising powers often sought the redistribution of global
interests through wars and expansion as part of an effort to change the world
order and establish their own global hegemony. In contrast, the BRICS coun-
tries do not attempt to discard and subvert the existing international system,
but rather to work together with developed countries to reform and improve
the international financial and monetary systems and to promote compre-
hensive reform of the UN as a central role in addressing global challenges
and threats, while accepting and adapting to the current international order.
In other words, the BRICS cooperation is an effort of the five countries to
reform and construct the international system.
Seventh, the cooperation is non-​confrontational. An important feature of
the BRICS cooperation is that it establishes a new type of development part-
nership and adopts a non-​confrontational cooperation strategy. Therefore, the
formation of the BRICS cooperative mechanism is in line with the common
interests of the international community. The BRICS is not a political or mili-
tary alliance, but rather the members are partners seeking common develop-
ment. What the five countries consider and discuss are mainly the development
areas that are of general concern to both developed and developing coun-
tries. The aim is to address challenges and seek development through cooper-
ation among the BRICS countries, among developing countries and between
developing and developed countries.
The interests pursued by the BRICS countries are not exclusive, but
rather broadly inclusive. Be it on regional, inter-​regional or global levels,
the BRICS countries are not challengers of the existing international
system, but active participants and builders of the global-​ governance
system. They provide a driving force for South–​South cooperation and new
opportunities for strengthened North–​South dialogue, coordination and
cooperation.
38 Xu Xiujun

3.3 New role of the BRICS mechanism in global governance

Since the inception of the BRICS cooperative mechanism, there have always
been controversies around its nature and positioning in the international com-
munity. But one of the consensuses is that in dealing with global issues, the
BRICS countries have at least three roles for global governance.
First, a cooperative mechanism among emerging economies. For a long
time, developed economies have been not only dominating international
rules, but also collaborating by forming blocs and other alliances to safe-
guard the vested interests they have acquired. In contrast, developing coun-
tries have little say over global issues. Even worse, there are not effective
mechanisms or platforms for them to voice their own interests and to
coordinate policy actions. As emerging markets, the BRICS countries are
an important force in driving reforms in global governance and represent
the interests of developing countries. The BRICS cooperative mechanism
provides not only a platform for economic and trade cooperation and
exchanges between emerging markets, but also a stage for developing coun-
tries to “speak with the same voice” and to improve their say in global gov-
ernance. The formation of the BRICS cooperative mechanism signifies that
emerging countries are no longer “bystanders” in global governance but
have become active participants in it and builders of new international rules.
BRICS strives for more voice and decision-​making power for the developing
countries in this critical period of global political and economic transform-
ation and reform.
Second, a negotiation platform for cross-​regional economic governance.
As the BRICS member countries span the continents of Asia, Europe, Africa
and to South America, an optimal connection has been built between these
regions through cooperation. It is also worth noting that among the BRICS
countries, Brazil is the largest economy in South America; Russia is the largest
among the former Soviet Union members; India is the largest in South Asia;
China is the largest in East Asia, and South Africa is the largest in Africa.
They not only have substantial influence in their respective regions, but also
represent the interests of other countries in these regions. The cooperation
among the BRICS countries has greatly enhanced the political, economic,
trade and cultural ties between these regions, thus becoming one of the most
important cross-​regional consultation and cooperation platforms in the inter-
national community. As the BRICS cooperative mechanism continues to
develop, and thanks to their leading role in regional economic governance, the
BRICS countries will play an increasingly important part in cross-​regional
cooperation and exchanges.
Third, a bridge between developing and developed countries. As the
backbone of the developing countries, the BRICS countries represent
the interests of all developing countries and serve as a bridge that links
developing and developed countries. This role is particularly evident in
 Non-neutrality of international regimes 39
the G20 cooperation framework consisting of nine developed economies
and eleven emerging economies.34 As a high-​profile platform for global
economic governance, the G20 plays an important coordinator’s role in
addressing major issues such as the global economic crisis, unbalanced dis-
tribution of global interests, global financial regulation and reform of the
international monetary system. However, the vast majority of developing
countries are excluded from the G20 framework. Even if certain G20
topics cover the interests of them, these developing countries do not have
the opportunity to conduct direct dialogues with developed countries.
The BRICS countries are all members of the G20. As representatives of
developing countries, the BRICS countries can provide new opportunities
for strengthening North–​South dialogue and facilitating coordination and
cooperation between developing and developed countries.
These three roles of the BRICS cooperation in global governance not only
bind the five BRICS countries together, but also create connections among
different countries and regions. This fully demonstrates that the BRICS
cooperation is an inclusive and open-​ended benefit-​sharing mechanism that
serves as a bridge in the international community.

4. Conclusion
The non-​neutrality of international regimes has led to the uneven distribu-
tion of interests in the international community and spawned advantaged and
disadvantaged groups of countries. The overall status of the BRICS countries
in the existing global-​governance network is not commensurate with their
strengths. To change the status quo, there are basically two ways: One is to
change the existing unreasonable international regimes, and the other is to
establish new regimes that are favourable to them. Due to the existence of the
vested-​interest group, the BRICS, as an emerging force, may find it difficult
to fundamentally change the existing system of global governance in the fore-
seeable future. Cooperating with one another to establish new non-​neutral
regimes that serve to balance the existing global non-​neutral framework –​and
to promote the development of international regimes in a direction that is
favourable to emerging economies –​might be the most realistic and effective
option. In this sense, the BRICS cooperation is a helpful supplement to the
existing international regimes.
The formation and development of the BRICS cooperative mechanism
serve not only to promote dialogue and cooperation between the BRICS
countries, but also to provide a platform for promoting consultation and
dialogue between different developing countries and between developing
countries and developed countries. Developed countries, developing coun-
tries and other emerging markets can all benefit from the furtherance of the
BRICS cooperation. Nevertheless, due to the non-​neutrality of the BRICS
cooperation, the absolute and relative returns for the BRICS countries and
40 Xu Xiujun
for other countries might vary, or even lead to conflicts of interests between
the two. To address this problem, the BRICS cooperation should not only
work to achieve the interests of the member countries, but also adhere to the
principles of openness and inclusiveness by accommodating the interests of
other countries. Only in this way can it facilitate the gradual changes to the
system of international regimes and, in the meantime, mitigate the impact of
dramatic changes to the global landscape.
At present, the BRICS countries still face many challenges. But as the eco-
nomic strength of the BRICS countries continues to improve, the coopera-
tive mechanism continues to evolve, more cooperation issues are addressed
through planning and implementation, and new models such as “BRICS+N”
are invented, the BRICS countries will be sure to play a more important role
in global governance and facilitate the creation of a new world featuring a
fair and rational new international political and economic order, lasting peace
and universal prosperity.

Notes
1 Jim O’Neill, “Building Better Global Economic BRICs”, Global Economics Paper,
No.66, New York: Goldman Sachs, 2001
2 Calculated in accordance with the 2011 World Bank database, http://​data.
worldbank.org.cn.
3 Arnold Toynbee, Historical Research, translated by Cao Weifeng, Shanghai
People’s Publishing House, 1966, pp. 74–​98.
4 Goldman Sachs, ed., BRICs and Beyond, London: Goldman Sachs, 2007; Leslie
Elliott Armijo, “The BRICs Countries (Brazil, Russia, India, and China) as Analytical
Category: Mirage or Insight?” Asian Perspective, Vol. 31, No. 4, 2007, pp. 7–​42.
5 Jack A. Smith, “BRIC Becomes BRICS: Emerging Regional Powers? Changes
on the Geopolitical Chessboard”, Global Research, January 16, 2011; General
L. Ivashov, “BRICS and the Mission of Reconfiguring the World: An Alternative
World Order?” The 4th Media, June 17, 2011.
6 Theodor Tudoroiu, “Conceptualizing BRICS: OPEC as a Mirror”, Asian Journal
of Political Science, Vol. 20, No. 1, 2012, pp. 23–​45; Ruchir Sharma, “Broken
BRICs: Why the Rest Stopped Rising”, Foreign Affairs, Vol. 91, No. 6, 2012,
pp. 2–​7.
7 Joseph S. Nye, “What’s in a BRIC?” Project Syndicate, May 10, 2010; Joseph
S. Nye, “BRICS without Mortar”, Project Syndicate, April 3, 2013.
8 Hans J. Morgenthau, Politics Among Nations: The Struggle for Power and Peace,
New York: Knopf, 1949; Kenneth N. Waltz, Theory of International Politics,
Reading: Addison Wesley, 1979.
9 Robert O. Keohane, “The theory of hegemonic stability and changes in inter-
national economic regimes, 1967–​1977”, In Robert O. Keohane, International
Institutions and State Power: Essays in International Relations Theory,
Boulder: Westview Press, 1989, pp. 74–​100.
10 Charles P. Kindleberger, The World in Depression, 1929–​1939, Berkeley: University
of California Press, 1973.
 Non-neutrality of international regimes 41
11 Immanuel Wallerstein, The Decline of American Power: The U.S. in a Chaotic
World, New York, London: The New Press, 2003.
12 IMF, WEO database, CD version, May 2013.
13 Padraig Carmody, “Another BRIC in the wall? South Africa’s developmental
impact and contradictory rise in Africa and Beyond”, The European Journal
of Development Research, Vol. 24, No. 2, 2012, pp. 223–​241; Jack A. Smith,
“BRIC Becomes BRICS: Changes on the Geopolitical Chessboard”, Foreign
Policy Journal, January 21, 2011, www.foreignpolicyjournal.com/​2011/​01/​21/​
bric-​becomes-​brics-​changes-​on-​the-​geopolitical-​chessboard/​
14 Douglas C. North, Institutions, Institutional Changes, and Economic Performance,
translated by Liu Shouying, Shanghai Hong Kong Joint Publishing, 1994, p. 3.
15 Zhang Yuyan, “Interest Groups and Non-​Neutrality of Regimes”, Reform, No. 2,
1994, p. 98.
16 Stephen D. Krasner, “Structural Causes and Regime Consequences: Regimes as
Intervening Variables”, in Stephen D. Krasner, ed., International Regimes, Ithaca,
NY: Cornell University Press, 1983, p. 2.
17 Yu Keping, “Introduction to Global Governance”, reprinted in Pang Zhongying,
World Politics —​Views from China: Global Governance, New World Press,
2007, p. 24.
18 Ye Jiang, Global Governance and China’s Strategy in Dealing with Great Powers,
Current Affairs Press, 2010, p. 90.
19 Zhang Yuyan, “Interest Groups and Non-​Neutrality of Regimes”, Reform, No. 2,
1994, p. 98.
20 Oran R. Young, “The Effectiveness of International Institutions: Hard Cases
and Critical Variables”, reprinted in James N. Rosenau, Governance without
Government: Order and Change in World Politics, translated by Zhang Shengjun,
Liu Xiaolin, et al., Jiangxi People’s Publishing House, 2001, pp. 208–​209.
21 Zhang Yuyan, “Thoughts on the Characteristics and Trends of the Global
Landscape”, International Economic Review, No. 3, 2004, pp. 14–​15.
22 Calculated in accordance with the 2011 World Bank database, http://​data.
worldbank.org.cn.
23 Zaki Laidi, “BRICS: Sovereignty Power and Weakness”, International Politics,
Vol. 49, No. 5, 2012, p. 615.
24 Third BRICS Leaders’ Meeting: Sanya Declaration, People’s Daily, April 15,
2011, p. 3.
25 Robert O. Keohane and Joseph S. Nye, Jr., Power and Interdependence. World
Politics in Transition, Bejing: Peking University Press, 2011, p. 3.
26 Extracted from the UNCTAD database (UNCTADstat), December 2012.
27 Marx and Engels: Selected Works, Vol. 4, People’s Publishing House, 1995, p. 383.
28 Alfred Marshall, Principles of Economics, Vol. 1, translated by Zhu Zhitai, The
Commercial Press, 1964, pp. 26–​27.
29 Stefan A. Schirm, “Leaders in Need of Followers: Emerging Powers in Global
Governance”, European Journal of International Relations, Vol. 16, No. 2, 2010,
pp. 197–​221.
30 This expression originates from the “BRICS plus” proposal at the First BRICS
Think Tank Roundtable held in Beijing in April 2013, which was attended
by Renato Coelho Baumann, Director of the Brazilian Institute of Applied
Economics, Svetlana P. Glinkina, Deputy Director of the Institute of Economics
42 Xu Xiujun
of Russian Academy of Sciences, Biswajit Dhar, Director General of the Research
and Information System for Developing Countries (RIS), India, Zhang Yuyan,
Director-​General of the Institute of World Economics and Politics, Chinese
Academy of Social Sciences, and Ana Cristina D. Alves, Researcher at South
African Institute of International Affairs (SAIIA).
31 Hu Jintao, “A Future of Shared Prosperity: Speech at the Third BRICS Leaders’
Meeting”, People’s Daily, April 15, 2011, p. 2.
32 Xi Jinping, “Work Together for Common Development: Keynote Speech at the
Fifth BRICS Leaders’ Meeting”, People’s Daily, March 28, 2013, p. 2.
33 Fifth BRICS Leaders’ Meeting: Durban Declaration, People’s Daily, March 28,
2013, p. 3.
34 For the definition of “emerging economies”, see Zhang Yuyan and Tian Feng,
“The Definition of Emerging Economies and Their Status in the Global Economic
Landscape”, International Economic Review, No. 4, 2010, pp. 7–​26.
3 
Theoretical explanations for the origin
of BRICS cooperation
Ren Lin and Yin Jiwu

The formation of BRICS cooperation has both exogenous and endogenous

causes. Exogenous causes can be divided into functional factors, including the
external environment, the power structure of the international system, and
the international institutional environment, and normative factors, including
the payoff culture for repeated cooperation, and the desire to develop fairer
international norms. Endogenous causes can also be divided into functional
factors, including the number of actors, complementarity and domestic
politics, and normative factors, including cognition of homogeneity and
endogenous consensuses. The BRICS’s judgement on whether to maintain
the payoff structure and their understanding of the structure’s future impacts
are two sets of mechanisms that link all the above factors. BRICS cooper-
ation originated from the national initiatives and practices of the member
countries under the exogenous environment. In other words, in the context
of a non-​neutral international system and the rise of the BRICS countries in
both political and economic realms, the political and economic interdepend-
ence among the BRICS countries gradually increased. Their consensus on
pursuing higher international status and interests transcended the homoge-
neous differences between themselves. This consensus led, in turn, to more
trust among the four countries and promoted the establishment of relevant
institutions and mechanisms.
The BRICS cooperative mechanism represents a new form of international
cooperation. On the one hand, it differs from traditional homogenous cooper-
ation in that it adopts unique institutional forms and allows a certain degree
of heterogeneity and competition among the member countries. This is also
one of the reasons for scepticism about the mechanism. On the other hand,
BRICS cooperation was a result of multi-​dimensional motives that aroused
our interest in exploring its origin. There are a lot of discussions in academia
about the evolvement, characteristics, attributes of BRICS cooperation, and
the implications of BRICS cooperation for global governance. However, there
has not been any systematic effort to explain the origin of the cooperation,
or any mature research to abstract and summarize the special case of BRICS
cooperation.1 Then, what are its new features? Why can the BRICS coun-
tries transcend each other’s differences and form a cooperative governance
44 Ren Lin and Yin Jiwu
mechanism with its own characteristics? What theoretical implications and
revelations does the origin of BRICS cooperation have? These constitute
the theoretical questions we attempt to answer in this chapter. This chapter
follows the narrative logic of general to specific by first of all reviewing trad-
itional theories on the origin of cooperation and evaluating the many variables
leading to cooperation and their corresponding mechanisms of action, and
then analysing the specialness of BRICS cooperation, and finally summar-
izing the dialectical inspirations of BRICS cooperation for general research
on cooperation.

1. Origin of BRICS cooperation: theories, variables, and

explanations
This section attempts to identify the basic theoretical elements regarding the
origin of cooperation by reviewing and outlining cooperation theories in the
disciplines of biology/​anthropology, economics, sociology, psychology and
international relations, and on this basis, to summarize the basic variables
and mechanisms of action with regard to the origin of cooperation, thus pro-
viding a basic theoretical analysis framework for the case study on BRICS
cooperation in the next section.

1.1 Theories on the origin of cooperation

First, biological studies on cooperation. Biological explanations for the origin
of cooperation include altruism (based on kinship, racial identity or reciprocal
exchanges) and egoism (as represented by mutualism). The altruism explan-
ation believes that common identity, compassion, and successful culture,
rules and regimes will help shape cooperation in the process of interactions
and evolution, while the egoism explanation opposes the logic that cooper-
ation originates from compassion and group culture. From the perspective of
mutualism, cooperation is a favourable “self-​interested strategy”, and egoism
is very much about the idea of ​​“all for one, one for all”. Therefore, the deci-
sion to play a cooperative game is driven by self-​interest in the eyes of egoists.
The biologist Richard Dawkins tried to bridge the divide between these two
theoretical pathways by attributing altruism and cooperation to selfishness, “a
predominant quality to be expected in a successful gene is ruthless selfishness.
This gene selfishness will usually give rise to selfishness in individual behavior
… Let us try to teach generosity and altruism, because we are born selfish.”2
In addition, biological explanations also borrow from classical theories from
other disciplines like repeated games and communication theory for the idea
that people who initiate altruistic cooperation tend to gain a “high payoff ”
advantage and thus evolve more successfully.3 However, some inhibitors (e.g.,
fear) to cooperation also make evolutionary sense. So even if altruistic cooper-
ation is possible, how to eliminate negative emotions and other uncertainties
is also a key topic for discussion on the origin of cooperation.4
 Origin of BRICS cooperation 45
Second, economic studies on cooperation make a clear distinction between
the “rational” and “emotional” schools. The rational choice model has always
been the core economic theory for explaining the drivers of cooperation.
Actors make the rational choice to cooperate based on the “complementarity”
between them. Essentially, it is the complementarity that gives rise to group
cooperative behaviours. In the absence of better alternatives, actors tend to
choose complementary partners. In this sense, human behaviour can all be
traced back to the primary motive of utility maximization. The emotional
school criticizes an absolute economic focus on utility cost and sets out to
reflect and expand on the connotation and denotation of rationality. “Human
rationality has never been cold reason without emotions … The shorter the
psychological distance between people, the greater the probability of cooper-
ation.”5 Just as Dawkins believes that altruism can fulfil a selfish end, cooper-
ation is not necessarily preconditioned by complementary benefits. Just
looking at the rational part to the extent of neglecting and denying any emo-
tional interpretations may steer economic analysis away from the truth. In
fact, Smith’s works have also emphasized that cooperation is driven by com-
passion rather than by pure self-​interest.6
Third, psychological and sociological studies on cooperation, which
emphasize the importance of emotional factors for cooperation, including
trust, common identity, and the sense of belonging to a group cognitively
and psychologically.7 Specifically, researchers on the psychological and socio-
logical path view a psychological basis for cooperation as a prerequisite for
the origin and establishment of cooperation. While Robert Axelrod believes
that cooperation is not necessarily built on trust but on the expectation of a
sustained and stable relationship,8 the establishment of trust is still necessary
for cooperation in particular because it can determine the durability and sta-
bility of cooperation. Only temporary, strategic and other types of short-​term
cooperation can do without trust.9 Among the many variables that determine
the establishment of trust for cooperation at the micro level, homogeneity,
density of interaction, and joint response to external pressure play pivotal
roles. For example, the higher the degree of homogeneity between relevant
actors, the more likely it is to generate trust; the greater the density of inter-
action between actors, the more likely it is to increase the transparency of their
respective strategic intentions, boost the interdependence of interests and cut
transaction costs; and an aligned understanding of common external tasks
and pressure is a key exogenous condition for mutual trust between actors.
Last, international relations studies on international cooperation, which
can be broadly divided into two stages. The first stage is mainly based on
the systemic pressure of anarchy and emphasizes the payoff structure, future
impact, and the vital influence of the number of actors on cooperation,
which gives rise to the theory of decentralized cooperation.10 In contrast to
this theory of cooperation, which overemphasizes the characteristics of an
anarchic system, studies on international cooperation has re-​emphasized the
role of regimes since the end of the Cold War trying to “recover the regimes”,
46 Ren Lin and Yin Jiwu
and discussed the independence and autonomy of international regimes such
as from the perspective of international law, the rational design of inter-
national regimes, and the implementation of regimes from authorization,
compliance to agency.11 Existing theories of international cooperation mainly
go down the path of game analysis of the effect of rationalism on cooper-
ation, which focuses on analysing the effect and cost of cooperation and
overcoming the cost of betrayal. The emphasis on the importance of regimes
highlights the significance of institutional forms for cooperation.
In addition, while altruistic cooperation has always been there, existing
studies have been mostly focused on antagonistic cooperation. Nevertheless,
international cooperation as represented by BRICS cooperation is more
function-​and development-​based, which is a reflection of the developments
in international governance organizations in the era of globalization. This
involves joint efforts to find solutions, from the provision of global public
goods to global economic, environmental, and terrorism governance.12 The
conditions for maintaining development-​based cooperation are different from
traditional antagonistic cooperation. Traditional theories tend to discuss
conflict-​and risk-​aversion cooperation, aimed at forming a military or political
alliance, to the neglect of cooperation based on improved benefits. As a result,
only the one-​time payoff structure is taken into account, without considering
the sustainability of cooperation. Cooperation that does take the sustainability
of cooperation into consideration includes development-​based cooperation
and emergency cooperation to form alliances, groups, and partnerships, and so
forth. Once an institution with order and stability is achieved and recognized
by all partners and yields steady benefits, development-​based cooperation is
self-​enforcing. However, emergency and strategic alliances may collapse once
the cooperation task at hand is completed and the basis for continuous cooper-
ation no longer exists. For example, G20 needs to think about how to maintain
its vitality after the financial crisis.13 In short, development-​based cooper-
ation focuses on the sustainability and repeatability of cooperation and views
cooperation from the perspective of “future impact”, bringing new theoretical
elements to studies on the origin of cooperation.

1.2 Different variables for explaining the origin of BRICS cooperation

The above discussion shows that the variables for explaining the origin of
cooperation intertwine with each other and vary in how they influence the
origin of cooperation under different situations and conditions.
The variables can be divided along the lines of functionalism and
normativism.14 According to such functional/​normative classification, func-
tional variables are based on historical practices and help identify both sides’
strategic intentions and create consensus in aligned interests and the repeat-
ability of cooperation through gradual partnerships and a series of practices
in international relations (communication, negotiation, games and strategic
interactions, economic exchanges, etc.).
 Origin of BRICS cooperation 47
In contrast to functionalism, the normative dimension focuses on actors
and their internal trust, consensus and concepts regarding cooperation. The
normative variables are more sustainable and stable, with an emphasis on the
sustainability and expectations of cooperation. Functional variables do not
reject the expectation that multiple positive cooperation practices may pro-
vide further positive feedback on the cooperation itself, which will help to
form an internal norm that fosters self-​enforcing cooperation.15 According to
evolutionary psychology, altruism and reciprocity can also be found in non-​
blood-​related individuals and groups (with very weak homogeneity) for which
cooperation is still possible.16 This kind of internal cooperative norms is an
affirmation of the value of cooperation and its mechanisms, methods, and
approaches.
The second approach to classification discusses the endogenous and
exogenous variables that influence the formation of cooperation.17 A review
of these two types of variables shows that cooperation is not only the result
of political, economic, and social interactions between actors, but also that
of the actors’ initiative to shape and build consensus among themselves.
Traditionally, exogenous variables are regarded as independent of inter-
national cooperation and its influence. Therefore, we tend to analyse the
positive effect of such variables on cooperation from the perspective of
functionalism, while regarding endogenous variables as factors or variables
inherent in cooperation. In this sense, endogenous factors represent the norms
and value of cooperation.
Under the explanatory framework of exogenous factors, the main variables
are international regimes and environments or systemic pressure. The estab-
lishment and improvement of regimes is an effective way to reduce transaction
costs, sustain long-​term future impacts, and enhance the payoff structure. The
international power environment and structure exert certain external pressure
on the establishment of international cooperation. These exogenous variables
play a functional role in promoting international cooperation. In a certain
sense, the exogenous theory interpretation mode of functionalism is in line
with the stepwise reciprocal cooperation model. The exogenous variables of
normativism emphasize that the international environments and regimes are
shaped into internationally accepted norms of behaviours, like whether there
is a payoff culture for repeated cooperation and whether fair international
norms are put in place.
The endogenous explanation emphasizes the attractiveness of cooperation
for actors: in other words, their expectations for international cooperation
driven by their internal needs and consensus in what is mainly a bottom-​up
cooperation model. Generally speaking, the greater the number of actors, the
more difficult it is to establish and sustain cooperation, due to increased trans-
action costs and difficulty in identifying interests, which also increases the
possibility of betrayal and reduces the chance of sanctions.18 In addition, the
prerequisite for cooperation is political consensus and trust between actors.
Trust often hinges on homogeneity, while political consensus is built on a
48 Ren Lin and Yin Jiwu
Table 3.1 Different types of variables used in studies on BRICS cooperation

Functional Normative

Exogenous The external environment, the power The payoff culture for repeated
structure of the international cooperation, and desire to
system, and the international improve international norms
institutional environment
Endogenous The number and complementarity The cognition of homogeneity,
of actors and their domestic and endogenous consensuses
politics (on status, identity, and
interests)

Source: Courtesy of the author.

consistent understanding of the status, identity, and interests of actors.19 The

BRICS countries have the desire to strengthen the status of developing coun-
tries in the existing global governance structure, and their participation and
voice in the system. They also have the need to cope with global financial
crises, maintain common interests and seek coexistence.
Cooperation variables are classified as follows (see Table 3.1) based on the
exogenous/​endogenous and functional/​normative dimensions.
According to orthodox theories on cooperation, exogenous functional
variables and endogenous normative variables matter most. Equally note-
worthy are other types of variables that are less common, such as exogenous
normative and endogenous functional variables. Exogenous normative
variables mostly refer to cooperative norms and culture at the system level,
while endogenous functional variables mostly refer to cooperation strategies
of, or between, actors.20

1.3 Mechanisms of action for the origin of BRICS cooperation

All variables are linked by two mechanisms of action.21 Specifically, the payoff
structure emphasizes the alignment of interests –​that is, actors can benefit
from cooperation generally in economic, security, or political terms, depending
on the nature and area of cooperation. Future impact is very important for
cooperation between self-​interested actors, because one-​off cooperation will
greatly increase the risk of betrayal, while the expectation for repeated cooper-
ation enhances the possibility of continued cooperation. In summary, the
two main mechanisms of action are the judgement on whether to maintain
the payoff structure,22 which emphasizes that external and internal realities
give rise to cooperation, and the prediction of future impacts (see Table 3.2),
which insists that cooperation is shaped by the existing cognitive structure.
First, objective judgement on whether to maintain the payoff structure. The
payoff structure means that actors expect the payoffs they receive from future
cooperation to be closely related to current behaviours. A payoff structure
 Origin of BRICS cooperation 49
Table 3.2 Mechanisms of action for the origin of BRICS cooperation

Functional Normative

Exogenous The systematic payoff structure The exogenous future impacts

(common interests) (existence of repeated cooperation)
Endogenous The individual payoff structure The endogenous future impacts
(common interests) (existence of identification and
consensus)

Source: Courtesy of the author.

that rewards cooperation can promote cooperation between actors whose

actions can be broadly divided into cooperative and non-​cooperative ones.23
A cooperative game pays more attention to the collective behaviour pro-
cess and a non-​cooperative game focuses on the characteristics of individual
behaviours. A non-​cooperative game emphasizes individual rationality, while
a cooperative game strives for the realization of common, collective interests
(collective rationality). Both rationalities are in line with the logical reasoning
of the payoff structure, but they intermingle as an inseparable whole in real
situations. In the event of multiple games and perfect competition, the two
gradually blend into each other. Collective rationality does not necessarily
contradict individual rationality. Game players seek personal gain, and the
game process is to find the best way to do that. If a cooperative game is more
beneficial than a single-​handed game, then it becomes a better choice in line
with individual rationality. In this sense, collective rationality (including
altruistic thinking, cooperative culture, etc.) is not contradictory to individual
rationality. Both exogenous functional and endogenous functional variables
are subordinate to the mechanism of judgement on whether to maintain the
payoff structure.
Second, a basic understanding of the future impacts of cooperation, which
mainly accounts for the betrayal or negative impact of a one-​off game or
cooperation –​that is, whether the cooperation can be repeated or is sustain-
able. When anarchy reigns, cooperation that cannot be repeated in the future
can easily lead to betrayal or is unfeasible in the first place due to the self-​
interested and selfish nature of actors. Indicators of future impact include
long-​time horizons; regularity of stakes; reliability of information about the
others’ actions; and quick feedback about changes in the others’ actions.24 The
most important factors or indicators are the time horizons of cooperation
and the regularity of stakes. Similar to the payoff structure, future impacts are
also very important for the promotion of cooperation and the expectations
of actors. Establishing an institutionalized and standardized international
regime is an effective way to strengthen such expectations and helps link the
past with the present. Actors internalize norms in the process of learning
and socialization to reshape their identity and consensus individually, which
will also affect their prediction of the future impacts of cooperation. Both
50 Ren Lin and Yin Jiwu
exogenous normative and endogenous normative variables are subordinate to
the future impact mechanism.
Last, a transition from a cooperative mechanism driven by “the payoff
structure” to one driven by “the prediction of future impacts” so that cooper-
ation becomes the norm. Cooperation will no longer be about obsessing over
the payoff structure in each game, but about predictable, transferable, pro-
active, habitual, and repeated cooperative games –​that is, the “future impact
mechanism” is given full play as a major potential driver. In this way, the
origin of cooperation transitions from functional judgement on payoffs to
common normative cooperation, which lays the foundation for long-​term,
stable cooperation. However, no cooperation is static. Actors in cooperative
games are also constantly making bargains and concessions. The transition
from one mechanism to the other is an important way to increase the stability
of cooperation, but it cannot solve the problems once and for all.
Exogenous functional variables reveal that the primary determinant of
the payoff structure is systemic –​that is, the interest structure is shaped by
the environment. The greater the clash of objective interests between actors,
the less likely they are to cooperate. Even if a cooperative mechanism is
established, it is susceptible to betrayal and failure. In this context, it is par-
ticularly important that actors are able to identify the corresponding coopera-
tive payoff structure and aligned interests on the one hand, and the capability
and intention of possible betrayals on the other.25 For international cooper-
ation, the payoff structure is also related to the area of cooperation. For
example, an economically complementary structure enables actors to expect
benefits from cooperation. The alignment of such interests can be also found
in politics, security, or other areas, as a lot of cooperation leans towards pol-
itical or security aspects.
Exogenous normative variables emphasize the impact of the collective
judgement on cooperation. The exogenous normative analytics come in handy
because the payoff structure and functional needs are not the only drivers of
cooperation. As Robert Jervis argues, despite “the importance of the system’s
structure, which here includes the pattern of interests and alignment possi-
bilities as well as the distribution of capabilities”, this “does not mean that
the less subjective factors discussed earlier play no role”, because “beliefs
often needs to be considered”.26 Beliefs affect what actors expect of the future
impact, and thus determine whether cooperation is achievable. Beliefs can be
endogenous or the result of interactions between actors and become known
as cooperation norms and culture.27 Although exogenous normative variables
represent actors’ cooperative beliefs or culture, a collective belief or culture,
that is, the expectation of stable, repeated cooperation, is actually a payoff
culture and includes beliefs in exogenous systems and norms.
Endogenous functional variables emphasize the immediate impact of indi-
vidual payoff structure. Actors assess the benefits from cooperation based
on objective factors such as the number of actors, complementarity, and
domestic politics. After making the assessment, the actors have the willingness
 Origin of BRICS cooperation 51
to actively design and try to improve the payoff structure so that the impact
spills over to the exogenous functional level.28 In this sense, BRICS cooper-
ation is a manifestation of active design. While BRICS is an active coopera-
tive design based on the concept proposed by four or five Western countries,
China has played a vital role in BRICS cooperation.
Endogenous normative variables emphasize the influence of actors’
cognition of cooperation. Actors make future expectations based on
their beliefs and work together based on consensus. In the event of well-​
established political consensus and political trust, actors proactively and
rationally work towards cooperation. Therefore, contrary to the aforemen-
tioned exogenous interpretation, such expectations emphasize the initia-
tive of relevant countries to shape cooperation and choose the institutional
arrangements of cooperation based on consensuses on status, identity, and
interests. In this context, the international system is also more of rational
design, and homogeneity is a more fundamental endogenous variable that
can promote the establishment of trust and consensus on cooperation
between actors to a certain extent. The endogenous explanation analyses
the bottom-​up pathways of social learning and functional spillover to the
origin of cooperation and focuses on the formation of trust and consensus
on cooperation between actors before promoting concrete cooperation
practices.

2. Theoretical explanations for the origin of BRICS cooperation

When reviewing the formation and development of BRICS cooperation, we
find that it has transcended the constraints of regionality and homogeneity.
The choice of institutional forms was also unique, providing us with an oppor-
tunity to explore a new theory on the origin of BRICS cooperation. This
section summarizes the main analytical variables used in research on (inter-
national) cooperation and divides these variables according to two dimensions
of classification in an effort to evaluate how effectively the different mixes
of analytical variables, and their corresponding mechanisms of action could
explain the origin of BRICS cooperation.

2.1 Theoretical explanation 1

2.1.1 Exogenous functional factors and the systematic payoff structure

First, the external environment, including the external risks arisen from glo-
balization. Global economic governance entails the addressing of global sys-
temic risks. As the global economy is closely interconnected, any issues with
one country’s economy may spread quickly to other countries and regions
through the global network.
The 2008 global financial crisis that began in the United States had a huge
impact on emerging markets,29 including financial shocks, that is, volatility in
52 Ren Lin and Yin Jiwu
the capital market and severely shrinking market capitalization; the decline in
foreign investment inflows and the increase in foreign capital outflows; and the
depreciation of the currency and the shrinking of foreign exchange reserves.
Demand in emerging countries was also impacted, as reflected by the decline
in demand and prices of commodities and processed products. Furthermore,
the financial crisis dampened the confidence of emerging countries, causing
increased unemployment, unstable income expectations, and reduced investor
and consumer confidence. Although emerging countries suffered similar
losses from the financial crisis, the fields impacted and the extent of the impact
varied due to the differences in each country’s initial conditions, economy
size, economic flexibility and structure, dependence on other countries, and
government capability in utilizing resources. Emerging countries introduced
corresponding policies to mitigate the financial crisis, including fiscal, mon-
etary, industrial, and social policies. In the meantime, emerging countries also
realized that strengthening international cooperation, especially that among
themselves, can help improve the effectiveness of these policies. In this sense,
the BRICS cooperative mechanism can be categorized as a type of trans-
national cooperation aimed at participating in global economic governance.
What it attempts to address are external risks that exist objectively in the
international system.
Second, the power structure of the international system. The existing global
governance system lags severely behind the changes in the international power
structure, making it inadequately representative and effective.30 Therefore,
emerging and developing countries are calling for reform of the global gov-
ernance system to make it more legitimate.
GDP, trade volume, and investment, among others, are all indicating
that the world’s economic centre is tilting toward emerging economies.
This became even more pronounced after the global financial crisis broke
out. According to the IMF, 30 years ago the GDP of emerging economies
accounted for 28 per cent of the world’s total. But as of 2014, the number
had increased to 50 per cent. Their share in global trade had also risen from
21 per cent to 50 per cent, and their proportion of investment had grown
from 26 per cent to 65 per cent of the world’s total.31 Emerging markets now
account for 50 per cent of the world’s GDP, 40 per cent of trade volume,
and 70 per cent of foreign exchange reserves. Even under the pressure of
economic slowdown, emerging and developing countries maintain their high
contribution to world economic growth. According to the IMF’s data in
April 2014, developed countries will maintain a growth rate of around 2.5
per cent. That number for emerging countries is 5.5 per cent, and for Asia is
around 7 per cent.32 Thanks to their improved economic strength, emerging
countries produced a huge amount of public goods during the global eco-
nomic crisis and made important contributions to global economic recovery.
However, until now, the quota reforms in the IMF and World Bank have
been stagnating, leading to imparity of authority and responsibility in eco-
nomic governance.
 Origin of BRICS cooperation 53
Third, the international institutional system. The asymmetry of institu-
tional arrangements in global economic governance33 can be attributed to
the “non-​ neutrality of regimes”.34 The existing global economic govern-
ance system is based on the economic order established and dominated by
developed countries after World War II. Since the very beginning, Western
countries have had the power to set agendas. In other words, they have had
an important say in global affairs for a long time. In comparison, developing
countries have not been able to participate in agenda setting due to historical
reasons, and therefore do not have an equal say to protect their legitimate
rights and interests. As their economic strength grows, emerging economies
have begun to call for greater power and voice, and a more reasonable payoff
structure because they are making major contributions to global economic
growth and providing an increasing number of public goods for managing
global economic risks. Only through effective reform can we help the eco-
nomic governance system shake off extreme non-​ neutrality and develop
towards a rational, fair, and effective direction.35
Under the existing framework of global economic governance, the insti-
tutional powers of the emerging economies represented by the BRICS coun-
tries are seriously asymmetrical with their economic strength and actual
contributions. For example, the BRICS countries account for 43 per cent of
the world’s total population. Their total foreign exchange reserves account for
40 per cent of the world’s total. Their total economic aggregate accounts for
21 per cent of the world’s total. But their voice in global economic govern-
ance organizations is extremely low, with their voting power severely incom-
mensurate with their economic strength.36 For example, in the World Bank,
the five BRICS countries account for only 11.03 per cent of the total voting
power, as opposed to the United States’ 16.76 per cent. Similarly, in the IMF,
the quota assigned to the five BRICS countries accounts for 11.51 per cent
of the total, as opposed to the United States’ 17.69 per cent, a 6-​percentage-​
point difference (see Table 3.3).37 With the rise of emerging economies, the
imparity of authority and responsibility in the global economic governance
system becomes even more prominent, thereby putting the representativeness
and effectiveness of the international system in question38 and undermining
the effectiveness39 of global governance to some extent. There are many cases
in which low legitimacy erodes the effectiveness of governance. For example,
the decline of the IMF’s legitimacy leads to its shrinking ability to act.40 When
an older governance platform fails to effectively complete the tasks of global
economic governance, new ones will be ready to emerge.41
Based on the analysis of the above exogenous functional factors, we believe
that one of the reasons for the formation of the BRICS cooperation is that
the five countries have shared interests in the international system. Therefore,
the following propositions can be derived.
Proposition 1: As their overall strength grew, the BRICS countries were
faced with common global economic risks and impacts from the external
environment. Under the non-​neutral pressure of the international mainstream
54 Ren Lin and Yin Jiwu
Table 3.3 IMF members’ quota and voting power (Unit: %)

Country Quota Voting Power

United States 17.69 16.75

Brazil 1.79 1.72
Russia 2.50 2.39
India 2.44 2.34
China 4.00 3.81
South Africa 0.78 0.77

system, the five countries formed a consensus on collective interests and

increased their expectations for payoffs from a cooperative game.

2.1.2 Endogenous functional factors and their individual payoff structure

First, the number of actors, which has an important impact on collective
actions. The more members, the more ambiguous is the individual payoff
structure, and the more difficult it is to conduct collective actions.42
In the case of BRICS cooperation, the discussion about the number of
actors actually involves the size of the BRICS countries. The formation of
BRICS cooperation reflects that the member countries with similar inter-
national status can avoid the collective-​action problem generated from an
excessive number of members and are better able to identify the inten-
tion, costs, and betrayal of cooperation. There were debates both inside
and outside43 BRICS cooperation over whether to continue absorbing new
members. Jim O’Neill, who coined the term “BRIC”, argued in an interview
that the BRIC should not further expand. He stressed that among the emer-
ging economies, only the BRIC and MINT (Mexico, Indonesia, Nigeria,
and Turkey) countries had considerable development potentials. More
participants would almost inevitably lead to the collective action problem
because the governance efforts of member states may be plagued by endless
discussions and buck-​passing of the responsibility to provide public goods,
making it difficult to achieve the desired governance efficiency. The existing
BRIC platform is an important part of global economic governance, and
its governance effectiveness does not necessarily have to be realized through
expansion. However, the BRIC may stay open to cooperation with other
countries, regions, or governance organizations. By pooling the strength of
its member countries, the BRIC may promote cooperation with East Asia,
South Asia, Africa, and Latin America, among other regions, as well as
international organizations.44
In addition, the appropriate number of actors is also associated with the
representativeness of the cooperative mechanism. It was widely questioned
whether the inclusion of South Africa would affect the representativeness
and efficiency of the cooperation. O’Neill also held the view that South
 Origin of BRICS cooperation 55
Africa’s economic aggregate and comprehensive strength were no match for
other member states, and its inclusion would inevitably arouse controversy.45
When the global financial crisis broke out, the BRIC countries teamed
up to meet the challenges. Their success attracted widespread attention,
including from South Africa, who expressed its intention to join. As the
most important economy in the southern part of Africa, South Africa also
brought many opportunities to the BRIC cooperative mechanism. The add-
ition of South Africa further enhanced the cooperative mechanism’s influ-
ence at both regional and global levels by linking the major regions of the
world closer together, including Asia, Latin America, Europe, and Africa.
It also served to promote South–​South and North–​South cooperation and
showed that the BRICS was an open and inclusive mechanism dedicated to
pursuing win-​win results.
Second, the functional complementarity among members. The expectations
of the BRICS countries for organizational complementarity also vary. Some
members look forward to achieving economic efficiency through the BRICS
mechanism, while others expect higher strategic effectiveness or enhanced
international status.46 In its early days, BRIC cooperation focused on “prin-
ciple cooperation” and was primarily driven by the need for tackling the
financial crisis and complementary cooperation in politics and status (voice
and rights to set rules in the economic governance system). After 2013, the
BRICS countries put equal focus on political and economic cooperation and
initiated the New Development Bank, among other projects. The complemen-
tary needs of the five countries in the economic field began to affect the fur-
ther expansion of cooperation. The complementarity of BRICS cooperation
is also affected by exogenous shocks. The financial crisis that broke out in the
Western world in 2007 was such an exogenous shock. It facilitated the alliance
of emerging countries to establish better global governance mechanisms,
to enhance their voice and rights to set rules, and to seek further economic
cooperation among themselves in fields of complementary potentials.
The “fading BRICS theory”47 claims that inadequate complementarity of
economic structure among the BRICS countries –​the differences in values,
and the overlap in the stage of development and position in the global value
chain –​all will contribute to the dim prospects for BRICS cooperation. The
BRICS cooperative mechanism will not reach the same stage as the European
Union as a highly coordinated political and economic alliance, nor is it likely
to have the same agenda as economic alliances in certain regions. Given the
difficulty for the BRICS countries to reach agreements on international issues,
they will not be able to work together towards a common goal. There are also
competitions among the BRICS countries in terms of trade. For example,
there are significant overlaps for Pakistan, India, China, and South Africa in
terms of trade structure, industrial mix, and position in the global value chain.
Therefore, trade competition among these countries is almost unavoidable.
In the future, efforts to stabilize BRICS cooperation should include
exploring and fostering complementarity and seeking cooperation in all
56 Ren Lin and Yin Jiwu
potential areas. As mentioned above, complementarity among the BRICS
countries is insufficient in the field of trade, but in finance, trade, and techno-
logical innovation, there is potential for cooperation thanks to a desirable
degree of complementarity. Especially in the context of instability in the
global economy and a short-​to medium-​term downward trend due to the
“negative externalities” of economic policies of developed countries in Europe
and America, it is necessary for emerging and developing countries to work
together to find complementary areas for cooperation and leverage the advan-
tage of working together. In light of the downturn of the global economy,
all countries are actively reflecting on this and exploring new engines for
global economic growth. The contribution of investments, especially those
in infrastructure, along with trade and finance, to economic growth, has
attracted more and more attention. In this regard, the establishment of the
New Development Bank was designed to fund future infrastructure construc-
tion projects in the BRICS member states and other developing countries.
Thanks to the bank, the areas for cooperation among the BRICS member
states are no longer limited to the industrial sectors that are functionally com-
plementary. The establishment of the New Development Bank will inject an
indispensable vitality into the effort to promote infrastructure investment as a
new engine for global economic growth. In addition, when dealing with inter-
national affairs, the BRICS member states can achieve complementarity in
security and autonomy by seeking more policy coordination, finding common
ground, and realizing common interests. These measures will help stabilize
the cooperative mechanism.
Based on the analysis of the above two endogenous functional factors,
we believe that the number of the BRICS member states and the possibility
of transcending the complementarity at both national and system levels
increased the expectations of the five countries on the individual payoff struc-
ture. Hence, we come to the next proposition.
Proposition 2: The BRICS has a limited number of members. As the
expectations for collective interests and payoffs heighten, and with the expan-
sion of potential complementary areas for cooperation among themselves,
the BRICS countries are expecting greater individual payoffs.

2.2 Theoretical explanation II

2.2.1 Exogenous normative factors and their future impacts

First, the expectation and evolution of the payoff culture. As “latecomers”
to the existing international system, the BRICS countries have the common
desire to make the system better conform to their own norms and cultures.
But this cannot be achieved through the effort of any individual actor –​
needless to say, the existing system is not adequately receptive of the emerging
countries.48 Since the outbreak of the financial crisis, neither the international
institutional environment nor the limited proportion of economic power the
 Origin of BRICS cooperation 57
BRICS enjoys in the international community has improved a bit, but has
rather become exacerbated. Even though the G20 mechanism has continu-
ously developed and improved, the developing countries represented by the
BRICS countries are still underrepresented in global governance. Therefore,
from the perspective of the global governance system and power structure, the
formation of BRICS cooperation and its continued existence is a result of a
relatively stable expectation for payoffs.
Second, the choice and evolution of the BRICS cooperative mech-
anism reflect the impact of the expectation for a payoff culture on cooper-
ation. There are two ways of cooperation between countries: either hard
(institutionalized) or soft (non-​ institutionalized).49 At present, BRICS
cooperation adopts an informal soft mechanism that includes both regular
and non-​scheduled meetings at multiple levels, such as foreign ministers’
meetings, finance ministers’ meetings, and leaders’ meetings. Therefore,
it resembles a loosely organized forum that is far from establishing a sec-
retariat. BRICS cooperation is primarily based on soft and informal
mechanisms. This is partly because the strategic intentions of the five
countries are relatively transparent, and the exchanged information can be
discerned and controlled. Besides, the formation of such mechanisms is also
a result of realistic considerations, such as the difficulty of establishing hard
mechanisms. The low level of institutionalization for BRICS cooperation
also objectively reflects that the high expectations for a payoff culture have
not taken shape in the formation and development of the cooperation. This
brings uncertainty to the governance efficiency, cooperative efficacy, and
further development.
The expansion of areas and functions of cooperation mirrors the changes
in the BRICS’ expectation for payoffs. The 2013 BRICS Summit in Durban
divided the development of BRICS cooperation into two stages. The first
stage featured forums of theoretic dialogues on economic governance. The
five countries had different expectations on the cooperation. Russia placed
its focus on cooperation in political security, while China, India, Brazil,
and South Africa emphasized the importance of economic governance
and cooperation, including the role of the BRICS countries in global eco-
nomic governance and economic cooperation among the five countries.50
The 2013 summit generated a new consensus in the cooperation areas, levels
and mechanisms. The BRICS thus turned into a comprehensive mechanism
for daily and long-​term coordination on major issues in the global eco-
nomic and political arenas. At the Durban summit, the leaders of the five
countries decided to set up the BRICS Development Bank and the foreign
exchange reserve pool, a pragmatic move that indicated deepened cooper-
ation in the economic field. At the 2014 Summit in Fortaleza, the BRICS
countries reached a basic consensus on establishing the development bank.
The expansion of shared interests and areas for cooperation among the
BRICS countries also served to promote the construction and improvement
of the cooperative mechanism. The theme of BRICS cooperation is flexible
58 Ren Lin and Yin Jiwu
and subject to change with the most imminent problems faced by emer-
ging countries. The cooperation is sustainable, thanks to basic expectations
for payoffs, such as reshaped global economic governance and an enhanced
voice for developing countries. Moreover, the implementation and in-​depth
development of the BRICS economic cooperation mechanism is closely
associated with the rise of the five countries’ political status, reflecting that
BRICS cooperation serves to link different topics. Thanks to the richness
and balance of the connotation of the payoff culture, and the furtherance
of cooperation both in political and economic realms, the expectation for
payoffs from cooperation stabilized, and that for repeated successes and
benefits increased.
Second, the desire to improve international norms. From the perspective of
cultural goals, the formation of BRICS cooperation was a result of the dissat-
isfaction of member countries with the existing international system, and their
desire to reshape the norms to their benefit.51 As mentioned above, the emer-
ging and developing countries are dissatisfied with the imparity of authority
and responsibility and the non-​neutral international norms. Therefore, they
have the common desire to reform and improve the international system of
governance norms.
The BRICS’ common response to the external world manifests their
desire to build fairer international norms. The endogenous consensuses of
the BRICS members converge into a collective consensus, according to which
they give collective responses to the external norms system. This collective
consensus directly affects how BRICS members recognize and determine the
impact of cooperation, thus having a bearing on how sustainable the cooper-
ation can be. The non-​neutrality of existing governance platforms such as the
World Bank and the IMF remains a serious problem. In this context, emer-
ging economies are in desperate need of a governance platform of their own.
As they participate more in global economic governance and provide global
public goods, the emerging economies call for changes to the non-​neutral gov-
ernance structure so that their vital interests are adequately attended to. By
far, the BRICS consensus has produced a number of outcomes, though still
facing many challenges. In their effort to seek participation in global eco-
nomic governance, in 2014 the BRICS member states managed to establish
the BRICS Development Bank.
Based on the above analysis, it can be seen that the BRICS countries
have built a normative culture of repeated cooperation. This culture has
enhanced the BRICS’ belief in future sustainable development and fore-
told the prospects of BRICS cooperation. Hence, we come to the next
proposition.
Proposition 3: The formation of common desire to reform the international
normative and cultural systems, as well as the BRICS’ gradual successes in
implementation, enhanced the expectation for sustainable cooperation. Thus,
the cooperative game becomes a rational choice for the BRICS member
countries.
 Origin of BRICS cooperation 59
2.2.2 Endogenous consensus factors and their future impacts
First, the cognition of homogeneity between member states. The differences
between the BRICS countries will raise concerns about the stability of the
cooperative mechanism. These differences cover the stage of development,
economic structure, national realities, and geopolitical conditions. The
BRICS countries conducted effective communication on substantive issues
such as the New Development Bank’s preliminary capital investment, respon-
sible persons, organizational structure, shareholders’ rights and responsibil-
ities, and location of the headquarters.52 According to the principle of parity
of authority and responsibility, China, as the country with the soundest eco-
nomic strength, the greatest international influence, and the highest share of
capital contribution, should have enjoyed the corresponding voting power.
However, for the benefit of BRICS cooperation as a whole, China has made
sacrifices and concessions in the institutional design and arrangements,
doing so in an effort to change the unfair global economic governance order,
drive reform of the international financial governance order, and improve
the voice of emerging and developing countries. Adhering to the principle
of seeking common ground while shelving differences, China makes signifi-
cant contributions to the long-​term stability of the BRICS cooperative mech-
anism.53 In the end, the BRICS members mitigated divergences and differences
in their joint effort to establish the BRICS Development Bank. The bank,
which is based in Shanghai, has a president from India, and top management
members from Russia, Brazil, and India. The lead-​up to the establishment
of the New Development Bank in 2014, reflects that the BRICS countries
seek homogeneous cooperation in their effort to address problems through
consultation.
In terms of homogeneity, the BRICS countries have significant differences
in their political systems, ideologies, and cultures. Their economic develop-
ment models also vary substantially. However, the cognition of these homoge-
neous differences is overtaken by the common identity of major countries in
emerging regions and the corresponding pursuit for status, and the consensus
on interests protection.
Second, endogenous consensuses. (1) Consensus on status. Emerging
countries refer to large countries or rising countries in different regions. The
cooperation among the BRICS countries, as a group of emerging countries
with similar status, serves to consolidate the influence of the five countries
in their respective regions and demonstrate their regional and international
status.54 As latecomers to the international system, emerging countries rise
rapidly in terms of economic strength, thereby reshaping the previous struc-
ture of international economic power. However, their economic status is not
commensurate with their political status. Therefore, the BRICS members
are dissatisfied with the impartiality and representativeness of the existing
international system. For a better international and regional status, including
the ability to exert regional influence and to reshape international norms,
60 Ren Lin and Yin Jiwu
emerging countries are more willing to work together. The BRICS cooperative
mechanism can pool more consensuses and represent the emerging economies
in the international arena to vigorously call for reform of the non-​neutral
international rules. The BRICS is “committed to promoting the reform of
international financial institutions to reflect changes in the global economic
landscape. The voice and representation of emerging markets and developing
countries in international financial institutions should be enhanced.”55
(2) Consensus on identity. The group identity formed through the coopera-
tive mechanism, that is, the group of emerging countries, has important
implications for the BRICS countries. It can also help the five countries handle
pressures arising from the voice of, and norms dominated by, the developed
countries. From the perspective of the economic development stage, the
BRICS’ consensus on identity can be summed up as a group of emerging
countries that are serving a pivotal role in the face of common challenges of
domestic, regional, and global economic growth. This consensus has been
clearly demonstrated through the agenda of the previous BRICS leaders’
meetings and the joint declarations signed at these meetings.
The countries dominating the international system generally have two
attitudes towards emerging countries: acceptance and rejection. The attitudes are
actually the results of intricate considerations about self-​interest. For example,
the existing international system hopes that emerging countries will take more
responsibilities while enjoying less exclusive power to establish norms and voice
their interests.56 These considerations also include whether the emerging coun-
tries are strong competitors economically and strategically, and whether they
are homogenous countries. Given the difficulties in ranking the existing inter-
national system, the BRICS countries are more willing to strengthen cooper-
ation in the fields of energy, civil services, education, and science and technology.
They are committed to promoting multilateral diplomacy and supporting the
central role of the United Nations in responding to global threats. They also
support the establishment of a more democratic and just multipolar world
based on the international rule of law, equal cooperation, mutual respect,
coordinated action of all countries, and collective decision-​making.57
In certain situations, such as when the global financial crisis broke out,
emerging major countries with similar international status had the consensus
to strengthen cooperation in response to the financial crisis.58 Major emer-
ging countries have made significant contributions to the development of the
global economy and suffered great losses from global financial risk. However,
in the existing global governance system, they are not entitled to reciprocal
rights to propose or enforce international norms and regimes. This context
becomes an objective external condition for the establishment of the group
identity of the major emerging countries. In other words, for these countries,
the Western-​led international regimes and norms have become “the Other”.
Moreover, the collective identity of the BRIC countries is reflected in the
following facts: China and other BRIC countries collectively promoted the
achievement of consensus at the 2009 G20 Pittsburgh Summit, where G20
 Origin of BRICS cooperation 61
leaders agreed to increase the share of emerging and developing countries in
the IMF. China, India, Brazil, South Africa, together with other developing
countries, voiced their collective requirements on the developed countries
to complete the emissions-​reduction goals in the second phase of the Kyoto
Protocol. The BRIC countries also requested the establishing of a new devel-
opment bank and contingency reserves as the foundation for investments in
infrastructure construction.59
(3) Consensus on interests. The consensus of emerging countries on
interests is mainly manifested in two aspects. One is that, due to the inequality
of the existing international system and regimes, these countries often cannot
effectively protect their national interests in international transactions.60 The
other is that the emerging countries need to put forward more norms and
regimes to protect the exchanges among themselves, thereby promoting the
growth of their own interests. “The BRIC dialogue and cooperation is not
only in line with the common interests of emerging markets and developing
countries, but also conducive to building a harmonious world of lasting peace
and shared prosperity.”61
Based on the analysis of the above two endogenous normative factors,
we believe that the BRICS countries’ understanding of their own nature –​
and the formation of their consensus on identity, status, and interests –​have
sustained implications for the formation and development of BRICS cooper-
ation. Hence, we come to the following proposition.
Proposition 4: With the gradual increase in the consensus among the
BRICS countries on their status, identity, and interests, they were able to tran-
scend the homogeneity among themselves, thanks to the pressures from the
existing global system and the common desire to reform the norms of that
system. This enhanced the expectation for sustainable cooperation among the
BRICS countries.

3. Conclusion
BRICS cooperation has a number of distinctive features. For example, it
is not institutionalized, and it features differences that transcend national
homogeneity. BRICS is also one of the international organizations that China
actively participated in creating and playing an important normative role.62
This chapter does not pursue the theoretical explanation based on any single
factor. Given the relatively little research on the origin of BRICS cooper-
ation and the fact that single-​factor theories tend to be biased, we explored
the systematic classification of explanatory variables and the corresponding
mechanisms of action and discussed how explanatory variables of different
dimensions, levels, and attributes exert their influence. Under this framework
of theoretical explanation, the expectation for a payoff structure at the system
and individual levels, as well as the understanding of the impact of exogenous
and endogenous factors emerge as the two core mechanisms of action that
facilitated the formation of BRICS.
62 Ren Lin and Yin Jiwu
This chapter systematically expounds on the theories on the origin of
cooperation. On that basis, we answer the question of how different factors
affect the formation of cooperation through different mechanisms by
examining different combinations of explanatory factors and mechanisms
of action. The theoretical implications are manifested in the following
aspects.
First, this chapter focuses on the explanation of the BRICS as functional
and developmental, rather than antagonistic cooperation,63 and explains
the origin of collective rationality and interests in a cooperative game. This
constitutes not only a further elaboration on the nature of the BRICS mech-
anism, but also an advance in the understanding of previous cooperation
models and their premises.
Second, the BRICS countries are substantially different. Their repre-
sentativeness is questioned. In this sense, BRICS cooperation is an excep-
tion to the Western mainstream assumption about international regimes,
namely, any cooperation has to be among homogeneous states. Be it
“democratic peace”, “democratic trust”, organizational theories such as
the rational creation of the international system, or the practice of foreign
democratic transformation of the Western countries headed by the United
States, they have a common argument, that is, democracy is the basis for
cooperation (especially effective cooperation). The theory of homogenous
cooperation makes some degree of sense theoretically, but it also creates
the closedness and exclusivity of cooperation by neglecting the possi-
bility for inclusive and pluralistic cooperation. The BRICS mechanism has
transcended that theory and provided a glaring example of pluralistic and
inclusive cooperation.64
Third, the important role of member states’ subjective initiative in the for-
mation and development of BRICS cooperation. Other than the explanations
for the origin of cooperation with emphasis on the structural pressures, there
are also theories approaching it from national strategic choices and cognition,
such as the development and regulation of complementarity among countries,
judgement and shaping of consensus on interests among countries, and the
expectation to shape benign international norms. The perception of homo-
geneity and the enhancement of consensus on identity, status, and interests,
both facilitated the formation of BRICS cooperation.65 In fact, the forma-
tion of BRICS cooperation is a reflection of the member countries’ subjective
initiative.
Fourth, traditional theoretical explanations for the origin of cooperation
are mostly factor-​based, in which various rational and bounded rational
factors were examined on how they exerted influence on the common desire
and tacit agreement for cooperation. This chapter synthesizes the factor-​and
mechanism-​based explanatory frameworks and further analyses the causal
variables and their mechanisms of action in four dimensions. In sum, this is
a dynamic causal explanatory theory emphasizing the combined function of
factors and processes.
 Origin of BRICS cooperation 63
Notes
1 Chen Jin (ed.), Report on the Development of BRICS Economic and Trade
Cooperation, UIBE Publishing House, 2013; Gu Yunshen (ed.), BRICS Research,
Shanghai People’s Publishing House, 2013; Lin Yueqin (ed.), BRICS Development
Report (2011/​2012), Social Sciences Academic Press, 2012/​2013; Li Yang (ed.),
BRICs and the Global Transformation, Social Sciences Academic Press, 2011;
Huang Renwei, “The Rise of the BRICS Countries and Global Governance
System”, The Contemporary World, No. 5, 2011, pp. 24–​27; Lu Feng, et al.,
“Background and Prospects of the BRICS Cooperation”, International Political
Studies Review, No. 2, 2011, pp. 1–​21; Zhu Jiejin, “Transformation of the BRICS
Cooperative Mechanism”, International Review, No. 3, 2014, pp. 59–​73.
2 Richard Dawkins, The Selfish Gene, 2nd ed., Oxford: Oxford University Press,
1989, p.4.
3 R.D. Alexander, Biology and Human Affairs, Seattle: University of Washington
Press, 1979; R.D. Alexander, The Biology of Moral Systems, Hawthorne, N.Y.:
deGruyter, 1987.
4 Shiping Tang, “The Social Evolutionary Psychology of Fear (and Trust): Or Why
Is International Cooperation Difficult?” Manuscript, 2011.
5 Wang Dingding, “The Origin and Evolution of Human Cooperation”, Social
Science Front, No. 4, 2005, pp. 39–​47.
6 Adam Smith, The Theory of Moral Sentiment, translated by Jiang Ziqiang, The
Commercial Press, 1997.
7 Yin Jiwu, Formation of Social Cognition and Alliance Trust, Shanghai People’s
Publishing House, 2009, pp. 101–​131.
8 Robert Axelrod, The Evolution of Cooperation, translated by Wu Jianzhong,
Shanghai People’s Publishing House, 2007.
9 Zheng Yefu (ed.), Trust: Making and Breaking Cooperative Relations, China City
Press, 2003.
10 Kenneth Oye (ed.), Cooperation Under Anarchy, translated by Tian Ye and Xin
Ping, Shanghai People’s Publishing House, 2010.
11 Lisa L. Martin and Beth A. Simmons (ed.), International Institutions: An
International Organization Reader, translated by Huang Renwei, Shanghai
Century Publishing (Group) Co., Ltd., 2006.
12 Joseph S. Nye and John D. Donahue (ed.), Governance in a Globalizing World,
translated by Wang Yong and Men Honghua, World Affairs Press, 2003, p. 17.
13 Ren Lin, “What should G20 do after the financial crisis?”, World Affairs, No. 24,
2014, pp. 46–​47.
14 For the classification criteria and corresponding theoretical discussions, see Qin
Yaqing (ed.), Rationality and International Cooperation: Liberalism in World
Politics, World Affairs Press, 2008.
15 Tian Ye, Institutional Choice in International Relations: From the Perspective of
Transaction Cost, Shanghai People’s Publishing House, 2006, pp. 138–​149.
16 Alexander J. Field, Altruistically Inclined? The Behavioral Sciences, Evolutionary
Theory, and the Origins of Reciprocity, translated by Zhao Pei, et al., Changchun
Publishing House, 2006.
17 Originated from economics, the distinction between endogenous and exogenous
variables lies in whether a given variable was independent of explanatory variables.
In this book, we categorize endogenous and exogenous variables from the
64 Ren Lin and Yin Jiwu
perspective of the BRICS cooperative system. In other words, the variables out-
side the BRICS system are exogenous variables, and those inside are endogenous
variables. In this sense, such a distinction is relative.
18 Kenneth Oye, “Explaining Cooperation Under Anarchy: Hypotheses and
Strategies”, reprinted in Kenneth Oye, Cooperation Under Anarchy, Shanghai
People’s Publishing House, 2010, pp. 16–​18.
19 Yin Jiwu, Formation of Social Cognition and Alliance Trust, Shanghai People’s
Publishing House, 2009.
20 Kate O’Neill, Jorg Balsiger and Stacy D. VanDeveer, “Actors, Norms, and Impact:
Recent International Cooperation Theory and the Influence of the Agent-​
Structure Debate”, Annual Review of Political Science, Vol. 7, 2004, pp. 149–​175
21 Kenneth Oye, “Explaining Cooperation under Anarchy: Hypotheses and
Strategies”, reprinted in Kenneth Oye, Cooperation Under Anarchy, translated by
Tian Ye and Xin Ping, Shanghai People’s Publishing House, 2010, pp. 5–​16. The
explanations for the mechanism of action in this chapter mainly draw upon the
theory of decentralized cooperation in international cooperation research, that is,
the cognition of the payoff structure and the prediction of future impacts of inter-
national cooperation under an anarchy system.
22 This mainly refers to the payoff structure of emerging and developing countries as
a group in the global system.
23 The origin of cooperation we attempt to explain in this chapter is essentially about
tracking the source of group rationality. Drawing on research on cooperative game
theory, we further clarify and enrich the theoretical framework of the origin of
cooperation. In the general sense, the motivation of a game, including a coopera-
tive game, is individual economic rationality. However, in reality, the cooperative
rationality often has more rich connotations, including group rationality.
24 Robert Axelrod and Robert Keohane, “Achieving Cooperation Under
Anarchy: Strategies and Institutions”, reprinted in Kenneth Oye, Cooperation
Under Anarchy, translated by Tian Ye and Xin Ping, Shanghai People’s Publishing
House, 2010, pp. 238.
25 Common external pressures and the cognition thereof, as well as and common
tasks/​missions and the cognition thereof, are important structural reasons for the
formation of cooperation. See Yin Jiwu, Formation of Social Cognition Alliance
Trust, Shanghai People’s Publishing House, 2009, pp. 127–​130; Stephen Walt, The
Origins of Alliances, translated by Zhou Yiqi, Peking University Press, 2007.
26 Robert Jervis, System Effects: Complexity in Political and Social Life, translated by
Li Shaojun, Shanghai People’s Publishing House, 2008, p. 231.
27 Here, we emphasize the positive feedback generated from a positive cooperative
game, which further strengthens the cooperative culture and norms and leads to
continuous expectation for long-​term cooperation and benefits. This is consistent
with the logic of the “one repayment for one payment” strategy and the “stepwise
repayment” strategy. See Robert Axelrod, The Evolution of Cooperation, Shanghai
People’s Publishing House, 2007.
28 For the impact of the actor’s subjective initiative on cooperation and its structure,
see Zhou Fangyin, “International Structure and Strategic Interactions”, Journal
of World Economics and Politics, No. 10, 2007, pp. 6–​17.
29 For the impact of the financial crisis on emerging economies and corresponding
anti-​crisis policies, see Lin Yueqin, “The Impact of the Global Financial Crisis on
the BRICS Countries”, Red Flag Manuscript, No. 12, 2009, pp. 30–​33.
 Origin of BRICS cooperation 65
30 Wei Zongyou, “The Rise of Emerging Major Countries as a Group and Global
Governance Reform”, International Forum, No. 2, 2011, pp. 8–​14.
31 IMF data, www.imf.org/​external/​pubs/​ft/​weo/​2014/​02/​index.htm, September 11,
2014.
32 World Economic Outlook, www.imf.org/​external/​pubs/​ft/​weo/​2014/​01/​, 2014-​
12-​20.
33 Tian Ye, “Institutional Supply in Global Governance: An Analysis of Transaction
Costs”, World Economics and Politics, No. 10, 2002, pp. 17–​22; Qin Yaqing, “Global
Governance Failure and Reconstruction of the Conception of International
Order”, Journal of World Economy and Politics, No. 4, 2013, pp. 4–​18.
34 Zhang Yuyan, “Interest Groups and Non-​Neutrality of Regimes”, Reform, No. 2,
1994, pp. 97–​105.
35 Xu Xiujun, “Emerging Economies and Transformation of Global Economic
Governance Structure”, Journal of World Economics and Politics, No. 10, 2012,
pp. 49–​ 79; Huang Renwei, “The Rise of the BRICS Countries and Global
Governance System”, The Contemporary World, No. 5, 2011, pp. 24–​27; Wei
Zongyou, “The Rise of Emerging Major Countries as a Group and Global
Governance Reform”, International Forum, No. 2, 2011, pp. 8–​14; Wu Zhicheng
and Yang Na, “Global Governance: From the Perspective of East Asia”, Foreign
Theoretical Trends, No. 10, 2012, pp. 17–​23.
36 IMF Members’ Quota Calculation Formula, www.imf.org/​external/​np/​exr/​facts/​
chi/​quotasc.pdf, January 10, 2015.
37 IMF Members’ Quotas and Voting Power, and IMF Board of Governors, http://​
www.imf.org/​external/​np/​sec/​memdir/​members.aspx, January 10, 2015.
38 Wei Zongyou, “The Rise of Emerging Major Countries as a Group and Global
Governance Reform”, International Forum, No. 2, 2011.
39 Wang Mingguo, “New Progress in the Study of International Institutions: A
Comprehensive Review of Institutional Effectiveness”, Teaching and Research,
Vol. 12, 2010, pp. 41–​49; David Helder and Kevin Young, “Principles of Effective
Global Governance”, translated by Zhu Xu, Nankai Journal (Humanities and
Social Science Edition), No. 5, 2012, pp. 1–​11.
40 Cui Zhinan and Xing Yue, “From the G7 Era to the G20 Era”, Journal of World
Economics and Politics, No. 1, 2011, pp. 134–​154.
41 Ren Lin, “BRICS Cooperation Promotes the Shaping of a Neutral International
System”, Oriental Morning Post, July 22, 2014.
42 Mansell Olsen, The Logic of Collective Action: Public Goods and the Theory of
Groups, translated by Chen Yu, Shanghai People’s Publishing House, 2011,
pp. 1–​2; Robert Axelrod and Robert Keohane, “Achieving Cooperation under
Anarchy: Strategies and Institutions”, reprinted in Kenneth Oye, Cooperation
Under Anarchy, translated by Tian Ye and Xin Ping, Shanghai People’s Publishing
House, 2010, pp. 240–​243.
43 “YICAI’s Interview with Jim O’Neill: The BRIC Should Not Have Expanded”,
www.yicai.com, Nov. 28, 2014. The BRICS countries are all emerging powers in
their respective regions, but there are controversies around their representativeness
and whether they should incorporate new members.
44 Xu Xiujun, Shen Minghui, and Ren Lin, Global Economic Governance: Old
Order vs. New Rules, World Affairs, 2014, No. 17, pp. 14–​26.
45 “YICAI’s Interview with Jim O’Neill: The BRIC Should Not Have Expanded”,
http://​www.yicai.com, Nov. 28, 2014.
66 Ren Lin and Yin Jiwu
46 For example, India’s participation in the BRICS is a decision after multiple trade-​
offs, according to Li Guanjie, between the following considerations: attracting
foreign investments from other member countries; seeking a solution to trade
deficits; drawing development experience from other member countries; fostering
an atmosphere conducive to its incorporation into the permanent members of
the UN; creating an environment for addressing security issues; and strategically
shaping a landscape of rising powers. The latter three considerations are more
subtle than the former three. See Li Guanjie, “Analysis of India’s Strategy in
BRICS Cooperation”, South Asian Studies, No. 1, 2014, pp. 119–​142.
47 This pessimistic argument has found its pieces of evidence from the recent eco-
nomic slowdown of emerging countries. It claims that the “golden decade” of
rapid growth for the BRICS economies has passed, and low-​and medium-​speed
growth will remain in a long period to go. For example, the Brazilian Real, the
Russian Ruble, and the Indian Rupee have seen substantial declines. For the
voices questioning the BRICS cooperation, see Joseph Nye, “BRICS Without
Mortar”, Lianhe Zaobao, April 10, 2013; Jiang Shixue, “How to Make the BRICS
Cooperation More Mature”, World Affairs, No. 15, 2014, pp. 34–​36.
48 The theory of social identity actually plays an important role here. See Wang
Pei and Liu Feng, “Social Identity Threats: From the Perspective of the Social
Identity Theory”, Advances in Psychological Science, No. 5, 2007, pp. 822–​827;
Michael Hogg and Dominic Abrams, Social Identifications: A Social Psychology
of Intergroup Relations and Group Processes, translated by Gao Minghua, China
Renmin University Press, 2011.
49 Donald Puchala and Raymond Hopkins, “International Regimes: Lessons
from Inductive Analysis”, in Stephen Krasner (ed.), International Regimes,
Peking University Press, 2005, p. 65; M.Virally, ”Definition and Classification of
International Organizations: A Legal Approach”, International Social Science
Journal, Vol.29, 1977, pp. 58–​72.
50 Zhu Jiejin, “Transformation of the BRICS Cooperative Mechanism”, International
Review, No. 4, 2014, pp. 59–​62.
51 In the Joint Statement of the BRIC Countries’ Leaders in Yekaterinburg, which
marked the formation of BRIC cooperation, the four countries called upon the
G20 to implement the consensus and pledged to promote the reform of inter-
national financial institutions and to improve the voice and representation of
emerging and developing countries in international financial institutions. “Joint
Statement of the BRIC Countries’ Leaders, Yekaterinburg” (June 16, 2009),
People’s Daily, June 17, 2009, p. 3.
52 Sixth BRICS Leaders’ Meeting: Fortaleza Declaration, People’s Daily, July 17,
2014, p. 2.
53 Lin Yueqin, “New Development Bank: Reconstructing the International Financial
Order”, Guangming Daily, October 15, 2014, p. 15.
54 Adriana Erthal Abdenur, “Emerging Powers as Normative Agents: Brazil and
China within the UN Development System”, Third World Quarterly, Vol. 35, No.
10, pp. 1876–​1893; Pu Xiaoyu, “Socialization as a Two-​Way Process: Emerging
Powers and the Diffusion of International Norms”, The Chinese Journal of
International Politics, Vol. 5, No. 4, 2012, pp. 341–​367.
55 Joint Statement of the BRIC Countries’ Leaders, Yekaterinburg, June 16, 2009.
56 Su Changhe, China and Global Governance: Process, Action, Structure, and
Knowledge, International Political Studies Review, No. 1, 2011, pp. 35–​45.
 Origin of BRICS cooperation 67
57 Joint Statement of the BRIC Countries’ Leaders, Yekaterinburg, June 16, 2009.
58 Ramesh Thakur, “How Representative are BRICs”, Third World Quarterly, Vol.
35, No. 10, 2014.
59 Gao Shangtao, “Theory and Model of Practice: An Analysis of the Process of
China’s Participation in the BRICS Mechanism”, Diplomatic Review, No. 1, 2015,
pp. 55–​68.
60 Most of the existing international systems are the products of hegemony. Men
Honghua, Wing of Hegemony: U.S. Institutional Strategy, Beijing University
Press, 2005. Robert Keohane, After Hegemony: Cooperation and Discord in the
World Political Economy, translated by Su Changhe, Shanghai People’s Publishing
House, 2012.
61 Joint Statement of the BRIC Countries’ Leaders, Yekaterinburg, June 16, 2009.
62 China’s overall attitude is to actively participate in international institutions
and organizations. For an overview of such attitude, see Wang Yizhou (ed.),
Construction within Contradiction: Multiple Perspectives on the Relationship
between China and International Organizations, China Development Press, 2003.
63 Antagonistic cooperation includes alliance and other types of international
cooperation. For the different forms of international regimes, see Tian Ye,
Institutional Choice in International Relations: From the Perspective of Transaction
Cost, Shanghai People’s Publishing House, 2006, pp. 120–​166. In fact, modern
functional international organizations and regional integration are both
manifestations of experience in functional cooperation. But we believe the BRICS
is unlike others in that it is a conglomerate of emerging countries that transcend
regions, ideologies, cultures and economic development models.
64 Su Changhe, “China and the International System: Seeking Inclusive Partnership”,
Diplomatic Review, No. 1, 2011, pp. 9–​18.
65 This is different from the theory of decentralized cooperation under an anarchic
system and the theory that emphasizes the importance of regimes. Kenneth Oye
(ed.), Cooperation Under Anarchy, translated by Tian Ye and Xin Ping, Shanghai
People’s Publishing House, 2010.
4 
BRICS cooperation in the game
of countries
Zhou Fangyin

Although the Western media has been questioning the prospect of the BRICS
cooperation since the first BRICS summit in 2009, the BRICS cooperation is
steadily gaining momentum. The three main reasons that affect this cooper-
ation are as follows: the impact of the current global landscape and the
increasing power of the BRICS countries on the global landscape, Western
countries’ strategies on the BRICS cooperation, and the BRICS countries’
own interests and other interactions in the BRICS cooperation. The BRICS
cooperation itself is the result of the game of the related countries. Despite
the differences in many aspects among the BRICS members, their cooper-
ation is fundamentally in line with mutual long-​term strategic interests and
has an important role that cannot be replaced by other platforms in achieving
related interests. As time goes by, the BRICS cooperation will leverage a more
important role in international economy and global governance.
A series of fruitful achievements of the BRICS cooperation indicates that
it is able to handle difficult situations effectively and seek consensus against
such a background. The BRICS cooperation has undoubtedly displayed
strong vitality in the past few years. What is the root of the BRICS cooper-
ation? What is the basis of the sustainability of the BRICS cooperation? Will
this basis be altered due to the change of international situations or eroded
due to the continual divergence of the economic power of the BRICS coun-
tries? These are absolutely the unavoidable questions when people get to learn
about the BRICS cooperation.
It was over ten years ago that the concept of BRIC was first put forward.
As to the concept per se, its name derived from an acronym used by Goldman
Sachs to promote its financial by-​products, and which is easy to vanish owing
to the change of international economic situations and the evolution of the
financial market. Superficially, the BRICS lacks a powerful adhesive to unite
its member states effectively. During the development of the BRICS cooper-
ation, it is not entirely unreasonable for the international media, including
many Western scholars, to question its prospects. There do exist some inherited
obstacles and flaws in the BRICS cooperation. In reality, however, the con-
cept of BRICS is not transient; instead, it displays an increasing vitality as
time goes by. The BRICS annual summit attracts much attention in the world,
 BRICS cooperation in the game of countries 69
and the BRICS cooperation has achieved much more than expected, which
is due to its realistic foundation. Therefore, we must have a deeper and more
comprehensive understanding of the main factors that affect the BRICS
cooperation, including from the perspective of the interactions between the
member countries, which will help us to better forecast and plan the future of
the BRICS.
In general, the factors that influence the BRICS cooperation are mainly
as follows: the global landscape, Western countries’ strategies regarding the
BRICS cooperation, and the BRICS countries’ consideration for the cooper-
ation and their interaction.

1. Global landscape
How many achievements can be made by the BRICS cooperation is largely
constrained by the background of the global landscape. The factors of the
global landscape are mainly reflected in the following aspects.
On the one hand, the global landscape is affected by the power structure
of the major power centres, especially the power of emerging countries as
represented by the BRICS in global politics, economy, military, and security.
To a large degree, it determines how much international influence the BRICS
countries themselves and the international organization they formed can
leverage under the best conditions.
The international system has been generally unipolar since the end of the
Cold War, or put another way, it has only one superpower, the United States.
A key feature of this system is that there is no single economy able to coun-
terbalance the United States. Under the unipolar system, the United States
is safer than any other big economy and exerts a larger influence on inter-
national affairs. Meanwhile, unipolarity reduces the systemic constraints on
the United States and gives it more freedom to act.1 In contrast, a multipolar
system means that no major country unequivocally occupies the first position.
Under the unipolar system, the relatively large gap in power increases the
cost for other countries to counterbalance the United States and reduces
the possibility for other countries to successfully counterbalance the United
States, as a result of which other major economies in the system become
hesitant to attempt to counterbalance it. The difficulty of collective actions
further increases the possibility for other major countries to jointly counter-
balance the United States. The special power structure under the unipolar
system creates an unfavoured external climate for other countries and those
international organizations that do not have the United States as a member to
exercise influence at the global level. Under the unipolar system, the lack of
sufficient external constraints has granted the dominant country more freedom
to move at will, which may lead to its excessive expansion or its tendency to
inappropriately extend its influence. And it will be intolerant of those inter-
national organizations or groups that are reluctant to be dominated by the
superpower or even potentially challenge or erode its influence. The greater
70 Zhou Fangyin
power the United States has, the less tolerance it will have in this regard. In
addition, the United States has a relatively strong motive to squeeze out the
action space of other sub-​major countries and further increase its systemic
benefits by adjusting international rules.2
China has witnessed rapid economic growth over a relatively long period
of time, which to a certain degree has promoted changes in the strength of the
international system. This change, however, is limited and not enough to pro-
mote the transformation of the international system from a unipolar struc-
ture to a bipolar or multipolar structure. At least in the next five to ten years,
it will still be difficult to truly transform the unipolar international system to
a bipolar or multipolar one.
Such a system of the international structure determines that the international
systems dominated by the United States and the Western institutions, such
as the World Bank, the International Monetary Fund, and the World Trade
Organization, will still be at the core of international economy and global gov-
ernance. Even if the BRICS cooperation can make smooth progress, the BRICS
countries cannot replace these organizations in the core areas. The BRICS coun-
tries will absolutely be faced with strong collective opposition and sanction by
the Western countries if they attempt to replace those institutions. In this sense,
it is a natural result of the current international system that Western countries
are not optimistic about the BRICS cooperation and often pour cold water on
it; and it is also natural that there are always some obstacles to the process of
the BRICS cooperation in the current system, making it difficult to achieve the
best outcomes. The basic principle of “openness, inclusiveness, cooperation and
win-​win results” advocated by the BRICS countries is not only their genuine
hope but also an unavoidable choice due to the relatively weaker position to the
United States and the European countries in general.
On the other hand, the BRICS cooperation itself is an important factor
in promoting the change of the international system. Under the unipolar
system, as the strength of the BRICS countries increases individually or col-
lectively and they have more substantial cooperation, that cooperation will be
more structurally meaningful. At present, the BRICS countries account for
30 per cent of the world’s total land area and their population is 42 per cent of
the world’s population. In 2014, their total GDP was about 22 per cent of the
world’s total GDP. If the BRICS countries continue to maintain an average
growth rate higher than that of the Western economies in the long run, and
if the BRICS cooperation can attract more and more support from other
countries, including other emerging economies, then the BRICS will have
an impact on the basic structure of the international system in terms of the
power structure of major countries, the international trade order, the inter-
national financial order, and the global governance system, and will change
many unreasonable elements in the existing order and arrangements.
From the perspective of the power structure, especially that in the inter-
national economy, the development of the BRICS cooperation will be deeply
influenced by the following trends in the future. (1) Compared with Western
 BRICS cooperation in the game of countries 71
countries, whether the BRICS countries, as a whole, can maintain a stable
momentum of rapid economic growth and how long the momentum can last –​
3–​5 years, 10–​20 years or longer –​will deliver different results. (2) Looking
into the next 30–​50 years, the understanding and estimation of to what mag-
nitude the overall economic scale of the BRICS countries will grow –​to reach
the same level as the economic aggregates of several major Western coun-
tries eventually or still have a large gap in total volume and quality –​will dir-
ectly affect the policies and attitudes towards the BRICS cooperation by the
BRICS countries themselves, Western countries and many other countries.
(3) When the overall strength of the BRICS countries is increasing, whether
the individual growth of each country shows obvious divergence and whether
the development between the BRICS countries reflects a solidified stratifica-
tion or a balanced growth overall will have an impact on the psychology of
the member states and also provide various opportunities and possibilities
for the potential differentiation of BRICS cooperation for Western countries.
The international trend determines the overall external climate faced by
the BRICS cooperation. Although it cannot fully determine the BRICS
countries’ strategies and policies in terms of mutual cooperation, the
external climate does provide different space and opportunities for these
countries and in reality restricts the behaviour of relevant countries as well.
The constraints are sometimes powerful and hard to be broken and affect the
BRICS countries’ positioning in the international system, including the pos-
ition of strength and the position of influence, their respective understanding
of development opportunities and strategic space, and the judgment of strat-
egies that should be taken to expand their strategic space and so on.
In general, the BRICS is not in a strong position in the current inter-
national system; instead, it is an emerging force that is rising but still relatively
weak overall. Since the Western countries have a dominant advantage in insti-
tutional arrangements and rules-​making in international trade, investment,
finance, and global governance, not a single BRICS country has the ability to
raise a serious challenge on its own, and such an attempt is doomed to lose
and will impose high costs and expenses. However, the BRICS, as a whole,
can greatly improve its status in the international economic environment
and have a bigger say in the international economy and global governance
by strengthening cooperation, enhancing mutual assistance, and attracting
broader support in the international community. Although the concept of
BRIC was originally proposed for international investment, the BRIC coun-
tries themselves began as a relatively powerful political force dispersed in the
international system. It is such an objective situation that bestows a strong
inner vitality on the BRICS cooperation.

2. Western countries’ strategic options for the BRICS cooperation

Under the same power structure, the different strategies adopted by Western
countries for the BRICS cooperation will exert various impacts on the progress
72 Zhou Fangyin
of the BRICS cooperation. Western countries generally have the following
major strategic options for the BRICS cooperation.
The first strategy is to vigorously suppress the BRICS cooperation and
strive to maintain the dominant position of Western countries in the inter-
national economy and global governance. This strategy will openly oppose the
erosion of the influence of the BRICS cooperation on the West on the inter-
national level and take countermeasures on the policy level, directly putting
various pressure on countries that actively promote the BRICS cooperation
and forcing them to shatter any hope to have a bigger say in international
affairs by promoting the BRICS cooperation. Such a strategy is probably
what Western countries want, but it will cause them to lose their moral high
ground in international economic cooperation and global governance, and
will arouse a greater response from within the system. Even if it can produce a
certain effect in a short period of time, it will cause further resentment among
the BRICS countries in the long run and may increase the long-​term cohe-
siveness of the BRICS countries. After all, external pressure is often a posi-
tive factor in enhancing internal solidarity. With the gradual increase of the
strength and international influence of the BRICS countries, this strategy is
less likely to yield substantial results.
The second strategy is to support the BRICS cooperation on the surface,
giving the BRICS countries some hope and making certain concessions to
them in secondary fields while creating delays and refusing to compromise
in international finance, international trade, international investment, and
the formulation of the core systems and rules in global governance. To put
it another way, this strategy is to support the BRICS cooperation superfi-
cially while trying to dissolve its internal motivation. For example, the BRICS
countries have been seeking to increase their voting rights and share in the
World Bank and the International Monetary Fund. According to the reform
plans of the two organizations in 2010, the BRICS’ voting rights in the World
Bank would be significantly increased to 13.1 per cent and its share in the
International Monetary Fund would reach 14.81 per cent. However, this
reform plan was not fulfilled for a long time due to the resistance from the
United States, although in fact the overall power of the BRICS countries
has far exceeded the share that the two institutions could grant them. The
objective effect of such a situation is that the patience of the BRICS countries
has been gradually exhausted, and they are forced to find a way out through
unity and cooperation.
During this period, the Asian Infrastructure Investment Bank initiated by
China was established in 2015, clearly showing the international community
that other countries can cooperate to establish a new regional multilateral
development bank and play an active role in global economic governance
without support from hegemonic countries. This also helps many coun-
tries realize that the control of global and regional multilateral develop-
ment banks by Western countries is not an unshakable law.3 Similarly, if the
concessions made by Western countries are far from the expectations of the
 BRICS cooperation in the game of countries 73
BRICS countries, those countries will make independent efforts to enhance
their institutional voice, thereby promoting reform of the global governance
structure and the international financial system. The establishment of the new
development bank and the BRICS Contingent Reserve Arrangement show
that Western countries have failed to achieve great success in coping with the
BRICS cooperation by causing delays and offering false appeasement.
The third strategy is to adopt a wait-​and-​see attitude to the BRICS cooper-
ation –​neither encourage nor publicly oppose it. This strategy counts on
the cooperation to be always in slow progress and will fail to influence the
international arena due to the conflicts among the BRICS countries and the
internal problems of their cooperation. Such an attitude gives no excuse to
the BRICS countries and avoids the possibility that the member states unite
to progress as a result of the opposition policy. The problem, however, is that
if nothing is done to the BRICS cooperation, as the power of those countries
increase and the interaction among them becomes more frequent, Western
countries will inevitably face the fact that the BRICS countries will have
more influence in the international community. It is undoubtedly difficult for
Western countries that dominate the system and have a bigger say in the inter-
national system to adopt such a passive and laissez-​faire policy.
The fourth strategy is to dismantle the BRICS cooperation by absorbing
individual BRICS countries, reduce their internal cohesiveness and make
them work towards different results or even be jealous and suspicious of each
other. Therefore, the BRICS cooperation would be effectively cooled down
and its impact on the existing international economic order and global gov-
ernance system would be alleviated. If one or two BRICS countries change
their attitude and policy due to persuasion from the West, this strategy will
produce effects quickly. However, it is difficult for Western countries to give
certain benefits to an individual BRCIS country while making no concessions
to others. The practice of giving certain benefits to an individual country
may make the West think that the reason why the concession is being made is
because of the pressure imposed by the BRICS countries. Such recognition
would make it unwilling to give up the platform of the BRICS cooperation.
In addition, if Western countries make concessions to a member state that has
the greatest power, the cost would be enormous, which to them is definitely an
undesirable result. If they make concessions to the country that has relatively
little power, the problem cannot be fundamentally solved in the long term.
Therefore, such a way has its limitations if put into practice. It is worthwhile
in tactics while doubtful in strategy.
The fifth strategy is to directly face the fact that the BRICS cooperation
is more and more important and producing results day by day, and explore
the fields where the BRICS cooperation and the international economic
order and global governance system can be connected and complement
each other on this basis. The strategy will better leverage the constructive
roles of the existing mechanism and the BRICS cooperation, encourage
them to evolve together amid competition and cooperation, and moderately
74 Zhou Fangyin
improve the existing governance mechanism and the ruling system at the
same time. In the long run, such a method will definitely increase the inter-
national influence of the BRICS countries to some degree. According to the
basic logic of international politics, however, as the power of the BRICS
countries is constantly increased and cooperation is steadily enhanced, it
is irreversible that the BRICS countries would have more influence in the
system. Adopting this strategy would to a certain degree affect the direc-
tion, progress, and speed of the BRICS cooperation and avoid the scen-
ario that the existing mechanism is fundamentally replaced by the BRICS
cooperation or two arrangements compete with each other, causing a huge
loss to both sides.
In general, the last strategy is the most practical one, which will lead to
the smallest negative effects in the long run. But it is also the last strategy to
which Western countries in the dominant position would resort. In reality,
the strategy adopted by the West will probably be a combination of the five
mentioned above. That is to say, they will adopt various methods, including
oppressing or discouraging the cooperation, associating with or targeting
individual member countries and making compromises in minor areas or
doing nothing unwillingly. Based on different opportunities and conditions,
different methods will bring about different combinations.

3. BRICS countries’ consideration for cooperation and their

interaction
A third factor that determines the direction of BRICS cooperation is the
member countries’ understanding of the relationship and value of the cooper-
ation, and the major policy choice to achieve their own interests. In essence,
the BRICS cooperation is the cooperation among the powerful and ambitious
sovereign states. Such cooperation cannot be realized if one country compels
others to accept its wish, and it is even less likely to be established under com-
pulsion by external countries. Meanwhile, the BRICS countries are not likely
to be dominated or voluntarily led by one country. To any member state, the
benefits of the cooperation must be bigger than the perception of the costs, or
it can choose to withdraw during the process of the cooperation. Therefore,
the BRICS cooperation must highly respect the will of all member nations
and be in line with their interests.
Whether that cooperation can make steady progress and a fruitful future
depends on how the BRICS countries treat each other and how they effect-
ively manage the relationship against a volatile global landscape and the inter-
national system transformation. There are both competition and cooperation
among the BRICS countries, and they have mutual interests and different
individual interests as well. The five countries have the same considerations
as to cooperation, and each country may have unique interests and views.
Below is a brief analysis of the interests and basic considerations of the five
countries.
 BRICS cooperation in the game of countries 75

3.1 China
China is in a special position in the BRICS cooperation. On the one hand,
after over 30 years’ constant rapid growth, the total volume of China’s
economy has reached an astonishing scale. On the global level, China is
the world’s second-​largest economy and largest trading country. In terms
of the economic aggregate, the difference between BRICS countries in
2014–​2015 became bigger. In 2015, China’s economic aggregate was about
US$10.8 trillion while the total GDP of Russia, India, Brazil, and South
Africa was around US$5.5 trillion. The total economic volume of China
was almost twice that of the other four countries together, while in 2013, it
was only 1.4 times the volume. This was obviously related to the major eco-
nomic difficulties and even the economic contraction faced by Russia and
Brazil in the past two years.
In terms of bilateral trade, China is the largest partner of Russia, India,
Brazil, and South Africa. China is the largest export market of Brazil and
South Africa and also their largest import market. In comparison, among
Russia, India, Brazil, and South Africa, none of them is among the top three
trading partners of each other (as time goes by, trade among the BRICS
countries will no doubt gradually increase). In terms of trade, China plays a
pivotal role in connecting the BRICS countries.
China’s outstanding advantages in economy is beneficial to the BRICS
cooperation but also restricts that cooperation. That China’s economic pos-
ition is far higher than other four countries is commonly the reason why
the public think that the BRICS is likely to be dismantled.4 The key of the
cooperation for the BRICS countries is the pursuit of influence and voice in
international affairs instead of competition in the economic area. Therefore,
as long as China does not impose its own will on other BRICS countries due
to its economic advantages, but respects others’ choices and will and avoids
letting any member state feel marginalized in the cooperation, its economic
power will not harm the cohesiveness of the BRICS countries; rather, it will
provide a solid material foundation for the BRICS cooperation to achieve
more substantial results.
It is the fundamental goal of China’s diplomacy to improve the overall
national climate, increase its influence in the international system, and ultim-
ately realize the rejuvenation of the Chinese nation in a peaceful way without
giving up the non-​alignment policy. A major restriction faced by China during
the process is that it does not have enough institutional voice in the inter-
national economy and global governance system and, as a result some of its
requirements cannot be effectively expressed and met under the existing order.
If various multilateral mechanisms cannot play their roles, China cannot have
more institutional voice even if its economic power is greatly increased.
The BRICS cooperation can play a positive role in helping China to exert
its influence in the international community, including challenging the existing
arrangement in international economy and global governance, and win voice
76 Zhou Fangyin
and influence for emerging countries. The deeper the BRICS cooperation
becomes, the bigger role it will play. The BRICS cooperation will improve
China’s strategic position in international economy and global governance
and create more activity space for China, which would be conducive for
China to grow into a major global power in a peaceful manner. Specifically,
the BRICS cooperation will help China to expand cooperation with emerging
countries in politics, economy, and security and deal with the US Asia–​Pacific
rebalancing strategy, face the challenges towards China’s international trade
environment such as the Trans-​Pacific Partnership Agreement (TPP)5, and
Transatlantic Trade and Investment Partnership (TTIP), and promote the
internationalization of RMB. The value of the BRICS cooperation is undeni-
able for China, both on strategic and practical levels in the future. Therefore,
instead of reluctance to make any sacrifice, China will be tolerant even if
other BRICS countries will be free riders of the Chinese fast train of devel-
opment to some degree in the process of the BRICS cooperation. And it will
take a relatively long time to show the strategic value of the BRICS cooper-
ation under the prerequisite that it maintain stable momentum overall.

3.2 Russia
Among the BRICS countries, Russia is relatively special. Unlike other member
states, Russia is not an emerging country in a serious sense; rather, it used to
be a superpower and now hopes to maintain its position and international
influence as a major power. Compared with the other four countries, Russia
has obvious advantages and disadvantages. It has strong military power and
regional security influence; it is as powerful as the United States in terms of
strategic weapons; it is a permanent member of the UN Security Council; it
boasts abundant energy and natural resources; it has rich experience in the
political battles with major economies; it has important geo-​political benefits
in its Commonwealth of Independent States and the Middle East; it has a
strong voice in many international affairs. In general, Russia boasts some
advantages and features that other BRICS countries do not have.
However, Russia is economically disadvantaged. In terms of the long-​term
trend of the world power development, China has an obvious trend to grow
into a world power centre; India is regarded to have huge potential due to is
large population; Russia has a large territory, yet it has a small population, so
its economy has structural flaws. Some Western scholars think Russia cannot
keep up with the development speed of the BRICS countries after the finan-
cial crisis.6 Due to the Ukraine problem, Russia has suffered serious economic
sanctions from the West, which puts pressure on its political security and
forms economic challenges, enhancing the political and economic value of the
BRICS cooperation to Russia to a large degree. In general, however, the pol-
itical function of the BRICS cooperation is larger than its economic function
to Russia. It is not Russia’s priority to deal with the economic sanctions
and strategic pressure from the West, expand its influence in international
 BRICS cooperation in the game of countries 77
affairs, maintain its influence in the Commonwealth of Independent States,
the Middle East and Central Asia, or improve its voice in the international
economy.
Russia places political strategy over economic strategy in the BRICS
cooperation, which determines that it will try to lead rather than follow any
other member state. Different from the G20 and the G7, the BRICS mech-
anism is one of the few multilateral cooperation mechanisms that are not
intervened by Western countries or even dominated by the United States.
Under this mechanism, Russia has a relatively large activity space instead
of bearing much pressure from other countries, and the BRICS can serve as
a significant platform where Russia can push the world to develop towards
multi-​polarization and alleviate strategic pressure. The BRICS cooperative
mechanism is an important tool for Russia as it can enhance its status in the
global governance system, which cannot be realized by Russia’s cooperation
with the West at present.7
Russia was suspended from the G8 after the Ukraine crisis; it is ordinary
and even isolated in the G20, an important platform to discuss international
economy and global governance, which further indicates the importance of
the BRICS mechanism to Russia. Against the backdrop, Russia tends to con-
sider more about politics in the BRICS cooperation. It supports China as to
the choice of the location of the New Development Bank (NDB) and agrees
that Shanghai is an ideal city. The more negative the policies to Russia taken
by the United States and its Western alliance and the more strategic pressure
they impose, the more active Russia will be to promote the BRICS cooper-
ation. In terms of the strategic space and the alternative option during crisis,
the existence of the BRICS itself is important for Russia. The BRICS mech-
anism also provides a significant platform for Russia to leverage its functions
and experience as a major power, and therefore takes up an important pos-
ition in Russia’s diplomacy.

3.3 India
India has special advantages among the BRICS countries. One of its important
edges is that India’s economy has huge development potential due to its large
population and natural resources. The perception and estimation of India’s
potential has earned it great significance and attention from the international
community. In addition, India’s current economic power is not very solid. Its
GDP in 2015 was US$2.06 trillion, about one fifth of that of China. The huge
potential plus the relatively small aggregate at present have caused various
results. On the one hand, it has stimulated the country’s ambition and expect-
ation; on the other hand, it makes India become a subject with whom other
major powers are eager to associate and take advantage of, and the country
has not caused precaution among other major powers. As a result, India is
relatively popular and welcomed among major powers. Although India has
its advantages in the relationships with major countries, it is in a peripheral
78 Zhou Fangyin
position, which is difficult to change in international economy and global
governance. Some major countries attempt to control China via India, but
controlling China is not what India really wants. Since India does not possess
enough power right now, it is still very difficult for India to realize the dream
of a big country that it has hoped for several decades.
India hopes to realize the following major goals through BRICS cooper-
ation. (1) Promote continual domestic economic growth and lay a solid
material foundation to exert influence in the international arena. Among the
BRICS countries, China boasts strong industrial manufacturing ability and
abundant capital and technological ability; Russia and Brazil possess rich nat-
ural resources and are major countries of energy and minerals; South Africa
represents the huge market of the African Continent. Cooperation with
these countries has meaningful value for India’s development.8 (2) Improve
India’s status and role in the multilateral cooperative mechanisms and spread
its influence to more areas around the world. After the Cold War, India has
been active in various multilateral international organizations, such as the
Asia Europe Meeting, South Asian Association for Regional Cooperation,
the G20 and the East Asia Summit. Among them, the BRICS cooperation
has an important role that cannot be replaced by any other platform. As
an emerging economy, India, like China, has experienced or will experience
increasing pressure from the West in international economy and global gov-
ernance, including global climate governance. India will better handle the
pressure and impact from Western countries in these fields by strengthening
its cooperation with other emerging economies. The BRICS cooperation
will help India regain its position and influence among developing countries
and transform its increasing economic power into political influence in the
international community. In particular, India can exert much more influence
in the BRICS mechanism than in the G20. (3) Try to become a permanent
member of the UN Security Council. India has always regarded the position
of a permanent member of the UN Security Council as an important gauge
of a major country. However, its plan to create a “G4” with Germany, Japan,
and Brazil to become a permanent member is not smooth. India still values
the cooperation with the “G4” to become a permanent member. However, it
also hopes to gain support from other BRICS countries, especially China and
Russia, the two permanent members of the UN Security Council, and have
more initiative to realize its goal. (4) Build a financing channel for its long-​
term development and quicken domestic infrastructure construction, creating
a more stable international financial environment for the long-​term develop-
ment. Amid the constantly volatile international financial market, the BRICS
Contingent Reserve Arrangement will enhance the stability of the exchange
rate of Indian rupee against sudden external pressure.
Although India values the BRICS mechanism, it does not hope that China
plays a leading role in the cooperation. India tried to compete with China as to
the location of the New Development Bank headquarters and the presidency
of the NDB. The final decision was that the location would be in Shanghai
 BRICS cooperation in the game of countries 79
while the first president would be an Indian. In addition, India is unwilling
to leave an impression that the BRICS mechanism is to challenge Western
dominance in the international community. To India, the United States and
Europe have top positions in its strategic priorities and it will not offend the
West due to its participation in the BRICS mechanism.9 As a result, India is
relatively contradictory towards BRICS cooperation –​it tries to have more
say in international economy and global governance through the BRICS
cooperation while it does not want to displease the West. This contradiction
also restricts India’s activity in the BRICS mechanism and determines its gen-
eral attitude of “invest less yet benefit more” towards the BRICS cooperation.
Such an attitude plus the insurmountable territorial dispute with China
make India an important target for the United States, Europe, and other
Western countries to win over among the BRICS countries. To some degree,
India is a weak element in the BRICS cooperation. But the cooperation has
provided an unprecedented platform and opportunity for India to become
a major world power from a regional major power, which has irreplaceable
value in the long run. In general, India will participate in the BRICS cooper-
ation while trying to gain advantages from both sides and try to prevent any
other country from leading the BRICS cooperation.

3.4 Brazil
With a land area of about 8.51 million square kilometers, Brazil ranks fifth in
the world and is the largest country in Latin America, accounting for half of
the total area of South America. By the end of 2013, its population was about
0.2 billion, ranking fifth in the world after China, India, the United States, and
Indonesia. From the perspective of land area and population, Brazil is a large-​
scale country. It also witnessed great economic growth over the past decade, with
its GDP rocketing to US$ 2.35 trillion in 2014 from US$663.7 billion in 2004, an
increase of over 2.5 times. Although Brazil experienced certain economic con-
traction in 2015, it is still among the top ten economies in the world. Brazil’s
large national scale, rich resources, and growing power no doubt increase its
desire for the status of a big country. But its ambition to exert important inter-
national influence has long been restricted due to the lack of a suitable platform.
As an emerging economy, Brazil attempted to increase its international
status by holding various large-​scale events. Not long after the closing of the
2014 World Cup in Brazil, it held the 2016 Olympics, which made Brazil the
first country in South America to hold the Olympics. Obviously, holding sport
events is not enough to facilitate Brazil’s development into a major power in
the international arena. It hopes to achieve its diplomatic ambition through
the BRICS mechanism –​to make its regional leadership internationally
recognized, transform into a world power from a regional power and secure
a seat in the UN Security Council. Brazil proactively held the second BRICS
Summit after the first was held in Russia, which indirectly reflects Brazil’s
positive attitude towards the BRICS cooperation.
80 Zhou Fangyin
Among the BRICS countries, Brazil’s economic aggregate ranks third,
and it is the largest economy and the only representative in Latin America.
With the help of the BRICS cooperation, the trade between Brazil and other
member states has become closer and more frequent. Brazil is China’s largest
trading partner in Latin America and since 2009 China has been Brazil’s lar-
gest trading partner. An important problem faced by Brazil is that it lacks a
solid long-​term foundation for economic growth. In trading relations with
other BRICS countries, Brazil has always been positioned as the supplier
of raw materials and primary products, which is far from the dream of a
“strong industrial country” chased by Brazil. This fact also made Brazil scep-
tical about whether to enhance its trading relation with China. In addition,
the growth rate of Brazil dropped to 2.7 per cent in 2011 and 0.9 per cent in
2012 from 7.5 per cent in 2010, and it endured a relatively serious economic
contraction, casting doubt on Brazil’s role in the BRICS among the inter-
national community. Brazil needs to make the most of economic cooperation
with other BRICS countries, improve domestic infrastructure, adjust indus-
trial structure, and promote sustainable economic development.
The BRICS cooperation has helped Brazil to acquire more international
influence. China and Brazil are the largest beneficiaries of the voting rights
and share reform of the World Bank and the International Monetary
Fund in 2010. With the collective efforts of the BRICS countries, Roberto
Azevêdo from Brazil was appointed as director-​general of the World Trade
Organization. The relations between Brazil and the African continent have
been upgraded overall, and both sides have spared no effort in improving
the overall relations, including political and military. And the support from
other BRICS countries is also of great significance for Brazil to become a per-
manent member of the UN Security Council.
With the increasing international influence of Brazil, the United States
and Europe are paying much more attention to Brazil. A report by the
Council on Foreign Relations in 2011 suggested that the US decision-​
makers should seriously treat Brazil as a global major power, strengthen
overall cooperation, and support Brazil to become a permanent member
of the UN Security Council.10 In February 2014, the European Union and
Brazil held the seventh summit in which the two sides discussed various
topics, such as global economic recovery, Internet security, and inter-
national security, including Ukraine, the Middle East, and Africa, and
reiterated the importance of strengthening the strategic cooperation part-
nership in all aspects. The United States is also building a more equit-
able partnership with Brazil, and the two countries have established the
presidents’ dialogue mechanism on the four topics, including economy
and finance, strategic energy, global partnership and defence cooperation.
Obviously, Brazil is favoured by the United States and the European
Council to some degree, which also indicates that Brazil will not sacrifice
its relations with the West, especially with the United States, when partici-
pating in the BRICS cooperation.
 BRICS cooperation in the game of countries 81
Among China, Russia, India, and Brazil , which possess relatively strong
national power, Brazil has the advantage of not being involved in any big
international conflicts. But, in turn, it means that Brazil does not have
much need to cooperate with other BRICS countries in international pol-
itics and geographic strategies. Domestically, there is even criticism against
the Brazilian government that it “sacrifices the principle of democracy” and
“tacitly consents to and tolerates Russian’s invasion” in terms of the Ukraine
problem.11 On the one hand, the BRICS gives the most voice and highest
status to Brazil among all the multilateral organizations with international
influence in which Brazil participates. On the other hand, Brazil does not seek
any leadership in any sense in the BRICS cooperation and does not reject
China’s leadership, though it hopes all topics and subjects under the BRICS
mechanism can be solved under equal consultation with every member state.
In general, Brazil is willing to develop its relations with Western countries
and emerging economies in a balanced way. It attempts to further solidify its
regional leadership in South America and avoid being marginalized in inter-
national mechanism arrangements. From this perspective, the BRICS cooper-
ation is a multilateral arrangement that is completely in line with Brazil’s
interests and needs and, thus, Brazil will have a stable and supportive attitude
towards BRICS cooperation.

3.5 South Africa

At present, among the BRICS countries, China’s GDP is around US$10
trillion, the GDP of Russia, India and Brazil is around US$2 trillion respect-
ively, while South Africa’s GDP is only over US$300 billion. In terms of
economic power and performance in recent years, South Africa is hardly
a qualified member of the BRICS. In particular, the growth rate of South
Africa in recent years is lower than the average growth rate of the African
countries to the south of the Sahara. In addition, South Africa’s land area
and population are much smaller than other BRICS countries’.
In the meanwhile, South Africa is of unique importance. It has been the
largest economy in Africa for a long time,12 and the most developed country
in Africa, with a GDP representing about 20 per cent of the total GDP of
Africa. Compared with other African countries, the economy of South Africa
is steady in general. South African companies occupy an important position
in finance, electricity, telecommunications and transportation in Africa. For
example, the Johannesburg Stock Exchange is the largest exchange in Africa;
Durban is the largest container port, and Richard Bay is the largest bulk
port; South Africa has the largest telecommunications network in Africa, and
so forth.
Different from China, India, Russia, and Brazil, who mainly represent
themselves only, South Africa represents African countries in the BRICS
cooperation to a large degree. South Africa’s geopolitical and economic influ-
ence in Africa is conducive to expanding the representativeness of the BRICS
82 Zhou Fangyin
mechanism around the world. In fact, South Africa is the only African
country in not only the BRICS but also the G20. South Africa thinks it has
the mission to represent Africa and promote the cooperation between the
BRICS and Africa. It regards itself as an ideal portal leading the BRICS
countries to Africa, especially Southern Africa.
Joining the BRICS is a significant diplomatic achievement for South
Africa, enabling it to become a major regional power in the world. South
Africa thinks becoming a member of the BRICS has a positive effect on
its economic growth and improvement of its international status, and it is
actively making efforts for it. In 2010, Jacob Zuma, then president of South
Africa, visited Brazil, India, Russia, and China in April, June, early August
and late August respectively, which reflected South Africa’s eagerness to join
the BRICS. Since South Africa became a member state of the BRICS, its
relationships with China, Russia, India, and Brazil have developed steadily,
and the economic ties with the four countries have been strengthened. South
Africa has established a strategic partnership with China, Russia, India, and
Brazil in recent years.
South Africa was the last to join BRICS and its economic power is the
weakest. From the perspective of its own interests, South Africa hopes to
deepen the internal cooperation among the BRICS countries while objecting
to absorbing more countries as members, because any new member will obvi-
ously lower South Africa’s status and influence in the BRICS cooperation.
Since South Africa is the weakest member in the BRICS, it does not show
obvious interest in the leadership of the BRICS cooperation; it cares about
the efficiency of the cooperation instead. South Africa attaches great import-
ance to China’s position and role in the BRICS mechanism, agreeing that
China is in the leading position in the cooperation. It fully recognizes the
overall power and action efficiency of China, and believes it is not a bad thing
that China leads the NDB and the Contingent Reserve Arrangement. Since
South Africa has the fewest reserves among the BRICS countries, it is most
likely to apply for aid from the Contingent Reserve Arrangement.
Since South Africa is experiencing certain economic difficulty, it hopes to
attract investment from the member states and create more job opportunities.
It also hopes that the BRICS can invest in its infrastructure construction,
such as electricity, telecommunications, and transportation, promoting eco-
nomic growth in the long term.
Joining the BRICS directly enhances South Africa’s international status. It
enables South Africa to be a beneficiary of other member states’ development
and facilitates South Africa speaking for Africa in international economics
and global governance via the BRICS, and improving its international influ-
ence. It will bring enormous practical and strategic benefits for South Africa
to take part in the BRICS cooperation. In addition, South Africa maintains
good relationships with all Western countries, and it can play a positive role in
coordinating the relationship between the BRICS and the West.
 BRICS cooperation in the game of countries 83

4. Conclusion
Different from the G7 and the cooperation between European countries,
the BRICS cooperation is conducted among emerging economies that have
distinct differences. They share no common features in history, geography,
civilization, culture, and religion, and have different political systems and eco-
nomic models. Even in the economic field, where they have strong comple-
mentarity, there is a certain competition among some BRICS countries and a
huge gap in their development.
In addition, the BRICS cooperation has important value for each member
state and serves as an irreplaceable platform for them to exert influence in
the international arena. In general, as the rising emerging power, the BRICS
countries all hope to improve their regional influence, realize the dream of
becoming a major country and facilitate the transformation of the inter-
national system in a peaceful manner, and reduce the risks and costs incurred
in the process. They are unwilling to lag behind other emerging countries in
realizing international ambitions or being left alone to fight on their own.
It will be very difficult for every single country to substantially raise its
status in international economics and global governance without the BRICS
cooperation and the substantial impact on the existing international economy
and global governance via collective efforts. The BRICS cooperation provides
a powerful tool to flexibly reform and improve the international governance
system with small risks and costs in a controllable way, which will also buffer
the impacts and fluctuations during the transformation of the system. In this
sense, the irreplaceable value of the BRICS cooperation is more reflected in
politics and strategies, in particular international systems and rules, instead
of in economic benefits for the BRICS countries. If the BRICS hopes that the
cooperation will effectively leverage the platform and influence the existing
international economy and global governance, one of the prerequisites is that
the BRICS cooperation should achieve important substantial results, which
requires member states to strengthen unification and cooperation. Just as
Putin said, only when the BRICS countries conduct substantial cooperation
in all aspects will they have substantial influence in international politics and
economy.13
As long as the BRICS countries themselves are willing to deepen the
cooperation, Western countries will have no way to stop emerging economies
from expressing their voice in the international system. Simple oppression
will not be enough to restrict the increase of the influence of the BRICS
cooperation and making concessions to the BRICS countries is no other than
facilitating them gaining international influence more quickly. In general, it is
inevitable for the BRICS mechanism to have more international influence; the
difference is more about the speed, degree, and obstacles.
There are some realistic problems in the BRICS cooperation, such as
the unbalanced economic power of the BRICS countries and the unstable
84 Zhou Fangyin
growth speed of some member states, which may lead to bigger divergence
in development. They do have some distinct differences and various political
requirements. For example, they have different views as to whether to challenge
Western countries; some have certain inherited and realistic problems; while
cooperating there are also disputes about how to allocate rights, responsibil-
ities, and duties reasonably, which voice to adopt when speaking in one voice,
how to address the “free-rider” problem, and even the internal leadership; in
addition, some Western countries hold out an olive branch to, differentiate,
speak ill of or overpraise individual BRICS countries. Faced with so many
complex elements altogether, the general process of the BRICS cooperation
will not be so easy and smooth.
Meanwhile, we have to admit despite so many disadvantageous factors in
the BRICS cooperation, none of them is fatal or structural; instead, they are
all technical factors and different in specific cases. What the BRICS coun-
tries face during cooperation are the negotiable problems, which can be
compromised through communication instead of the insurmountable con-
frontational contradictions with a zero-sum result. Therefore, although some
voices in the international community are not optimistic about the BRICS
cooperation, it can be smoothly advanced in reality. As an important coopera-
tive platform excluding Western countries that have global importance and
much room for improvement in the future, the BRICS cooperation is the
result of voluntariness and the result of game (competitions) by these ambi-
tious and confident sovereign states. Each result it achieves is a balance of
interests realized by the relative countries. It will take a long time to transform
the international system, and the BRICS countries are highly consistent in
the macro political and strategic interests during the process, which determine
that the BRICS cooperation has important value for the member countries
in the long term and make people have stable and reliable confidence in its
prospect. As time goes by, the BRICS cooperation will play a more important
role in the international economy and global governance.

Notes
1 Robert A. Pape, “Soft Balancing against the United States”, International
Security, Vol. 30, No.1, 2005, p.11. John Ikenberry, Michael Mastanduno, and
William C.Wohlforth, “Introduction: Unipolarity, State Behavior, and Systemic
Consequences”, World Politics, Vol. 61, No. 1, 2009, pp. 1–27.
2 Liu Feng, “Adjustment of International Interest Landscape and Transformation of
International Order”, Foreign Affairs Review, No. 5, 2015, pp. 46–62.
3 Zhou Fangyin, “The Mechanism of International Order Change and the Strategy
of Striving for Achievements”, Quarterly Journal of International Politics, No. 1,
2016, pp. 36–62.
4 Pang Xun, “BRICS: A Word of the Past”, China Investment, No. 5, 2014, pp. 24–25.
5 The agreement was renamed as Comprehensive Progressive Trans-Pacific
Partnership (CPTPP) after United States withdrawal.
6 Stefan Hedlund, “Russia after Financial Crisis”, Russian Studies, No. 6, 2010,
pp. 71–87.
 BRICS cooperation in the game of countries 85
7 Liu Chunjie, “A Summary on Russian Policy and Research on the BRICS
Mechanism”, Academic Journal of Russian Studies, No. 6, 2015, pp. 84–89.
8 Xin Renjie & Sun Xianpu, “BRICS Cooperative Mechanism and Sino-India
Relation”, South Asian Studies, No. 3, 2011, pp. 87–99.
9 Jagannath P. Panda, “India’s Call on BRICS: Aligning with China without a
Deal”, Institute for Security and Development Policy, Working Papers, No.91,
March 9, 2012.
10 Council on Foreign Relations, Global Brazil and U.S. Brazil Relations, Independent
Task Force Report, No.66, July 2011.
11 Fábio Zanini, “Foreign Policy in Brazil: A Neglected Debate”, Harvard
International Review, http://hir.harvard.edu/foreignpolicyinbrazil/.
12 However, according to the National Bureau of Statistics of Nigeria in April
2014, the GDP of Nigeria surpassed that of South Africa, becoming the largest
economy in Africa. China News: “Nigeria Surpasses South Africa in GDP and
Becomes Largest Economy in South Africa”, http://news.xinhuanet.com/2014-04/
07/c_126362683.htm.
13 Xiao Huizhong, “Tentative Analysis on Several Questions of Russian Diplomacy
with BRICS Countries”, Russian Studies, No. 4, 2012, p. 41.
5 
International structure and the
BRICS cooperation
Jiao Chuankai

The collective rise of emerging economies is the most prominent phenomenon

in the contemporary international economy and politics. The rise of emer-
ging economies will undoubtedly have a profound impact on the evolution
of the world pattern when the bipolar pattern ended with the Cold War while
the new world pattern has not yet been completely formed. Emerging econ-
omies, however, have some uncertainties. If they cooperate with each other
and create a joint force, they will become an important force that cannot be
neglected in the settlement of any international issue. Otherwise, their role in
the international community will be severely constrained. Therefore, emerging
economies have become one of the hot issues in academic research. As the
world’s largest emerging economy and an important member of the BRICS
mechanism, China has a deep understanding of the potential and constraints
of cooperation among emerging economies, which is the necessary founda-
tion to correctly formulate foreign policy. This chapter intends to take BRICS
as an example, analyse the complex situation of cooperation and competition
among emerging economies from the perspective of structural realism, and
summarize the potential and constraints of cooperation between China and
other emerging economies.

1. Structural realism and BRICS mechanism

1.1 Theory of structural realism

The theory of realism including structural one is the basic paradigm for
understanding international politics, and is regarded as the “enduring main-
stream paradigm”.1 Structural realism is one of the most important genres
in the contemporary realism paradigm. Although it is not a theory of for-
eign policy, as a system theory, it can be adopted to analyse the behaviour
of state and foreign policy. According to Waltz, the representative figure in
Structural Realism, the result of major events in the international system, or
the result of actor interaction, cannot be explained merely from the actor or
the interaction between actors. Instead, attention should be paid to the influ-
ence of the system environment that restricts the actor and the interaction.
 International structure, BRICS cooperation 87
Waltz also determines the characteristics of the international system from
three aspects: (1) the arrangement principle of the units of the international
system; (2) unit functions; (3) unit strength. Waltz believes that, first of all, the
basic unit of the contemporary international system is the national state. All
countries enjoy the highest internal and independent sovereignty, and there is
no common authority among them. Countries do not belong to each other or
have jurisdiction over each other. Each country decides its own foreign policy
and behaviour independently. Therefore, the international community is in
anarchy. Second, regardless of the national strength, and how different are its
political systems, values and cultural traditions, every country, without excep-
tion, pursues its own interests, safeguards national security and enhances
national strength. In other words, as the actors of the international system,
countries have highly consistent functions. Finally, although countries do
not belong to each other, and they have sovereignty, and they function in the
same way, the varied strength of different countries is like a tradeoff. That is,
states are units surrounded by a hard shell, or “billiard balls” of various sizes.
The interaction between states implies the collision of these “billiard balls”,
depending on their respective forces and velocities rather than their internal
structures.2
The anarchy of the international community is the external restriction
on the sovereign states, namely the living environment of the state. But the
consistency of function is the basic attribute of states, which is the intrinsic
restriction. Unlike the domestic political systems, these two features of the
international system remain constant. It is the strength of the country that
changes. The change in national strength determines the number of major
countries, which then determines the nature of the structure of the inter-
national system. Different countries have different positions in the structure
of the international system due to their different strengths. The structure sets
a series of restrictions on actors through the process of socialization and com-
petition to “encourage certain acts of state and punish those acts that do not
respond to incentives”.3
Therefore, according to the theory of structural realism, the following
arguments can be inferred: The most important variable determining a
country’s foreign policy and the act of state is the country’s strength or its
status in the international structure. This chapter argues that the emerging
economies, represented by the BRICS countries, basically have the same
status in the current international structure, or are at least highly similar and
comparable. Thus, this chapter restates the theory of structural realism.

1.2 The BRICS countries and the BRICS cooperation mechanism

In 2001, Jim O’Neil, the chief economist of Goldman Sachs in the United
States, pointed out that emerging economies, such as Brazil, Russia, India and
China, have great economic potential and significant investment opportun-
ities, and named them as “BRIC”, using the first letter of each country. BRIC
88 Jiao Chuankai
has gradually become a synonym for emerging economies and an important
investment field attracting international attention. Driven by such an atmos-
phere of public opinion and common interests, the dialogue and cooperation
among the BRIC countries have been constantly strengthened. In September
2006, the foreign ministers of the four countries met for the first time at the
United Nations General Assembly. In July 2008, BRIC state leaders also
met at the G8 Summit and the Dialogue Meeting of Leaders of Developing
Countries in Japan. But there was no formal mechanism for cooperation
among the BRIC countries.
When the financial crisis broke out in 2008, the economies of all emer-
ging economies were greatly impacted without exception. In order to survive
the crisis, the BRIC countries held a summit in Russia in June 2009 and
issued a joint statement, which marked the official birth of the BRIC cooper-
ation mechanism. Since then, BRIC leaders have met many times, and the
cooperation mechanism has been improved. In the international community,
the influence of the BRIC mechanism has also been gradually increasing,
and more developing countries are expected to join or become observers. In
December 2010, South Africa officially joined the mechanism, and BRIC
became BRICS. BRICS cooperation has formed a series of mechanisms,
including regular formal and informal meetings between leaders, minis-
terial talks, business forums, and think-​tank forums. The cooperation has
expanded from investment and trade to other areas, and the contents of
cooperation are increasingly diversified. In March 2013, the five leaders
decided to establish the BRICS development bank and the financial reserve
pool. In July 2014, the leaders held their sixth meeting, in Brazil. There the
five countries issued the Fortaleza Declaration, announcing the establish-
ment of the BRICS development bank and the of the BRICS contingency
reserve arrangement.
The achievements and the role of the BRICS mechanism can be seen from
the “three tasks” proposed by Xi Jinping, the president of China, in September
2013. First, jointly respond to the new international financial situation. In
response to the financial crisis in 2008, developed countries implemented
the quantitative easing monetary policy. The implementation or withdrawal
of this policy would have an impact on the international financial situation.
Second, oppose the trade protectionism imposed by developed countries.
The financial crisis in 2018 led to the rise of new trade protectionism, mainly
in developed countries. Third, enhance the status of emerging economies in
global economic governance and break the developed countries’ monopoly
on the international financial organization.

We should work together to enhance the representation and voice of

emerging market countries in global economic governance, implement
the quota reform decision of the IMF, formulate a new quota formula
that reflects the weight of each country’s economic aggregate in the world
economy, and reform the special drawing rights currency basket.4
 International structure, BRICS cooperation 89
Some of the targets have been met, such as establishing a new development
bank and raising the share of emerging economies in the IMF. In 2015, the
Ufa, Russia, summit passed the Strategy for BRICS Economic Partnership,
putting forward the goal of BRICS’s future economic and trade cooperation
towards the “integration of big market, multi-​level circulation, land, sea and
air connectivity, and cultural exchanges”.
It can be seen that “BRICS” is the label that Western countries now attach
to emerging economies. It was originally an academic concept. The emergence
and development of the BRICS cooperation mechanism is not only the need
for emerging economies to cope with global common problems, but also the
result of their confrontation with the Western developed countries. In 2014,
President Xi Jinping put forward that the BRICS should attach importance
to economic cooperation, as well as political coordination, “being the anchor
that helps stabilize the global economy and the shield that protect the peace
of the international community”,5 but so far, the BRICS cooperation mech-
anism has made achievements mainly in areas such as economy and finance,
and has tried to coordinate positions on major international issues. For for-
eign policy in other areas, especially national affairs, the mechanism remains
to be further strengthened.
BRICS countries have some common characteristics. Apart from the rapid
economic development of all countries in recent years, BRICS members are
highly comparable in terms of national territory area, population, economic
aggregate and international status (See Table 5.1).
Although BRICS countries have different histories, cultures and traditions,
customs, ideologies and social systems, they are all in the same or similar pos-
ition in the international structure. The theory of structural realism asserts
that the factors that influence the foreign policies of different countries are not
internal differences, but different positions of countries in the international
structure. Therefore, BRICS countries should have the same or similar
demands and propositions, and thereby formulate the same or similar foreign

Table 5.1 Comparison of elements of strength among BRICS countries

Item National Territory Population GDP International

Area (100 million) (US$ trillion) Status
(10,000 square
Country kilometres)

Brazil 8514.9 2.01 2.24 Regional power

Russia 17075.4 1.44 2.02 Global power
India 3201.5 12.10 1.86 Regional power
China 9596.9 13.54 8.23 Global/​Regional
power
South Africa 1221.0 0.45 0.38 Regional power

Source: Made by the author based on network data, such as the World Bank.
90 Jiao Chuankai
policies, implying the coexistence of cooperation and competition between
emerging economies. On the one hand, they will unite and support each other
for the common goal and form the international coordination mechanism for
emerging economies. On the other hand, behind their cooperation, competi-
tion will occasionally emerge due to their homogenous demands, which will
be difficult to avoid and resolve.

2. Current situation and potential of BRICS cooperation

According to the theory of structural realism, the BRICS countries have the
same or similar demands and propositions in the international community,
which also means that the BRICS members have a good foundation and
broad areas for cooperation. From the current world situation, this cooper-
ation is mainly reflected in the following areas: first, fields such as international
finance and economy, as well as the demand for reform of global economic
governance structure; second, the field of global development, mainly in the
post-​2015 UN global development agenda. It also includes position coordin-
ation on major international issues such as climate change, preventing prolif-
eration of nuclear weapons and combating terrorism.
First, the BRICS cooperation in global economic governance advances
smoothly and has had great achievements.
In November 2014, the BRICS leaders met informally in Brisbane,
Australia. President Xi Jinping pointed out that the BRICS should actively
participate in international multilateral cooperation, enhance their voice
in global economic governance, including strengthening the construc-
tion of coordination and cooperation, promoting an open world economy,
implementing International Monetary Fund reform, and facilitating solutions
to global development problems at the G20 summit.6
Since 2010, the BRICS countries have made efforts to reduce their reli-
ance on the US dollar, to promote the diversification of the international
monetary system and conduct a series of collective and coordinated actions,
including taking the initiative to diversify the international monetary
system, strengthening regional monetary cooperation, promoting currency
swaps and local currency trade settlement, promoting the status of Special
Drawing Rights, and proposing the joint program for establishing a devel-
opment bank. At the G20 summit in 2012, the BRICS countries jointly
proposed to increase the IMF’s capital, including the increase of US$43
billion from China, as well as the capital increase of US$10 billion from
Russia, India and Brazil, respectively, and the increase of US$2 billion
from South Africa. Emerging economies have rallied to strengthen their
quotas and voting rights at the IMF. At the fifth BRICS summit in 2013,
the member countries determined to set up the BRICS development bank
and the pool of foreign exchange reserves. In July 2014, the new develop-
ment bank was formally established. The monopoly of the West on the
international financial organization was thereby broken, and the voice
 International structure, BRICS cooperation 91
of emerging economies was enhanced, which effectively promoted world
financial stability.
It is worth noting that the rise of emerging economies has a remarkable fea-
ture in that it takes place within the framework of today’s international pol-
itical and economic systems. In other words, the contemporary international
political order and international economic order provide institutional space
for the rise of emerging market countries. Therefore, stable and reasonable
international economic rules are very important for emerging economies. The
contradiction between the emerging countries and the established powers is
no longer the struggle for international hegemony in history but focuses on
the reform of international rules. In 2008, the global financial crisis promoted
the questioning and discussion of existing international economic rules
among countries and gave birth to the “BRICS cooperation mechanism”.
The BRICS countries believe that the world economic pattern has changed
fundamentally along with the emergence of emerging economies, which is not
reflected in the current international economic governance system. Therefore,
the international economic governance structure needs to be reformed, and
the representation and voice of emerging economies should be enhanced.
Second, the BRICS cooperation is remarkable in the field of international
development. The United Nations Millennium Development Goals (MDGS)
expired in 2015. Many countries have issued position papers on the post-​
2015 development agenda (the UN 2030 agenda for sustainable development,
which came into force in 2016). On the whole, the BRICS countries share the
same or similar policy propositions, which can be proved as follows by the
position papers issued by China and India in 2013.
First, in terms of the relationship between the post-​2015 global develop-
ment agenda and the MDGS, both China and India hold the opinion that the
post-​2015 global development agenda should be the inheritance and continu-
ation of the MDGS instead of a new start. China states the future develop-
ment agenda should “adhere to the principle of coherence” and be based on
MDGS, and that some unachieved MDGS should continue to be involved in
the post-​2015 development goals.7 India believes that although encouraging
achievements have been made by the MDGS, the various targets are still of
great significance for the developing countries after 2015. The development
priorities set out in the MDGS should still be reflected in the post-​2015 devel-
opment agenda.8
Second, China and India have basically agreed on key areas and priorities
for future development. China proposes that the priority for future develop-
ment is to “eliminate poverty and hunger”, comprehensively promote social
progress, and improve people’s livelihood. Other areas include aging, edu-
cation, the basic medical care system, protection of the rights and interests
of women and children, social security mechanisms, “promoting inclusive
economic growth”, promoting employment, as well as trade and investment
liberalization and facilitation. India also believes that the core goal of develop-
ment is to eradicate poverty and promote economic growth. Both China and
92 Jiao Chuankai
India disapprove of taking democracy, human rights, governance, security
or conflict as goals of the post-​2015 development agenda. These statements
are reflected in the reports of other international organizations. For instance,
the open working group on sustainable development goals (OWG) argues
that human rights, rights-​based approaches, governance, the rule of law, and
broader participation in decision-​making may be difficult to be listed as goals
in the post-​2015 development agenda.9
Third, China and India are also highly consistent in their policies and
propositions on other major issues of principle. Both countries oppose any
arrangement or proposition that could undermine national autonomy through
the development agenda. In addition, both countries have made proposals to
uphold the multilateral trading system and oppose trade protectionism, and
both emphasize the principle of “common but differentiated responsibilities”
in the field of development. In terms of the construction of global partner-
ship, both countries emphasize the North–​South assistance supplemented by
South–​South cooperation. In other words, it is emphasized that developed
countries should provide financial, technological and capacity-​ building
assistance, and Western developed countries should provide stronger guaran-
tees in terms of aid funds.
Finally, the BRICS countries also share broad common interests in other
areas, including climate change, non-​proliferation of nuclear weapons and
combating terrorism. In particular, cooperation in the climate field reflects
the common interests of emerging economies and the strength of solidarity.
In 2009, under the initiative and promotion of China, a negotiating group
of four major developing countries, Brazil, South Africa, India and China,
was formed under the United Nations Framework Convention on Climate
Change. The BASIC mechanism is formed by taking the initial letter of the
four countries. The unified voice of the four countries in the name of the
BASIC countries during the previous coordination meetings of the inter-
national climate change negotiations and the conference of the parties has
had a significant impact on the negotiation process and become an important
and representative force.
The BRICS cooperation has huge potential that can be mainly reflected in
the following areas. The first area is the economic sector. Emerging economies
share a common identity in the international community because of their
economic achievements and are now committed to economic development
without exception. On the one hand, the BRICS countries can promote all-​
round economic cooperation and build a unified, large market; on the other
hand, experience and lessons drawn from internal economic development
and reform can be shared. The second is the field of cultural exchanges. It is
not long since the BRICS mechanism was established, thus the internal ties
among BRICS countries need to be further strengthened. Promoting cultural
exchanges can help deepen mutual trust and enhance the soft power of the
BRICS countries. President Xi Jinping raised the goal of “Greater Cultural
Exchanges” at the 2013 Durban summit. The third area is global economic
 International structure, BRICS cooperation 93
governance. Although great achievements have been made, cooperation in
this field is of great importance and thereby requires long-​term efforts, as it
concerns the external development environment of emerging economies and
is inevitably hindered by the Western developed countries. The fourth is the
area of global development. As the post-​2015 development agenda of the
United Nations is being formulated and the differences between developed
and developing countries are becoming increasingly distinct, the BRICS
countries should put forth joint efforts on this issue to ensure that the final
version of the agenda is in line with the interests of both emerging econ-
omies and developing countries in general. At last, the BRICS countries
should strengthen coordination in other major international affairs, jointly
propose solutions, seek justice, practice equality, cooperate to uphold inter-
national justice, and promote the establishment of a global partnership for
development.10

3. Structural competition among the BRICS countries

Structural realism predicts competition among the BRICS countries because
of their homogeneity, which is determined by the international political struc-
ture and is therefore inevitable. In general, competition among the BRICS
countries exists in multiple fields, including politics, economics, energy,
market, and so forth.
First of all, the BRICS countries are all big powers with a strategic
intentions to guard against and contain each other.
From a political perspective, all the BRICS countries, without excep-
tion, show a strong great-​power complex. Historically, the BRICS coun-
tries have become regional or world powers by various advantages, such as
dimensionality, population, resources, and so forth. Currently, the rapid eco-
nomic development makes their pursuit of great-​power status more urgent.
China has put forward the “Chinese dream” of national rejuvenation, while
other countries have their own great-​power strategies. For example, since the
collapse of the Soviet Union, Russia has regarded the revival and revitaliza-
tion of its great power status as the cornerstone of its diplomatic strategy.
Vladimir Putin has strengthened Russia’s nuclear deterrent capability, stressing
that Russia is “strong enough” to defend sovereignty, security and national
interests, and to establish its great power status and dignity with robust mili-
tary strength.11 According to Putin, the president of Russia, great-​power
status is not optional, but inevitable, and necessary for survival. Only by being
a great power can Russia continue to exist within its present borders. Putin’s
conservative nationalist ideology is supported by much of Russian society.
It was reported that Putin won the first “Defending Russia’s Great Power
Status” award from the Russian People’s Congress in 2013.12 Putin annexed
Ukraine’s Crimean Peninsula in March 2014, triggering Western economic
sanctions against Russia. With the collapse of oil prices and the devaluation
of the ruble, the economic sanctions led to the deterioration of the Russian
94 Jiao Chuankai
economy. However, instead of being pushed out of office, as Western public
opinion had predicted, President Putin gained a higher approval rating
among the Russian public, reflecting the population’s in-​depth sense of being
a great power.
As another example, in recent years both political leaders and other
famous figures in India have made grand remarks on India becoming a world
power, and Vajpayee, the former prime minister, also regarded the twenty-​first
century as the “century of India”.13 Among the domestic discussions on the
positioning of India, the most representative statement is that the country is
“one of the six power centers in the world”. Therefore, “joining the manage-
ment of the international community” or “sitting in the VIP seat of the inter-
national community” is the specific goal of India, to become a great power. In
2004, India, along with Germany, Japan and Brazil, formed the G4, intending
to become a permanent member of the Security Council. After 2013, India
actively participated in the formulation of the UN’s post-​2015 global devel-
opment agenda to enhance its reputation in the international community.
In recent years India has been putting forth constant efforts in the quest for
great-​power status.14
Brazil also has its own great-​power strategy. As early as the 1990s, Auden
Reuter, the director of Latin American studies at Johns Hopkins University,
pointed out: “Brazil, being stronger and more confident, will not yield to
any country, domestically or internationally. Meanwhile, Brazil has suddenly
found itself in a position to seek a more important place in international
affairs due to its special economic position.15 Luis Felipe Lamprea, the
former foreign minister of Brazil, once said, “The Brazilian government feels
it deserves international recognition and leadership. We have won the world’s
recognition and respect for Brazil’s international status and mission and we
will definitely draw more attention from the globe.” In the twenty-​first cen-
tury, Brazil has gradually realized its “dream of becoming a strong country”
through promoting domestic reform, actively participating in globalization
and carrying out diversified diplomacy. The application for permanent mem-
bership of the UN Security Council is the most distinctive example of Brazil’s
realization of its “dream of becoming a strong country”. The meaning of a
“great power” Brazil comes from the judgment of its natural and geograph-
ical conditions, economic scale, military strength, diplomatic strategy and sci-
entific and technological levels.16
China shares long border lines with India and Russia. Wars were once
fought between China and India and China and Russia over border issues that
have not been completely resolved even now. Due to geopolitical concerns,
the competition between China and these two countries needs to be treated
with caution. India is ambivalent about China’s Belt and Road Initiative.
Moreover, India has secretly resisted the China–​Pakistan Economic Corridor,
a partnership between those countries. In addition, India cooperates with
other countries like Japan and Vietnam to contain China on the South China
Sea issue. There are similar rivalries between China and Russia.
 International structure, BRICS cooperation 95
Second, there is a growing trend of competition between the BRICS
economies.
Since the formation of the 1940s Yalta system, the overall trend of the inter-
national economic pattern is countries in the world gradually being integrated
into the capitalist global economic system led by the United States. Russia’s
accession to the World Trade Organization in 2012, after nearly two decades
of efforts, became a landmark event in this trend. The current US-​led nego-
tiations on new global economic rules, such as the Transatlantic Trade and
Investment Partnership (TTIP) and the Trans-​Pacific Partnership Agreement
(TPP), show the continuation of this trend. One of the features of the inter-
national economic landscape is still the passive adaptation and adjustment of
emerging economies to the international economic system.
In terms of the stage of development and industrial policies, China and
other BRICS countries, which are undergoing rapid growth, pay special
attention to trade exports and foreign investment, have strong homogeneity in
exports, and face fiercer competition with each other –​with “collisions” par-
ticularly appearing in light industry like clothing, textiles, shoes and hats. Due
to the impact of the international financial crisis, trade protectionism was
emerging in more and more countries. Countries, including Brazil, India and
South Africa have frequently launched anti-​dumping investigations against
China’s trade, and Russia has also repeatedly conducted investigations on
China’s export on the grounds of rectifying their domestic market order.
In Brazil, for example, the tariffs on 14 kinds of Chinese toys increased
from 20 per cent to 35 per cent in 2010. In 2011, five of the seven products
for which Brazil raised tariffs were imported from China, including tiles
(from 15 per cent to 35 per cent), bicycles (from 20 per cent to 35 per cent)
and split air conditioners (from 18 per cent to 35 per cent). Brazil reckons
that nearly half of its manufacturing firms face competition from China,
whose products dominate the domestic consumer market, and Brazilian
manufacturers require the government to protect their industries.17 Among
the WTO members, Brazil is one of the countries that have the most anti-​
dumping complaints against China. China’s exports to Brazil have repeatedly
been subject to anti-​dumping investigations, which peaked in 2009. In 2011,
Brazil launched five anti-​dumping investigations against Chinese imports, all
of which are manufactured products –​in steel, chemicals, light industry and
other industries. Since the first anti-​dumping investigation against Chinese
products launched in December 1989, Brazil had initiated 54 anti-​dumping
investigations against Chinese imports by the end of 2011, involving electro-
mechanical, hardware, chemical, light industrial, textile and food products.18
The BRICS countries also face competition for resources. The current eco-
nomic development model worldwide is still resource-​driven, and economic
development is inseparable from the consumption of resources, especially for
the BRICS countries with relatively underdeveloped science and technology.
In the current situation, the economic growth of the BRICS countries is
characterized by low efficiency and high energy consumption. The BRICS
96 Jiao Chuankai
countries are complementary in respect to resources. For example, Russia is
an important energy provider for China, while Brazil and South Africa are
important raw materials providers for China. But if the BRICS countries still
maintain the rapid economic growth as in the past, the energy consumption
will be striking. The competition between the BRICS countries for energy and
other resources will be inevitable.
In addition, the BRICS countries have obvious homogeneous needs and
competition in attracting funds and advanced science and technology from
the developed Western countries. For example, most of the policies adopted
by the BRICS countries include tax incentives, special economic zone pol-
icies and regional preferential policies. Take Russia as an example: in 2010,
it established Skolkovo Innovation Centre under the leadership of Dmitry
Medvedev, the president of Russia. The centre attracted Nokia of Finland,
Siemens of Germany, Bouygues of France and Cisco of the United States
through government loans and tax incentives. Although Russia’s relationship
with the West has been fluctuating, it has been actively courting and attracting
more funds, technology and talent.
There is also competition among the BRICS countries in terms of out-
bound investment. Other BRICS countries have implemented strategies
similar to China’s “Going Out” strategy. Indian Oil and Natural Gas
Company, for example, has won exploration rights in Vietnam, Cuba and
Nigeria. The Tata Group has set up Tata Africa holdings in Johannesburg,
South Africa. The biggest competitor of China in Africa is India. Russian
energy companies are also making efforts to explore overseas markets and
expand their international influence.19 There are potential conflicts of interest
among the BRICS countries due to the overlapping industries and regions of
international investment.

4. Conclusion
Both emerging economies and the BRICS mechanism are new phenomena
in the contemporary international community. Structural realism enables us
to better understand the relationship between emerging economies from a
powerful analytical perspective. The conclusion is as follows.
First, the BRICS cooperation mechanism is still in its infancy. Since its
official launch in Ekaterinburg, Russia, in June 2009, six summits on the
BRICS cooperation mechanism have been held, and outstanding results
in international financial governance have been achieved. The institutional
setting of the BRICS mechanism demonstrates the trend of multifaceted ties
among the official, non-​governmental and think-​tank sectors, indicating that
the member states set high expectations for the future of the BRICS mech-
anism. But on the whole, the significance of BRICS cooperation needs to be
further proved, and domestic cooperation in economy, trade, science, tech-
nology and culture needs to be further enhanced. The BRICS countries still
account for a small proportion of total trade and investment, and there is
 International structure, BRICS cooperation 97
still great divergence in terms of absorbing new members into the BRICS
mechanism. At present, there is no general coordinating body such as the
secretariat. Given the differences between emerging economies, improving the
cooperation mechanism will be a very slow and cautious process.
Second, there is great potential for cooperation between China and other
emerging economies in the areas of economy and trade, investment, cli-
mate, carbon emissions, clean energy, global development and global part-
nership. These are low political fields, where there are fewer barriers against
cooperation, and where the benefits of win-​win cooperation far outweigh the
benefits of competition. At the international level, emerging countries can
unite to strive for fairer market rules and trading terms, and developed coun-
tries can be expected to shoulder more responsibilities, including development
assistance, financial support and technology transfer. At the domestic level,
countries should make full use of economic complementarity, promote the
breadth and depth of industrial cooperation between emerging economies
and strengthen economic and trade and investment relationships with each
other, open markets and provide more favourable terms of trade to better take
advantage of the economies of different resources endowment and promote
common development. Faced with the gap in science and technology between
emerging economies and developed countries caused by the new industrial
revolution, emerging economies can further deepen their cooperation in
research and development.
Third, China’s cooperation with other emerging economies in the political,
military and other higher political fields needs to be cautious. According to
Ernst Haas’s “spillover” theory, cooperation in one area promotes cooper-
ation in others and ultimately enhances the basis of political cooperation.
Successful cooperation among emerging economies in areas with low political
sensitivity, such as economy, trade and science and technology, will undoubt-
edly lead to a demand for cooperation in geopolitical, military and other
higher political fields. But the BRICS concept, which first emerged in Western
academia and investment circles, needs to be carefully assessed when being
introduced into political fields in terms of the prerequisites, costs and possible
consequences. Emerging economies differ greatly in their cultural traditions
and values, especially in their political systems and concepts formed in the
course of modernization. The non-​governmental foundation for cooperation
needs to be further strengthened. Moreover, there are not only realistic geo-
political influences between China and India and between China and Russia,
but also historical conflicts and realistic boundary disputes, which all affect
the deepening of political mutual trust.
Finally, cooperation between China and other emerging economies should
focus on coordination with Western countries or the existing international
system. Although emerging economies have made remarkable achievements,
they all, except for Russia, have positioned themselves as developing coun-
tries. Cooperation among emerging economies still reflects the nature of
South–​South cooperation among developing countries, which has inherent
98 Jiao Chuankai
requirements for opposing hegemony and changing the old international eco-
nomic order. However, China should pay attention to the coordination with
Western countries or the existing international system. On the one hand, the
rise of emerging economies has not fundamentally changed the basic inter-
national political and economic order, and the Western developed countries
are still the dominant players in the international community. On the other
hand, the international system provides some institutional space for the devel-
opment of emerging countries. China is a beneficiary of globalization, and at
the current stage it is still in China’s fundamental interests to abide by, rather
than oppose, the international system. What is more, based on the prediction
of the theory of structural realism and the reality of international politics, all
emerging economies regard the cooperation mechanism as the tool to realize
their own strategies. China must put its interests at the centre to promote
cooperation among the BRICS countries.

Notes
1 Hong Yousheng, “The Realistic Theory of International Relations: An Enduring
Mainstream Paradigm”, History Teaching and Research, No. 4, 2004.
2 Fábio Zanini, “Foreign Policy in Brazil: A Neglected Debate”, Harvard
International Review, http://​hir.harvard.edu/​foreignpolicyinbrazil/​.
3 Waltz, Kenneth. Theory of International Politics. Shanghai People’s Publishing
House, 2008, p. 126.
4 “Jointly Maintain and Develop an Open World Economy”, People’s Daily,
September 7, 2013, p. 3.
5 Xi Jinping, “New starting point, new vision, and new dynamism: a speech at the
sixth BRICS summit”, People’s Daily, July 17, 2014, p. 2.
6 Du Shanze & Bao Jie, “Enhancing the Voice of the BRICS Countries in Global
Economic Governance”, People’s Daily (overseas edition), November 17, 2014.
7 Ministry of Foreign Affairs of the People’s Republic of China, China’s Position
Paper on the Post-​2015 Development Agenda, March 14, 2016.
8 Government of India’s Inputs on the Post-​ 2015 Development Agenda, from
“National Consultation Report, Post-​2015 Development Framework: INDIA”,
United Nations Resident Coordinator’s Office, May 2013 www.in.undp.org/​
content/​ d am/​ i ndia/​ d ocs/​ p overty/​ n ational-​ c onsultation-​ r eport-​ p ost-​ 2 015-​
development-​agenda.pdf.
9 A letter dated 19 July 2013 from the co-​chairmen of the open working group on
sustainable development goals of the general assembly to the president of the gen-
eral assembly: The Progress Report of the Open Working Group on Sustainable
Development Goals of the General Assembly, July 23, 2013.
10 Dong Fangxiao, The Contribution of Chinese Wisdom to the “BRICS Dream”.
11 Xing Guangcheng, “New Concept of Russian Diplomacy”, People’s Daily, April
6, 2000, p. 7.
12 Zhou Xu, “The World Russian People’s Congress Awarded Putin the Prize of
Defending the Great Power Status”, March 14, 2016.
13 Zhang Minqiu, Ed. Crossing the Himalayan Barrier: China’s Quest to Understand
India. Chongqing Press, 2006, p. 253.
 International structure, BRICS cooperation 99
14 Jiao Chuankai, “The Dilemma of the Road to Great India”, Journal of Nantong
University (social science edition), No. 3, 2014.
15 Riordan Roett, Brazil, Politics in a Patrimonial Society (Fourth Edition),
New York: Westport, 1992, p. 190.
16 Zhou Zhiwei, “An Analysis of the Internal Factors of Brazil’s ‘Great-​power
Status’ ”, Latin American Studies, Vol. 27, No. 4, 2005.
17 Ma Luping, “An Analysis of Trade Friction between China and Brazil from the
Perspective of Mercantilism”, North Economics, No. 2, 2012.
18 Wang Fei & Wu Jinjia, “The Current Situation, Opportunities and Challenges of
Economic and Trade Relations between China and Brazil”, International Forum,
No. 4, 2014.
19 Liu Feng & Zhu Xianping. “The Development Strategy of “Going Out” of
Russian Energy Enterprises and China-​ Russia Cooperation”, Northeast Asia
Forum, No. 5, 2013.
6 
Practice theory and China’s
participation in BRICS cooperation
Gao Shangtao

Western scholars studying international relations systematically included the

practice issue into an international relations study in 2000 and put forward the
practice theory of the international relations study. According to the practice
theory, international relations are a process of practice, and the methodology
adopted is abductive reasoning. The key to its research includes the study on
the agent and structural relations and the practical thoughts on social factor
generation and system transfer.1 Some Chinese scholars echoed this view and
put forward the framework of the practice theory with Chinese characteristics
on the basis of Chinese politics and culture.2 Based on the observation and
generalization of the basic human practical activities, the theoretical frame-
work has put forward the causal relationship between practice, its conditions,
its modes and identity. Will the framework of practice theory effectively
explain China’s participation in the BRICS mechanism? What inspirations
can China’s practice provide for the practice theory? In this chapter, we will
try to answer these questions by the analysis of the process of practice.

1. Participation practice, consensus reaching and new identity

establishment
Participation practice and identity recognition are two core concepts in the
practice theory. According to the practice theory, a causal relationship can
be established between a country’s participation practice and identity recog-
nition through its practice in the international regimes with the logic of prac-
tice as its medium; or to put it another way, “participation practice” brings
about “identity recognition”. The specific mechanism is as follows: the prac-
tical activities of a country’s participation in the international regimes will
constantly create and unite international consensus, which will define the new
identity of the country after being confirmed by the international rules and
systems. A country’s participation in new practical activities with the new
identity will have influence on the development of the international regimes
and promote structural change.3
The analytical framework divides participation practice into the following
five categories according to different phases when a country enters the
 China’s participation in BRICS cooperation 101
international regimes: discourse practice, alliance practice, learning practice,
compliance practice and innovation practice.4 Discourse practice is a process
during which a country defines a practical activity. It guides the specific action
by bestowing specific meanings on the subject of practice and constructing an
appropriate framework of perception.5 Alliance practice refers to a country’s
mobilization and persuasion on the target group in order to realize spe-
cific tasks. It is an activity where the agent aims to persuade the subject into
accepting, adjusting or abandoning some perceptions, attitudes, habits and
behaviours.6 Learning practice is the action of imitating and learning when a
country participates in the international regimes. The participant duplicates
the norms of the group in order to respond to a strange or uncertain envir-
onment.7 Compliance practice means that a country rectifies its behaviour,
adjusts its relations with the international regimes and reshapes mutual
expectations after it participates in the international regimes. Innovation
practice refers to a country’s reform or innovation of the operation mode of
the international regimes, international rules, agendas and aims.
According to the practice theory, practice is conducted at a certain time
and in a certain space, which is reflected by the international regimes and
the domestic resources when a country participates in practical activities. The
international regimes mainly refer to the international systems, most of which
are created by Western countries and are in general normative, Western-​
dominant and permeable to latecomers. The normativeness of the inter-
national systems means that a country’s participation is a process of practice
dominated by compliance with the international norms. Western dominance
determines that a country’s participation in the international systems is both
a process of learning and a process of adjustment, and a country’s innovation
practice must be carried out on the basis of the adjustment and acceptance of
the existing systems. Penetrability indicates that a country can participate in
the international systems and adjust their norms. The international systems
set different constraints and provide different chances of penetration for the
countries inside and outside the system, leading to the different environment
of practice for different countries.
Domestic resources mainly include three aspects: domestic systems,
domestic interests and domestic norms.8 Domestic structure is the core driving
force for a country’s participation practice and also an influential factor for
the international institutions and norms to enter a country to gain support
and exert influence. The systems of each country differ a lot according to the
government and social relations it defines, which will affect the opportunity
for the international systems and norms to enter a country and are widely
applied. The consideration for domestic interests and the matching degree of
norms will influence a country’s choice for participation practice. The more
a country thinks that accepting a certain international norm is conducive to
gaining material interests, the better this norm will be spread in this country.
The matching degree between the domestic norm and the international norm
determines the pressure of the adaptation and adjustment of the domestic
102 Gao Shangtao
norm and the obstacles of the publicity of the international systems and
norms and their influence. In short, the three factors –​systems, interests and
norms of the domestic resources –​lead to the different degrees of political
acceptance (degree of sensitivity) of a country’s participation practice, which
is reflected in four results: complete acceptance, partial acceptance, acceptance
with conditions and political exclusion.
According to the analytical framework, a country’s participation practice
constantly creates new social consensus, which can be confirmed by the inter-
national systems on various levels and define the new identity of a country.
Therefore, the identity recognition of a country in the international system
can be divided into recognition of form, recognition of distribution and rec-
ognition of value. Recognition of form refers to the recognition on the level
of representative right, and it is a limited recognition. On the one hand, the
senior members of the international systems collectively acknowledge the
new country’s entry into the system; on the other hand, they do not neces-
sarily acknowledge that the latter has the same rights and dignity as they do.
Recognition of distribution is a substantive recognition on the material level.
It mainly refers to the recognition of the voting rights and the status in the
system, reflecting how many interests a country can acquire in the system.
Recognition of value is a substantive recognition on the spiritual level, a rec-
ognition based on dignity, equality and respect in the interaction of coun-
tries.9 A country will become a senior member state with a complete identity
when its member state identity is recognized on three levels after its entry into
the international system.
Analysis of the practice theory has provided a new dynamic perspective
for us to observe international relations. However, can we use this analytical
framework to better analyse China’s participation in the development of the
BRIC mechanism? It is widely acknowledged that the BRIC mechanism is an
institutionalized international organization established eight years ago and it
was a product of Goldman Sachs’s observation and analysis of the emerging
economies of Brazil, Russia, India and China.10 The concept of the BRIC has
been popular throughout the world due to the research report of Goldman
Sachs, and the cooperation between the four countries within the BRIC frame-
work was extended and deepened, as a result of which South Africa joined,
so there are now five participating countries and a new acronym, BRICS.11
Does the process of development correspond to the typical model of practice
theory?

2. China’s participation practice and consensus-​reaching in the early

stage of the BRICS mechanism
Until now the development of the BRICS mechanism can be divided into two
important phases. The first key phase was the initial phase when the BRIC
mechanism was prepared, and the second key phase included the six summits
that witnessed the development of the BRICS mechanism, among which
 China’s participation in BRICS cooperation 103
three were the most important. We will first look at the initial phase when
the BRIC mechanism was prepared and discuss what resources China had,
what practical activities China participated in, what important consensus was
reached, and whether these aspects are in line with the descriptions of the
practice theory.

2.1 Practical resources for China’s participation in the BRICS mechanism

According to the practice theory, the practical resources mainly refer to two
factors during China’s participation in the international system: the inter-
national climate and the domestic resources. Did those two factors dir-
ectly influence China’s choice of action when it participated in the BRICS
mechanism?
First, from the perspective of the international climate, China has had
more connections with the outside world and more opportunities of devel-
opment since the reform and opening up. China had to join the existing
mature international institutions in order to fully leverage those institutions
and rules under the international system to develop itself. However, the inter-
national institutions at that time tended to be dominated by Western coun-
tries, especially the United States. If China wanted to join these international
institutions, it had to persuade others to accept it and undergo a process of
constantly learning, adjusting and abiding by the norms of international
institutions. In addition, after China joined these international institutions,
it could nominally adjust and innovate part of the norms via the penetra-
bility of the international regimes. However, the West has left not much
room for China to manoeuvre. The Western dominance of the international
regimes determines the fact that China could not play a “too big” role. For
example in terms of innovation practice, China had little say over the formu-
lation and amendment of the rules and the distribution of rights and duties
in the organizations. Such a situation not only was incommensurate with its
rising status, but also it hugely limited the further development of China.
Therefore, China had to find another brick in the wall, at an appropriate time
establishing an international organization dominated by itself. Based on this,
China turned to the concept of the BRIC and hoped to convert the concept
into a practical cooperative mechanism dominated by the developing coun-
tries via a series of innovation practices. This meant that the international
regime was an important factor for China to promote the BRIC mechanism.
Second, China’s domestic resources were beneficial to building the BRIC
mechanism. In terms of the domestic system, China is famous for concen-
trating resources and doing big things and is able to gather the related domestic
forces to unite the BRIC countries. Meanwhile, China’s effort to promote
the establishment of the BRIC mechanism is conducive to implementing
the strategy of peaceful development, enhancing collaboration among the
BRIC countries and increasing China’s international influence, which is
totally in line with its interests. Therefore, China’s participation in the BRIC
104 Gao Shangtao
mechanism is likely to be recognized by China’s people domestically and there
is no domestic obstacle to acceptance. In addition, China’s participation in
the establishment of the BRIC mechanism means that it can fully consider the
compatibility of the norms of the mechanism, which is helpful for the mech-
anism to gain popularity or even be integrated across the country. Therefore,
China had abundant domestic resources and enough driving forces to partici-
pate in the establishment of the BRIC mechanism.

2.2 Types of Chinese participation practice at the

beginning of the BRICS mechanism
According to the practice theory, there are five basic types when a country
participates in the practical activities in the international regimes. At the
beginning of China’s participation in the BRIC mechanism, we can clearly
distinguish three types, namely, discourse practice, innovation practice and
alliance practice.
The beginning of the discourse practice of China’s participation in the BRIC
mechanism centred around the concept of the BRIC countries, bestowing
the specific meaning that reflected China’s new pursuit of an international
organization: to redefine the concept of the BRIC, which only occurred in
the Goldman Sachs’ report: position it as the first non–​Western-​dominated
international organization with China –​an emerging major power –​as its
founding country and core member, and guide China’s practical activities
based on it. China firmly believed that such an international organization
would increase China’s social power in international relations and put the
strategy of “smart network of relations” into practice, peacefully pursuing
the status of a major power via the horizontal relationship network among
countries rather than the competition for hierarchy and power.12 To this end,
China included the BRICS mechanism into the Report to the 18th National
Congress of the Communist Party of China, regarding it as one of the four
platforms for “active participation in multilateral affairs”.13 However, the new
concept of the BRICS mechanism defined by China’s discourse practice at
that time was merely an individual recognition and an individual concept of
China. It could only unilaterally define the possible outline of the BRICS
mechanism and the individual identity of China as a founding country from
China’s perspective. And the individual identity would form a collective iden-
tity after the collective consensus reached through China’s alliance practice
received collective confirmation.
China’s innovation practice at the beginning of the BRIC mechanism
was of paramount importance as it determined whether the BRIC mech-
anism could be accepted by the countries concerned and whether it could
be shifted from concept to reality. China had to draw a blueprint for the
imaginary BRIC mechanism in advance to attract other relevant countries.
To this end, China rationally planned the BRIC framework and its devel-
opment roadmap and proposed reasonable internal consultation principles.
 China’s participation in BRICS cooperation 105
According to China’s assumptions, the BRIC cooperative mechanism would
mainly include meetings on various levels, such as the summits, the meetings
of foreign ministers, the meetings of high-​level representatives of national
security affairs, and the meetings of finance ministers, to comprehen-
sively deepen and specify the coordination and cooperation among coun-
tries. The development roadmap mainly strived to complete a series of key
steps concerning the success of the BRIC mechanism cooperation through
the summits. The preliminary period included at least the following three
aspects: first, to determine the development direction of the institutionalized
cooperation and global governance appeals; second, to propose and approve
an action plan to consolidate the institutionalized cooperation of the BRIC
countries and to clarify the basic position of global governance; third, to
plan the establishment of the New Development Bank and the Contingent
Reserve Arrangement, providing a physical pillar for the BRICS mech-
anism.14 In addition, China actively advocated the principle of “deliberative
democracy” as the basic principle for dialogue and discussion within the
BRICS and set an example by doing so. These active and effective innova-
tive activities laid a solid foundation for the development of the BRICS
mechanism.
Based on the above efforts, China proactively persuaded the member
states to accept China’s new understanding of the BRIC mechanism, rec-
ognize the cooperation framework and deliberative democratic principles
of the BRICS mechanism, accept the development direction of the BRIC
mechanism and the specific steps advocated by China, and agree to work
with China to promote the establishment of the BRIC mechanism. In order
to fully mobilize other BRIC countries and avoid the negative impression
that China would have a strong influence on the BRIC cooperation, China
formulated a unique practical strategy –​fully leveraging China’s delibera-
tive democracy, negotiating with other countries, and encouraging them
to make proposals for cooperation that were acceptable to every member
country. In addition, China sought the common interests of the BRIC coun-
tries and strived to increase other countries’ initiative to accept its proposals
for cooperation. It has proved that these practices achieved remarkable
results and Russia, India and Brazil agreed to jointly establish the BRIC
mechanism with China.

2.3 Consensus-​reaching at the beginning of the BRICS mechanism

According to the practice theory, participation practice will facilitate and
unite the collective consensus, which was clearly reflected in China’s participa-
tion in the practical activities, especially the alliance practice, at the beginning
of the establishment of the BRIC mechanism. The newly achieved consensus
mainly includes the following three aspects.
First, Russia, Brazil, and India recognized China’s creative proposal of
institutionalizing the BRIC concept. As with China, Russia and Brazil are
106 Gao Shangtao
both emerging countries and have good relations with China. In the context
of the global economic crisis in 2008, China’s economy was still thriving while
other countries were suffering. Both countries hoped to work with China to
develop themselves, get rid of the Western economic crisis, increase their
influence and build a fair, democratic and multipolar world order.15 Therefore,
the two countries had almost the same idea as China to ​​establish the BRIC
mechanism. India had historical issues with China such as border disputes,
but it was also very actively responsive to China’s proposal to build a BRIC
mechanism. India believed that the BRIC mechanism would become a formal
multilateral cooperation platform for emerging countries where the voice of
emerging countries would be raised, and the relationship between developing
countries would be developed. India also believed that the BRIC mechanism
would enable it to play a greater role in the United Nations and further
enhance its international status. Therefore, the Indian National Congress and
the Bharatiya Janata Party, which were always at odds with each other, had an
active attitude toward participating in the BRIC cooperation, and the Indian
people also generally welcomed the BRIC summit.16
Second, the three countries agreed to establish the BRIC mechanism
with China as founding countries and recognized the institutionalized steps
advocated by Beijing. After coordination and promotion by China, Russia
agreed to take the lead in organizing a meeting of foreign ministers of the
BRIC countries during the United Nations General Assembly in September
2006 to discuss the BRIC cooperation. China positively responded and fully
cooperated, and India and Brazil were also pleased to take part. The success
of the first meeting of foreign ministers was followed by the four countries’
decision to hold a meeting of foreign ministers every year to discuss coord-
ination and cooperation within the BRIC framework and prepare for the
BRIC summit. As a result, the BRIC cooperative mechanism was officially
launched.
Third, all the member states agreed to regard the principle of deliberative
democracy proposed by China as the basic code of conduct for the BRIC.
Since the establishment of the BRIC mechanism, China and other member
countries have adhered to the norms of equality and democratic consultations,
which was later adhered to and gradually clarified. At the first BRIC Summit,
then Chinese President Hu Jintao proposed to establish the BRIC mech-
anism as an international paradigm of mutual respect and equal consult-
ation through dialogue and communication. At the fourth BRICS Summit,
President Hu clearly stated the principle of “sticking to equal consultation”.
Widely welcomed and unanimously recognized by the BRICS countries, this
principle has become the basic model for all BRICS meetings and talks at all
levels. It has also become the basis of the principle of openness and transpar-
ency, solidarity and mutual assistance, deepened cooperation and common
development, and of the BRICS spirit of “openness, inclusiveness, cooper-
ation and win-​win results”.17
 China’s participation in BRICS cooperation 107

3. Important practices by China in the development of the BRICS

mechanism
The second key stage of China’s participation in the development of the BRICS
mechanism –​also the three meaningful development nodes –​are the first, third
and sixth BRICS summits. During these three summits, China made more efforts
in its participation practice and a new collective consensus emerged.

3.1 Innovation practice, alliance practice and institutionalized consensus

for collaboration during the first summit
On June 16, 2009, the first meeting of the leaders of the BRIC countries was
held in Yekaterinburg, Russia. During this meeting, China carefully conceived
the agenda and the objectives of the First BRIC Summit, namely, “getting a
good start and making great progress”, hoping to institutionalize the BRIC
cooperation.18 China closely consulted with other member states, especially
host country, Russia, and reached consensus. In addition, China repeatedly
negotiated with other BRIC countries and jointly determined the theme of the
conference –​prevent the spread of the international financial crisis, promote the
reform of the international financial system, focus on non-​traditional security,19
and establish a mechanism-​based cooperative relationship between the BRIC
countries for mutual cooperation and common development.20 As to the out-
come of the talks, China hoped that the four countries would work hand in
hand, strengthen the equal dialogue, exchange and cooperation, safeguard the
common interests of developing countries and promote the recovery and growth
of the world economy on the principle of openness and transparency.21
After friendly consultation, the first summit not only reached an important
consensus that the BRIC countries would conduct institutionalized cooper-
ation and pinned down the functional appeal of global governance, but also
reached important consensus on cooperation. For example the BRIC coun-
tries would unanimously support the G20 Summit, commit to promoting the
reform of the international financial institutions, and carry out international
cooperation in the field of energy, and so forth.22

3.2 Innovation practice, alliance practice and consensus on action

during the third summit
On April 14, 2011, the Third BRICS summit was held in Sanya, China. At this
summit, China actively and innovatively designed the agenda and determined
the theme of the meeting. China designed various forms of meetings and
talks, such as small-​scale discussions, large-​scale discussions, the press con-
ference attended by leaders and the welcome banquet hosted by the Chinese
president. In addition, bilateral meetings and talks were frequently held
before the summit in order to make friendly contact, coordinate positions
108 Gao Shangtao
and build consensus. The theme of the summit was positioned by China as
“Broad Vision, Shared Prosperity”, and the agenda items included the inter-
national situation, global economy and international finance, development
and BRICS cooperation, highlighting the Chinese approach of “leading
the mechanism construction by problem discussions, solving problems and
improving the mechanism”.23
While preparing for the summit, China proactively innovated the concept
in order to invite South Africa into the BRIC mechanism. China believed
that the South Africa’s participation in the BRIC mechanism would enrich
the African agenda of the summit, make the mechanism more inclusive, rep-
resentative and open, strengthen the gross GDP of the BRIC mechanism and
raise its international influence and international voice, which was totally in
line with China’s expectations for the BRIC countries and the development
direction of the mechanism. China closely discussed this new understanding
with other member states and tentatively reached a consensus. Meanwhile, it
communicated with South Africa, and the two sides agreed on granting South
Africa membership in the BRIC mechanism. In December 2010, China,
Russia, India and Brazil agreed to grant South Africa the membership of the
BRIC mechanism.24
The Sanya Summit designed a clear plan for the future BRICS cooper-
ation, determined a new starting point for the BRICS cooperation, reached
a series of important consensus, such as the reform of the international
monetary and financial system, cooperation in economy and trade, and
global climate change, and stated the main direction for future cooper-
ation. The Sanya Summit also specially formulated an action plan for the
above consensus, making great effort to put the BRICS mechanism into
practice.25

3.3 Innovation practice, alliance practice and substantialized consensus

during the sixth summit
On July 15, 2014, the Sixth BRICS Summit was held in Fortaleza, Brazil.
At the summit, China not only offered suggestions for major issues, but also
proposed a feasible plan for the establishment of the New Development Bank
and the construction of Contingent Reserve Arrangement. The summit was
positioned as a new starting point, a new vision and new driving force for
the BRICS cooperation, and China hoped to draw a new cooperation blue-
print and develop a closer, more solid and more comprehensive partnership
via good coordination, allowing the BRICS countries to raise their voice and
make contributions in major international and regional issues.26 And the
cooperation blueprint for a more solid BRICS mechanism was to establish
the New Development Bank and the Contingent Reserve Arrangement. To
this end, China put forward a solution accepted by all sides after repeated
negotiations and consideration and after taking into account other countries’
suggestions.
 China’s participation in BRICS cooperation 109
China fully leveraged deliberative democracy and facilitated consensus-​
reaching, as indicated in the following two aspects: first, China’s vision and
design of the summit was implemented through consultation and persuasion;
second, the solution of the establishment of the New Development Bank and
the Contingency Reserve Arrangement was finalized after consulting with
other BRICS members. There was little disagreement among the BRICS
countries as to China’s vision and design. As suggested by China, the host
country, Brazil, fully considered China’s proposal and incorporated it into
the agenda of the meeting. However, it was difficult to persuade the BRICS
countries to agree on the establishment of the New Development Bank and
the Contingency Reserve Arrangement. In the end, after considering the
proposals from all parties, China facilitated the communication and exchange
on multilateral and multilateral issues and in the new field of cooperation. The
member states finally reached consensus after seven rounds of negotiations.
The Fortaleza Summit established the New Development Bank and the
Contingency Reserve Arrangement inside the mechanism. The Bank was to
have an initial authorized capital of US$100 billion. The initial subscribed
capital US$50 billion, equally shared among founding members. The first
chair of the Board of Governors was from Russia. The first chair of the Board
of Directors was from Brazil. The first president of the Bank was from India.
The headquarters of the Bank in Shanghai and the New Development Bank
Africa Regional Centre was established in South Africa. The initial size of the
Contingency Reserve Arrangement was US$100 billion, and the maximum
amount states can request from the Reserve was as follows: US$41 billion
for China, US$18 billion respectively for Brazil, India and Russia, and US$5
billion for South Africa.27

4. Identity shift of China’s participation and international influence

The concept of the BRICS mechanism was put into practice with the joint
effort of China and the other BRICS countries. During the development,
China’s practice has constantly promoted collective consensus, which has
confirming the new identity of China and bestowed new momentum on China.

4.1 BRICS mechanism confirms China’s new collective identity

Since the emergence of the concept of the BRICS, China has observed the
situation and seized the opportunity, instilled meaning into the concept and
forming a unique understanding: the BRICS mechanism is a platform con-
ducive to the peaceful development of China and its pursuit of becoming
a major power; it is necessary for China to accelerate putting the concept
into an international institution in reality. Such understanding gives China an
individual identity –​proactively serving as a founding country of the BRICS
mechanism. Driven by the individual understanding and the individual iden-
tity, China actively communicated with Russia, India and Brazil and reached
110 Gao Shangtao
consensus with them on establishing the BRIC mechanism, and also reached
the collective consensus on shifting the value of the platform and the necessity
of establishment of the BRICS mechanism into a substantive BRICS institu-
tion. Such a collective consensus not only directly promoted the convening of
the BRICS summit and the establishment of the BRICS mechanism, but also
indicated China’s successful shift from the individual identity of a founding
country of the BRICS mechanism to the collective identity of a founding
country. However, this confirmation of China’s new identity at the beginning
was only the recognition of form.
After the first summit in 2009, the principle of deliberative democracy with
“equal negotiation” as its core advocated by China was accepted by the BRIC
countries and became a basic principle and norm of the BRIC mechanism.
This collective norm directly determined China’s equal rights and reciprocal
obligations to participate in the BRIC mechanism. To put it another way,
China, as a founding country and promoter of the BRIC mechanism, enjoys
equal rights within the BRIC mechanism and shoulders reciprocal obligations
for the formation and development of the BRIC mechanism as do all the
member countries. To be specific, equal rights include the right to equally pro-
pose and make the agenda of meetings, determine the theme of talks, lead or
participate in major decisions, and so forth. This meant that China’s identity
in the BRIC mechanism was further substantively recognized, including both
the distribution recognition reflecting rights and interests and the value recog-
nition reflecting identity equality and social justice.
The Third BRICS Summit, in 2011, further strengthened the BRICS coopera-
tive mechanism and proposed an action plan aimed at pragmatic cooperation.
In the process of drafting and discussing the action plan, China’s status as a
founding country of the BRICS mechanism was enriched and the distribution
recognition and the value recognition of the identity were strengthened. In 2014,
the Sixth BRICS Summit established the New Development Bank within the
BRICS mechanism. The initial subscribed capital is equally distributed among
member countries. The consensus not only further confirmed China’s identity as
a founding country, but also enriched and strengthened the distribution recogni-
tion and the value recognition of China’s identity.28 China’s collective identity as
a founding member of the BRICS mechanism with equal rights and reciprocal
obligations was firmly established.

4.2 Influence of China’s new identity on the international development

As soon as the new identity was established, China started to actively interact
in the international regimes with the new identity and with the help of the
BRICS mechanism, exerting huge influence on the development of inter-
national regimes and promoting changes in international regimes.
First, China’s participation in the BRICS mechanism has the most influ-
ence on the G20. At the First BRIC Summit, China coordinated with other
member states and called on the countries related to commit the consensus
 China’s participation in BRICS cooperation 111
reached at the G20 London Summit April 2009, aiming to ensure more pro-
gress to be realized at the G20 Pittsburgh Summit in September 2009.29 Jointly
promoted by China and other BRIC countries, the heads of the G20 coun-
tries reached consensus in Pittsburgh, agreeing to raise the share of emerging
markets and developing countries in the International Monetary Fund.30 In
order to implement the consensus, the BRIC countries represented by China
negotiated with other participating countries day after day and finally reached
consensus on the reform of the share in the IMF at the meeting of the G20
Finance Ministers and Central Bank Governors in October 2010. The share
of China increased to 6.19 per cent from 3.8 per cent,31 surpassing Germany,
France and the United Kingdom and ranking the third, only to the United
States and Japan, while the United States still had veto power. The total
share of the BRIC countries increased to 14.18 per cent and the share of
all emerging economies increased to 42.29 per cent.32 The international eco-
nomic order would undergo a historic change if the distribution plan would
be implemented.33
Second, the BRICS countries had their voice heard at the United Nations
Climate Change Conference and exerted great influence on global climate
politics. From December 7, 2009 to December 18, 2009, the fifteenth session
of the Conference of the Parties to the UNFCCC and the fifth session of the
Conference of the Parties serving as the Meeting of the Parties to the Kyoto
Protocol (Copenhagen Climate Change Conference) took place, arranging
for the action plans for emission reduction after the Kyoto Protocol expired
at the end of 2012. However, developed countries responded negatively to
the goal of emissions reduction. Those economies with huge amount of
emissions, such as the United States, Japan and the European Union, either
paid lip service or rejected the requirements proposed by developing coun-
tries. Therefore, China, India, Brazil and South Africa (also known as the
“BASIC”), on behalf of the BRICS countries, and Sudan, the then rotating
presidency of the G77, spoke in one voice and demanded developed countries
to continue the Kyoto Protocol and achieve the target of emissions reduc-
tion in a second commitment period. Meanwhile, they proposed that the fruit
of the Copenhagen Climate Change Conference should include the content
that developing countries cared about, such as a shared vision for long-​term
cooperative action, mitigation, adaptation, capital and technology transfer.
At the Doha Climate Change Conference held in November and December
2012, four BRICS countries, namely, China, India, Brazil and South Africa,
again spoke in one voice and advocated that all the parties work towards the
task of emission reduction under the principle of “common but differentiated
responsibilities”. Thanks to the joint efforts of the BRICS countries, the results
of the Doha Climate Change Conference basically met China’s expectations.34
Third, the New Development Bank and the Contingency Reserve
Arrangement are two major constructive progress promoted by China as a
founding country of the BRICS mechanism on the platform of the BRICS
mechanism, which determined the institutionalized development direction
112 Gao Shangtao
of the BRICS mechanism and changed the international economic order,
exerting huge influence on the international financial landscape.35 To start
with, the establishment of the New Development Bank and the Contingency
Reserve Arrangement has served as a pillar for the BRICS mechanism and
facilitated the BRICS countries to make great strides for a substantive “com-
munity of interests”, showing a development trend of resource unity, mutual
interests and practical cooperation.36 In addition, the New Development
Bank not only can fund infrastructure construction, but also meet the in-​
depth needs of its member states and even other developing countries in the
process of economic transformation and play a bigger role in the business
such as cross-​border settlements and currency swaps among member coun-
tries. Meanwhile, complementary to the current international financial order,
the New Development Bank and the Contingency Reserve Arrangement
can reciprocate the right to formulate some international financial rules to
developing countries and thus facilitate the international financial order to
undergo changes beneficial to emerging economies.37
Fourth, China has proactively promoted diversification of the world’s
development model and the democratization of international relations with
the BRICS platform. As emerging economies, the BRICS countries share
some common features in realizing rapid economic growth –​all of them are
actively opening up and using external resources and market conditions to
develop their economy. However, each member country differs in specific
paths. Therefore, admitting the diversification of world politics, economy
and social progress and holding an inclusive and cooperative attitude are
an important basis for the BRICS cooperation and a key norm of the inter-
national community. Besides, democratic and equal consultation are basic
principles of the institutionalized BRICS cooperation. There is no superior
country or inferior country within the BRICS mechanism. All the member
states have equal rights to freely choose their own social systems and develop-
ment paths independently. Therefore, the BRICS mechanism has provided a
platform for emerging economies to truly have equal dialogues, shielding them
from the international organizations dominated by the Western major powers.
It is conducive to accelerating the democratization of international relations38
and diluting the hierarchy and oppression in the current international system,
exerting far-​reaching influence on the international politics and economy.

5. Conclusion
According to the analysis, clear logic of practice has been shown in China’s
participation in the establishment and development of the BRICS mechanism.
Driven by the international regimes and resources at home and abroad, China
has taken part in a series of participation practice for the establishment of the
BRICS mechanism, united the consensus of the establishment of the BRICS
mechanism and of China’s participation in the mechanism and collective
action as a founding country, which bestows a brand-​new collective identity
 China’s participation in BRICS cooperation 113
on China –​a founding country of the BRICS mechanism with equal rights
and reciprocal obligations –​after confirmation of the BRICS mechanism for
future international interaction.39 The new identity will lead China to play a
new role in the international regime and exert influence on its development.
It is worth noting that the practice theory is a maximal analytical frame-
work40 and is generalized into five modes of practice. A country generally
will undergo the following five processes of practice when joining a mature
international organization: (1) by discourse practice, the country defines the
organization from the perspective of its relations with others and provides
evidence and guidance for participation; (2) the country persuades the inter-
national organization to believe and accept it through alliance practice so that
it can be successfully accepted; (3) after joining the organization, the late-
comer should familiarize itself with the rules, adapt to and integrate into the
organization by learning and imitating as soon as possible, which is known
as the learning practice; (4) after learning the norms of the organization,
the country should adhere to the norms or even internalize them, which is
known as compliance practice; (5) after the country becomes familiar with
the rules and is able to fully leverage them over time, it will find loopholes and
problems with the rules and try to transform them by the permeability of the
organization, leading to the innovation practice. The five modes of practice
completely describe the process experienced by an outsider country to join a
mature international organization.
However, not all countries will undergo the entire five modes of practice
in their participation practice. The practice process will not be as typical as
described in the theory when a country establishes a new international organ-
ization from scratch. When a country starts to establish a new international
organization, it will generally undergo the discourse practice to define a pos-
sible outline for the future organization. Then it will persuade other countries
to believe in and accept the possible form of organization, and invite them into
the organization through alliance practice. Next, the country has to formulate
rules of the organization through innovation practice and reach consensus
with other countries related through alliance practice, followed by the com-
pliance practice to internalize the rules and the possible innovation practice
in the future. For the founding countries of the international organizations,
the learning practice is not very typical here while the innovation practice is
evident. Above is the inspiration for the practice theory that we can draw from
China’s participation in the establishment of the BRICS mechanism.
Practice theory is also meaningful to perfect and promote the major-​power
diplomacy with Chinese characteristics. It is indicated by the practice theory
that a country can constantly unite new consensus and innovate methods of
practice in the international community through active discourse practice,
alliance practice and innovation practice on the basis of learning and compli-
ance. The major-​power diplomacy with Chinese characteristics demands that
China should interact with other countries with a more active and responsible
manner and clarify China’s responsibilities and propose China’s plans. This
114 Gao Shangtao
means that the major-​power diplomacy with Chinese characteristics will be
constantly improved and developed under the inspiration and promotion of
the practical theory.
The analysis has proved that the practice theory is basically a feasible
framework for theoretical analysis and explanation. It is important for
China as a world power to rationally construct and fully leverage the plat-
form of international regimes to play a greater role in promoting the devel-
opment and implementation of the major-​power diplomacy with Chinese
characteristics.

Notes
1 Zhu Liqun & Nie Wenjuan, “Practice Orientation in Theory of International
Relations”, World Economics and Politics, No. 8, 2010, pp. 98–​115.
2 The representative one is Qin Yaqing’s attempt in the Study on China’s Active
Participation in International System Reform, one of the national major social
sciences projects. Refer to the “sub-​project: theory” (to be published). Having
combined the practice theory and Chinese characteristics, Qin has also absorbed
Marxist philosophy on practice and the thoughts on practice in traditional Chinese
culture, trying to establish a practice theory with Chinese characteristics. Before
that, there were some articles on the framework of Western practice theory in
China, promoting the shift to the study on practice of international relations theory
in China. Refer to Zhu Liqun & Nie Wenjuan, “Practice Orientation in Theory
of International Relations”, World Economics and Politics, No. 8, 2010; Zhu
Liqun, “Explanatory Mode of Practice of China’s Participation in International
Regimes”, Foreign Affairs Review, No. 1, 2011; Wu Wencheng, “Alliance Practice
and Identity Recognition: Take China’s Participation in UNESCO as Example”,
Foreign Affairs Review, No. 1, 2012; Feng Jicheng, “China’s Participation in UN
Peacekeeping Missions: Learning Practice & Identity Recognition”, Foreign
Affairs Review, No.1, 2012; Zhu Liqun & Nie Wenjuan, “Practice Agency from
the Perspective of Structure-​Agent: On Proactivity of China’s Participation in
International Regimes”, World Economics and Politics, No.2, 2013; Zhao Yang,
“Agent, Structure and Practice in Identity Construction of a Country: A Study
Based on China’s Participation in International Regimes”, Teaching and Research,
No. 8, 2013; Sun Kai, “Participation Practice, Discourse Interaction and Identity
Recognition: Understanding China’s Participation in North Pole Affairs”,
International Economics and Politics, No.7, 2014; etc.
3 Refer to Sun Kai, “Participation Practice, Discourse Interaction and Identity
Recognition: Understanding China’s Participation in North Pole Affairs”,
International Economics and Politics, No.7, 2014, pp. 48; Zhu Liqun, “Explanatory
Mode of Practice of China’s Participation in International Regimes”, Foreign
Affairs Review, No. 1, 2011, pp. 19–​33.
4 Christian Büger and Frank Gadinger, “Reassembling and Dissecting: International
Relations Practice from a Science Studies Perspective”, International Studies
Perspectives, No. 8, 2007, pp. 100–​105.
5 Audie Klotz, Norms in International Relations: The Struggle against Apartheid,
Ithaca, NY: Cornell University Press, 1995, pp. 29–​33.
 China’s participation in BRICS cooperation 115
6 Zhao Dingxin, Social and Political Movements, Social Sciences Academic Press,
Beijing, 2006, p. 2.
7 Alastair Iain Johnston, Social States: China in International Institutions 1980–​
2000, Princeton: Princeton University Press, 2008, pp. 23–​46.
8 Zhu Liqun, Lin Minwang et al., Olympic Games and Beijing’s Internationalization: A
Study of Norm Socialization, World Affairs Press, 2001, p. 29.
9 The elaboration on theories above mainly refers to Qin Yaqing’s “sub-​
project: theory” of “Study on China’s Active Participation in International System
Reform” (to be published). Other related literature has also been referred to.
10 Wang Yuhua & Zhao Ping, “Features and Problems of BRICS Cooperation and
China’s Response”, Contemporary Economy & Management, No. 11, 2011, p. 24.
11 ibid.
12 Pang Xun, “BRIC Organization: Strategy of ‘Smart network of relations’ or
China’s Major Country Diplomacy”, May 30, 2014, website of Carnegie-​Tsinghua
Center for Global Policy, http://​www.carnegietsinghua.org/​2014/​05/​30/​金砖国家-​
组织-​中国大国外交的-​结网巧战略/​hcdk.
13 Hu Jintao, Report to the 18th National Congress of the Communist Party of China,
November 8, 2012, People’s Daily Online. The other three major platforms for
China to actively participate in multilateral affairs are the United Nations, the
Shanghai Cooperation Organization and the G20.
14 Xu Lifan, “BRICS Cooperation Encounters A Third Period”, Beijing News, July
15, 2014, A02.
15 Xin Renjie & Sun Xianpu, “BRICS Cooperative Mechanism and Sino-​Indian
Relations”, South Asian Studies, No. 3, 2011, p. 88.
16 Xin Renjie & Sun Xianpu, “BRICS Cooperative Mechanism and Sino-​Indian
Relations”, South Asian Studies, No. 3, 2011, p. 90.
17 Website of the Ministry of Foreign Affairs of the People’s Republic of China,
“Joint Statement of the BRIC Countries’ Leaders at Yekaterinburg, Russia”, June
16, 2009.
18 The briefing held by Wu Hailong, the then director-​general of The Department of
International Organizations and Conferences of the Ministry of Foreign Affairs
before the Summit. Refer to “China Advocates the BRIC Cooperation Should Be
Gradually Promoted” on www.xinhuanet.com, June 16, 2009.
19 Wang Yizhou, “BRIC Countries Strive for A Common Future”, Business Weekly,
June 22, 2009, pp. 12–​13; Qin Zhilai, “First BRIC Summit: Ushers in A New Era
of Cooperation”, International Outlook, No. 5, 2009, pp. 47–​48.
20 Qin Huaishi, “BRIC Countries in the Post-​crisis Era”, Foreign Trade & Economy,
No. 7, 2009, pp. 20–​21.
21 Li Gangqiang, “China’s Development Path: from the BRIC Summit”, China
Inspection and Quarantine, No. 8, 2009, pp. 45–​46.
22 Website of the Ministry of Foreign Affairs of the People’s Republic of China,
“Joint Statement of the BRIC Countries’ Leaders”, Yekaterinburg, Russia, June
16, 2009.
23 www.chinanews.com, “President Hu to Deliver Important Speech at BRIC
Summit”, April 2, 2010.
24 www.people.cn, “South Africa Becomes an Official Member of BRICS
Mechanism”, December 28, 2010.
25 www.chinanew.cn, “Sanya BRICS Summit Reaches Broad Consensus and
Achieves Three Key Results”, April 14, 2011.
116 Gao Shangtao
26 www.people.cn, “President Xi Attended 6th BRICS Summit and Delivered
Important Speech”, July 17, 2014.
27 www.people.cn, “6th BRICS Summit –​Fortaleza Declaration (full text)”, July
17, 2014.
28 Jenny Clegg: “Out of the Crisis: Can BRICS Play an Active Role in the Formation
of a New International Economic Order”, Journal of Economics of Shanghai
School, No. 4, 2012, p. 41.
29 Cai Chunlin, Liu Chang & Huang Xuejun, “Status and Role of the BRICS in
International Economy”, Comparative Economic & Social Systems, No. 1, 2013,
pp. 40–​49.
30 www.xinhuanet.com, “Previous G20 Summits”, September 27, 2009.
31 Sang Baichuan, Liu Yang & Zheng Wei: “Current Situation, Problems and
Prospects of the BRICS Financial Cooperation”, Intertrade, No. 12, 2012, p. 33.
32 www.china.com.cn, “Meeting of G20 Finance Ministers and Central Bank
Governors Concludes: Promises No Currency Wars”, October 24, 2010.
33 Sang Baichuan, Liu Yang & Zheng Wei: “Current Situation, Problems and
Prospects of the BRICS Financial Cooperation”, Intertrade, No. 12, 2012,
pp. 32–​34.
34 www.chinanews.com, “Xie Zhenhua: China Satisfied with the Results of Doha
Conference”, December 9, 2012.
35 Cai Chunlin, Liu Chang & Huang Xuejun, “Status and Role of the BRICS in
International Economy”, Comparative Economic & Social Systems, No. 1, 2013,
pp. 40–​49.
36 Tang Lingxiao, “Realistic Driving Force for the Establishment of the New
Development Bank”, Social Sciences in China, August 20, 2014.
37 Jenny Clegg: “Out of the Crisis: Can BRICS Play an Active Role in the Formation
of a New International Economic Order”, Journal of Economics of Shanghai
School, No. 4, 2012, p. 43.
38 Lv Youzhi, “International Influence and Constraints of BRICS Countries”,
International Vision, No. 3, 2011, p. 32.
39 China is the founding country of the BRICS mechanism. This identity was later
confirmed within the BRICS framework after the establishment of the BRICS
mechanism.
40 Wang Yang, “Theoretical Orientation of Bruno Latour”, Philosophical Trends,
No. 7, 2003, pp. 19–​24.
7 
The BRICS countries and global
economic governance
Xu Xiujun

Since the end of Cold War, especially since the start of the twenty-​first century,
the emerging countries have achieved outstanding economic performance and
become a focus of world attention. With the rapid rise of a large number of
emerging countries, the pattern of interests distribution under the prevailing
global economic governance system has become increasingly unsuitable to the
changes of the era, which has become the main source of legitimacy crisis of
the global economic governance system. As emerging countries, the BRICS
have both the strategic need to boost domestic economic and social devel-
opment and the strategic need to enhance their narrative and voice on the
international stage, so they all have the motivation to jointly expand their
strategic interests. Since the establishment of the BRICS summit mechanism,
their leaders have from time to time had an in-​depth exchange of views on
issues and challenges faced by the five countries and even the whole world,
and continuously deepened the BRICS participation in global governance.
In this process, the BRICS countries have gradually changed from passive
recipients of the existing global governance system to active participants and
creators, and created some new ideas, new ways, and new practices for the
emerging countries to cooperate and participate in global governance.

1. The rise of emerging countries and establishment of the BRICS

cooperative mechanism

1.1 Collective rise of the emerging economies

Since the end of the Cold War, especially since the onset of the twenty-​first
century, the emerging countries have achieved outstanding economic perform-
ance and become a focus of world attention. In terms of economic growth, the
emerging economies and developing countries registered an average growth
rate of 6.1 per cent from 2000 to 2013, among which the BRICS countries
registered 6.9 per cent on average, 2.4 percentage points and 3.2 percentage
points higher than the world economic growth rate during the same period,
respectively.
118 Xu Xiujun
In terms of total economic size, the total GDP of the emerging markets
and developing countries reached $28.64 trillion in 2013 if calculated on
market exchange rates, accounting for 38.7 per cent of global GDP, an
increase of 18.6 percentage points over 2000. The total GDP of the BRICS
countries reached $15.76 trillion, accounting for 21.3 per cent of global GDP,
an increase of 13.0 percentage points over 2000. In terms of purchasing
power parity, the share of the emerging markets and developing economies
in global GDP for the first time exceeded that of the developed economies in
2013, reaching 50.4 per cent, an increase of 13.4 percentage points over 2000.
Among them, the percentage of the BRICS countries in global GDP was 27.6
per cent, 10.7 percentage points higher than that of 2000.
In terms of the increment of economic size, the emerging countries represented
by the BRICS countries have achieved a brighter performance in recent years.
In the five years from 2008 to 2013, the total GDP of the emerging markets
and developing countries saw a net increase of $9.45 trillion based on market
exchange rates, accounting for 77.9 per cent of increased global GDP aggregate.
Among them, the BRICS countries increased by $6.43 trillion, accounting for
53.0 per cent of the global GDP increment. In the same period, the total GDP
of the developed economies increased by $2.69 trillion, accounting for 22.1 per
cent of the global GDP increment, among which the G7 increased by $1.88
trillion, accounting for 15.5 per cent of the global GDP increment.1

1.2 Legitimacy crisis of the current global economic governance system

With the rapid rise of a large number of emerging countries, the pattern of
interests distribution reflected in the current global economic governance
system has increasingly become inappropriate, which has become the main
source of the legitimacy crisis of the global economic governance system. In
today’s international community, the most important and influential global
economic governance mechanism has been established under the leadership
of developed countries, who have subsequently become vested interests under
the established system, enjoying the largest share of the benefits of global
economic governance.
In the IMF and World Bank, Western countries led by the United States
have overwhelming shares and voting rights and monopolize the control power
of senior management in the governance structure of the two institutions. It
is worth noting that the United States also exclusively enjoys the veto power
on major issues in the two bodies. Although the two institutions launched the
quota and voting rights reforms in favour of the developing countries, these
already-​decided programs have yet to be implemented due to the obstruction
of the US Congress.
In the global economic governance mechanisms based on consensus or
informal decision-​making, such as the World Trade Organization (WTO) and
G20, developed countries control and dominate the decision-​making power
of these mechanisms through consultations outside the mechanisms that
exclude most developing countries. In the WTO, voting is often left out of
 BRICS and global economic governance 119
multilateral disputes settlement and is replaced by “informal consultations”
or the so-​called “Green Room” that only involves major developed and a few
developing members, a practice that is not explicitly stipulated in various
WTO agreements. In the G20 mechanism, the G7 coordination mechanism
among developed economies still exists, and for the decision-​making of many
issues, developed economies often first conduct internal consultations to
coordinate each other’s stances and policies, while emerging countries are in a
disadvantaged position in G20 discussions and consultations.
In short, the global economic governance system is the carrier of national-​
interests distribution, and emerging countries are generally in a weak pos-
ition that does not match their own strength in the interests distribution of
various institutional systems, which directly leads to the widespread existence
of the legitimacy crisis of the current global economic governance system.
Therefore, in order to reverse the current unfair and unreasonable pattern
of interests distribution, the reform of global economic governance system
remains inevitable.

1.3 Establishment of the BRICS cooperation mechanism and its significance

Due to the rapid economic rise of emerging countries, the international com-
munity pays more attention to those emerging countries with outstanding
economic performance, laying a foundation for the establishment and expan-
sion of the BRICS cooperation mechanism. In 2001, Jim O’Neill, an econo-
mist at Goldman Sachs, identified four emerging economies –​Brazil, Russia,
India, and China –​as the countries with the largest investment value, and the
term of “BRICs” was correspondingly coined.2
In June 2009, the leaders of Brazil, China, India, and Russia held their
first summit in Yekaterinburg, Russia, and confirmed the establishment of a
regular meeting mechanism once a year, thus leading the essential transform-
ation of BRICs from an economic concept to a dialogue and cooperation
platform. Less than two years after the establishment of the BRICs summit
mechanism, the BRICs expanded its membership for the first time to bring
in South Africa, the largest economy in Africa, and then turned into BRICS.
With the inclusion of South Africa, BRICS has become a more representative
mechanism for cooperation among the emerging countries.
It is unprecedented in international relations and the history of inter-
national economics that five emerging countries from the four continents
of the world, namely, Asia, Europe, Africa and South America, have come
together to establish a trans-​regional multilateral cooperation mechanism.
Therefore, the BRICS cooperation mechanism is of self-​evident symbolic
and practical significance. The establishment and development of the BRICS
cooperation mechanism is of vital significance to strengthening economic and
trade cooperation and policy coordination among the five countries, and more
importantly, it marks the rise of the emerging economies represented by the
BRICS countries and the substantial progress that emerging countries have
achieved in changing the existing international economic and political order.
120 Xu Xiujun

1.4 A new role of the BRICS cooperation mechanism in the global

economic governance system
Due to its unique characteristics, the BRICS cooperation mechanism has
played an irreplaceable role in the global economic governance system since its
establishment. Specifically, the BRICS countries have played three important
roles in global economic governance:
First, the BRICS cooperation mechanism provides a platform for cooper-
ation among emerging countries. Due to the long-​term absence of the coord-
ination and cooperation mechanism that represents the interests of emerging
countries, the dialogues between those countries and developed countries
usually cannot better safeguard the interests of emerging countries in the field
of global economic governance. Therefore, the establishment of the BRICS
cooperation mechanism and its open cooperation model provide a platform
for the emerging markets and developing countries to conduct economic and
trade cooperation, express appeals and raise their voice in the global eco-
nomic governance system.
Second, the BRICS cooperation mechanism provides a platform for con-
sultation on trans-​regional economic governance. From a geographical per-
spective, the BRICS countries come from Asia, Europe, Africa, and America
of the five continents, which means they can link to a maximum the econ-
omies of all regions. At present, the BRICS countries are building a cooper-
ation framework with African and Latin American countries in a bid to
release the potentials of these regions and facilitate trans-​regional economic
cooperation.
Last but not least, the BRICS cooperation mechanism provides a plat-
form for exchanges between developing and developed countries. The BRICS
cooperation mechanism not only aims to promote cooperation among emer-
ging countries, but also attaches great importance to communication and
coordination with developed countries. As early as April 2011, the leaders
of the BRICS countries pointed out at the Sanya Summit that cooperation
among the BRICS countries is inclusive and non-​confrontational, and that
BRICS countries take an open position on strengthening ties and cooperation
with other countries and relevant international and regional organizations.
Other countries mentioned here include not only emerging countries and
developing economies but also developed economies.

2. The BRICS countries and the change of the global economic

governance system

2.1 Challenges for the participation of emerging countries in global

economic governance
Since the international financial crisis, the global political economy has grad-
ually entered a period of transformation and adjustment. Various forces
 BRICS and global economic governance 121
are fading away, and the world economy has taken on new development
trends and features of the times. In the field of global economic governance,
new problems have kept emerging, and emerging countries face numerous
challenges in their participation in global economic governance. In summary,
these challenges come from the following two aspects:
Challenges from within emerging countries. On the mechanism construction,
the absence of a united and exclusive international economic cooperation
organization that comprises most emerging countries, easily leads to the “spa-
ghetti bowl” effect of the emerging countries’ cooperation mechanism. At the
same time, the openness of such a cooperation mechanism is susceptible to the
influence of external countries, and the looseness of their cooperation mech-
anism is non-​conducive to the establishment of close cooperative relations.
In terms of trade and investment links, emerging countries are confronted
with such problems as small scale, unbalanced trade and investment links,
weak cross-​regional links and different trade and investment structures. When
it comes to financial and monetary cooperation, most emerging countries’
financial markets have not reached the due level of openness and innovation,
so their experiences and ability to resist financial risk are very limited, and
they are constrained by developed countries and the West-​dominated inter-
national monetary and financial system.
Challenges on the global level. This is particularly reflected in the building of
the global economic governance mechanism. It is a historical development
for the G20 to transform from a cooperation platform between the emerging
markets and developed economies into a primary forum to promote inter-
national economic policy dialogue and advance the reform initiatives for
global economic governance. However, the slow institutionalization of the
G20 makes it difficult to play an effective role in global economic govern-
ance. Developed economies still play a dominant role in the G20 mechanism,
in which the interests and concerns of emerging economies cannot be fully
reflected. Whether emerging countries can achieve equality and effective gov-
ernance of the global economy alongside developed economies through this
platform still faces many tests and challenges.

2.2 The reform of global economic governance system pushed by

the BRICS countries
Despite the numerous challenges emerging countries face in participating in
global economic governance, the BRICS countries, as an emerging force in
the reform of the global economic governance system, have made a series of
achievements in promoting the reform of the system, achievements that are
mainly reflected in the following four aspects:

(1) Promoting the reform of quotas and voting rights of international

monetary and financial institutions. In September 2009, the four BRIC
countries actively pushed the IMF and World Bank to transfer 7 per cent
122 Xu Xiujun
and 6 per cent shares respectively to the emerging markets and developing
countries and finally reach a new quota reform program. In July 2014, the
leaders of BRICS countries once again pushed the IMF to study a plan to
advance the reform process to ensure a greater voice and representation
of the emerging markets and developing countries, and urged the World
Bank and member countries to complete the next round of World Bank
group equity review by October 2015.
(2) Establishing the BRICS New Development Bank to complement the
existing multilateral development institutions. In July 2014, the BRICS
countries announced the signing of the agreement on the establishment
of the BRICS New Development Bank. The establishment of the
BRICS NDB will not only raise funds for infrastructure and sustainable
development projects in the BRICS and other developing countries,
but also complement the existing multilateral and regional financial
institutions in boosting global growth and development and promote
more effective use of global financial resources.
(3) Setting up an emergency foreign exchange reserve fund to guard
against international financial crises. In July 2014, the BRICS countries
announced the signing of an agreement to establish an emergency reserve
arrangement with an initial capital of $100 billion. This is not only an
important institutional achievement of the BRICS financial cooperation
that plays a positive a preventive role in helping member states cope with
short-​term liquidity pressure, but also is of far-​reaching significance for
preventing financial crises, promoting monetary cooperation among
emerging countries and strengthening the global financial safety net.
(4) Pushing for new progress in WTO multilateral talks. The BRICS
countries have always supported an open, inclusive, non-​discriminatory,
transparent and rules-​based multilateral trading system; BRICS pushed
for positive outcomes of the 9th WTO ministerial conference in Bali,
Indonesia, in December 2013, and remained committed to the successful
conclusion of the Doha Round of WTO talks.

The progress made by the BRICS countries in pushing for the reform of
the global economic governance system has not only provided a model for
cooperation among emerging countries, but also made developed countries
increasingly aware of the shortcomings of the existing global economic gov-
ernance system and the importance of reforming it.

3. The BRICS countries and innovation of the global

governance model
Since the establishment of the BRICS summit mechanism, the BRICS leaders
have already met seven times. Over the past seven years, the BRICS leaders
have had in-​depth exchanges of views on issues and challenges facing the five
countries and even the rest of the world, and continuously worked to advance
 BRICS and global economic governance 123
BRICS participation in global governance. In this process, the BRICS coun-
tries have gradually turned from passive recipients of the existing global
governance system into active participants and creators, created some new
ideas, new ways and new practices for emerging countries to cooperate with
each other and participate in global governance, and injected new impetus
and vitality into the improvement and innovation of global governance.
Specifically, the BRICS countries’ efforts to improve and innovate global
governance are mainly reflected in equal sharing of governance power, joint
building of partnership, gradual deepening of inclusive cooperation and
active handling of emerging issues.

3.1 Equal collaboration and sharing of decision-​making power

At present, the decision-​making mechanism in the global governance system
mainly follows the principles of consensus and voting. In the voting mech-
anism, decision-​making power is mainly divided into two forms –​equal
decision-​making based on the principle of “one country, one vote”, and
weighted distribution of voting rights based on political and economic power
and geographical distribution. In the United Nations, decisions are usually
made on a “one vote for one country” basis, but on major issues, each of
the five permanent members of the UN Security Council has a veto right.
In the WTO, except for “reverse consensus” and “voting” in a few cases in
the dispute settlement mechanism, all decisions on various matters follow
the “consensus-​based” principle. However, in practice, the “informal con-
sultation” attended by major developed members and a few developing
members often plays a decisive role in the WTO’s decision-​making. This
informal decision-​making mechanism usually forms a proposal, which is then
submitted to the ministerial conference for discussion to reach a consensus,
thus forming de facto weighted decision-​making. In international monetary
and financial institutions such as the World Bank and the IMF, the char-
ters clearly stipulate that the shares and then the voting powers are allocated
among member states mainly according to their economic strength.
Therefore, the existing major global governance institutions have adopted
different forms of weighted voting. This principle of decision-​ making
power allocation facilitates the control of these institutions by economically
powerful Western countries, some of which exercise de facto veto power over
major issues in these institutions. As a result, on the one hand, great powers
(especially Western powers) tend to dominate the global governance system,
and on the other hand, the voice of developing countries is not only rare but
often not properly reflected, greatly limiting their role and influence. Even in
the institutions that allocate governance rights according to member states’
economic power, the voting rights of many developing countries are badly
unbalanced by their own strength, and the reform programs agreed on cannot
be implemented due to obstruction from a few countries. In the long run,
the power imbalance in the global economic governance system has become
124 Xu Xiujun
increasingly obvious, the principle of sovereign equality among countries
increasingly eroded, and the democratization of international relations diffi-
cult to make substantive progress.
Within the BRICS, all members, big or small, rich or poor, strong or weak,
hold consultations on all matters on an equal footing and create a new model
of sharing decision-​making power on an equal basis. This pattern not only
runs through all BRICS cooperation, but also is fully reflected in the govern-
ance structure of the BRICS’s New Development Bank (NDB). In March
2013, the BRICS leaders decided to establish a new development bank at their
fifth summit, and in July 2014, the BRICS countries signed an agreement to
establish a new development bank, which, according to the agreement, will
have an authorized capital of $100 billion and an initial subscribed capital of
$50 billion. According to IMF data, China’s GDP based on market exchange
rates totalled $10.38 trillion in 2014, accounting for 61.1 percent of the
BRICS countries. However, the NDB’s authorized capital was not allocated
among BRICS countries according to their GDP weight, but equally shared
by the five countries. This means the five BRICS countries could equally
share the equity and voting rights of the bank. At the same time, the NDB’s
other arrangements have also taken into full consideration the interests of
all parties. The NDB’s first chairman of the board of governors was from
Russia, the first chairman of the board of directors was from Brazil, and first
president from India, while headquartered in Shanghai and with an Africa
regional centre located in South Africa. In July 2015, the BRICS NDB was
officially opened in Shanghai. Although the effect of this governance model
of equal power sharing among members remains to be seen, it undoubtedly
provides a new choice for the reform and innovation of global governance in
the context of frequent occurrence of malpractices in the governance struc-
ture of existing global governance institutions.

3.2 A partnership featured as mutual benefit and win-​win cooperation

Mutual benefit and win-​win cooperation mainly refer to taking account of
the interests and concerns of all parties, seeking common interests, giving full
play to the advantages and potentials of all parties, and ultimately achieving
common prosperity. Fundamentally speaking, mutual benefit and win-​win
cooperation are to abandon the traditional zero-​sum game between countries
and build an interdependent community of shared interests. It is under such a
vision that the BRICS countries are building a new type of all-​round partner-
ship in line with the trend of the times.
At the seventh BRICS summit, Chinese President Xi Jinping elaborated on
the connotation of the BRICS partnership and summarized it in the following
four aspects: (1) A partnership for world peace. The BRICS countries advo-
cate common, comprehensive, cooperative, and sustainable security, jointly
uphold regional and world peace and stability, resolve differences through
peaceful and political means, and promote democracy in international
 BRICS and global economic governance 125
relations; (2) A partnership for common development. The BRICS coun-
tries are committed to building a value chain of shared interests and a major
market of integrated interests, and realizing complementarity in resource
endowment and industrial structure, so as to build a BRICS community of
shared interests, safeguarding the common interests of the emerging markets
and developing countries, and promoting common development and pros-
perity of developing countries. (3) A partnership for diverse civilizations.
Through exchanges and mutual learning, the BRICS countries always seek
common ground while shelving differences, and have made common progress.
By taking advantage of their unique geographical advantages, the BRICS
countries have actively engaged in dialogue and exchanges with other coun-
tries and international organizations, strengthened solidarity and cooperation
with other emerging markets and developing countries, and expanded their
representation and influences. (4) A partnership for strengthening global eco-
nomic governance. The BRICS countries are committed to improving their
status and role in the global governance system, pushing the international
economic order to adapt to the historical trend that the power of the emer-
ging markets and developing countries is on the rise, maintaining the legit-
imate rights and interests of the emerging markets and developing countries,
and ensuring all countries enjoy equal opportunity, equal rules and equal
rights in international economic and trade activities.3
In the economics field, the BRICS leaders also adopted a guiding docu-
ment –​the Strategy for BRICS Economic Partnership. The document lays out
overall planning of the interconnectivity development pattern of the BRICS
countries, defined as “integrated market, multi-​level circulation, land, sea and
air interconnectivity, and cultural exchanges”, and confirms eight key cooper-
ation areas, including trade and investment, manufacturing, energy, and finance,
as well as some cooperation measures. The document further expands the
trade and economic cooperation area and space for the BRICS countries and
strengthens their competitiveness in the international market, but it also puts
into practice the building of a BRICS community of shared interests and lays
a solid foundation for BRICS countries to build a comprehensive partnership.
There is no doubt that the BRICS partnership is an innovative model for
global multilateral cooperation and governance, applying bilateral partner-
ship to multilateral cooperation mechanisms, and creating conditions for the
search for broader common interests. At the same time, the BRICS partner-
ship, which goes beyond the Cold War mentality and the mindset of political
alliance, is not targeted at any other country or organization or aimed at sacri-
ficing the interests of other countries, and thereby it sets an example for equal
cooperation and common development between countries.

3.3 Expansion of open, inclusive and mutually beneficial cooperation

The global economy has suffered major shocks, and various forms of pro-
tectionism have increasingly run rampant since the global financial crisis,
126 Xu Xiujun
but the general trend of economic globalization has not changed. Global
trade and investment continue to grow, the flow of factors of production
such as personnel, capital and technology, continues to strengthen, and the
interdependence and influences among countries continue to deepen. In this
context, the development and prosperity of any country cannot be achieved
without a sound external environment, the internal problems of any country
will spread to other countries and even trigger a global crisis, and countries
are increasingly forming a community with a shared fate. As a cooperation
mechanism with only five members, the BRICS also should not focus on their
own development and neglect connections with the outside world. Adhering
to the principle of openness and inclusiveness, the BRICS has explored an
open cooperation strategy with its own characteristics in recent years, built
a “BRICS plus” openness and cooperation model, and endlessly expanded
mutually beneficial cooperation with more countries and regions.
In March 2013, the fifth BRICS summit extended mutually beneficial
cooperation among the BRICS countries to Africa. The meeting, themed
“BRICS and Africa: committed to developing integrated and industrialized
partnership”, discussed infrastructure investment in Africa on the basis of
mutual benefit to support Africa’s industrial development, employment, skills
development, food and nutrition security, poverty alleviation and sustainable
development, and reached a multilateral agreement on African infrastructure
co-​financing to meet the huge infrastructure financing demand as a result
of the rapid growth of the African continent. After the meeting, the leaders
of the BRICS and 15 African countries held a dialogue entitled “releasing
Africa’s potential: BRICS and Africa cooperation in the field of infrastruc-
ture”, and discussed ways to realize bilateral openness and cooperation.
In July 2014, the sixth BRICS summit extended mutually beneficial
cooperation among BRICS countries to Latin America. As one of the main
agendas of the meeting, the leaders of BRICS and Latin American countries
held a dialogue on the theme of “sustainable solutions for inclusive growth”,
which set up a platform for the two sides to demonstrate their political will
for friendly cooperation and achieve synergy between BRICS and Latin
American markets. Both BRICS and Latin American countries are emer-
ging markets and developing countries with huge development potentials
and broad prospects for cooperation. Extending BRICS cooperation to Latin
American countries will not only help tap the impetus and potential of bilat-
eral cooperation, but this will also promote the long-​term development of
bilateral cooperation.
In July 2015, at the seventh BRICS summit, the leaders of BRICS coun-
tries, Shanghai Cooperation Organization member and observer states, the
Eurasian Economic Union and its invited member states, as well as some
international organizations held a dialogue on how to improve people’s
well-​being, and reached an extensive consensus on strengthening political,
economic and cultural exchanges. This meeting once again expanded the
mutually beneficial cooperation model of “BRICS plus” and has extended
 BRICS and global economic governance 127
the mutually beneficial cooperation between the BRICS countries and the
outside world to Eurasian members. The Eurasian continent has abundant
resources and a number of the emerging markets and developing econ-
omies and the BRICS countries share similar development tasks and stra-
tegic goals with the countries in the region. Cooperation between the two
sides is conducive to synergizing their respective connectivity strategies and
promoting common development.
This shows that BRICS cooperation is not closed and exclusive, but open
and inclusive. Such kind of open, inclusive and mutually beneficial cooper-
ation not only opens wider space for the BRICS countries to comprehensively
enhance their influence in international and regional affairs, but also provides
references for regional and global governance institutions to innovate their
cooperation models.

3.4 Active exploration for governances in emerging areas

With the participation of countries around the world in the process of global
governance, some new global problems have continuously emerged as techno-
logical progress leads to the development of new fields. The BRICS countries
have not only actively participated in the governance of traditional global
issues, but also actively responded to new problems and challenges facing the
world. This demonstrates the active and leading role of the BRICS countries
in global governance. At present, the BRICS countries are actively partici-
pating in and leading governance in some new areas, mainly in the areas of
the Internet and outer space governance.
On cyber governance, the BRICS countries seek to engage in pragmatic
cooperation with each other to address common cyber-​security challenges
facing the world. The Internet is a global resource and all countries should
participate in the evolution and operation of global network on an equal
footing. However, due to technological gaps, countries across the world have
not equally shared the benefits this resource has brought to human develop-
ment. In addition, some countries, organizations and individuals have even
used information and communication technology and Internet to conduct
large-​scale electronic surveillance and personal data collection, and even
engage in transnational organized crimes, develop offensive means and carry
out terrorist activities, making global network governance an urgent task.
Considering concerted actions on a global scale still face numerous obstacles,
the BRICS countries have taken the lead in launching cooperation in this
area. At their seventh summit in 2015, the BRICS leaders decided to estab-
lish a BRICS working group on information and communication technology
cooperation and, through strengthening cooperation among the five countries
on information and communication technology, including on the Internet,
promoting the development of codes, norms, and principles of conduct for
the responsible country in this field. Meanwhile, the working group will
conduct cooperation in information and best practices sharing on security
128 Xu Xiujun
problems in the use of information and communication technology, effect-
ively combating cyber crimes, the establishment of liaisons between member
states, joint research and development projects, capacity building, and the
making of international norms, principles, and standards.4
In the field of space governance, the BRICS countries have done a lot to
ensure the security of space activities, have put forward governance principles
that are in the interests of all parties, and have played a constructive role.
At present, the international community has not yet established a complete
system of international rules on the development and utilization of outer
space, leaving the governance of outer space in a relatively disordered state.
The BRICS countries maintain that the development and use of outer space
should be exclusively for peaceful purposes and that all countries can benefit
from it regardless of their level of economic or scientific and technological
development. In order to prevent arms race in outer space, the BRICS coun-
tries actively push forward talks for an international agreement aimed at
preventing arms race in outer space, and support substantive disarmament
negotiations on the basis of the updated Draft Treaty on the Prevention of
the Placement of Weapons in Space, the Threat or Use of Force Against
Space Objects (PPWT) presented by China and Russia. In order to improve
the security level of space activities and operations and prevent conflicts, the
BRICS countries have proposed to cooperate to work out a common strategy
in this field.

4. Conclusion
In today’s world, the trend of economic globalization continues to advance,
re-​globalization with international rules as the core becomes increasingly out-
standing, and the reform and development of the global economic govern-
ance mechanism become increasingly difficult. At the same time, emerging
countries are facing growing challenges in domestic economic adjustment
and social development, and their momentum of rapid economic buildup
is weakening. All these mean that global economic governance is entering a
period of changes in which numerous challenges will emerge, but there is no
doubt this will provide the BRICS countries with an important opportunity
for equitable participation in global economic governance. On the whole,
there are more positive factors than negative ones that drive BRICS cooper-
ation, and the BRICS cooperation is on the rise with the sound momentum
of development.
So far, the BRICS countries have formed a multilayered cooperation frame-
work, with regular leaders meetings as the main channel, the meetings of high
representatives for security affairs, foreign ministers, and permanent envoys to
multilateral organizations as a supplement, and the cooperation among think
tanks, businesses and banks as the prop, which has laid a solid foundation for
the development and improvement of the BRICS cooperation mechanism in
the future. At the same time, with the buildup of their economic strength, the
 BRICS and global economic governance 129
BRICS countries have become more capable of, and efficient in, participating
in global economic governance. In this context, the reform of the global eco-
nomic governance system is most likely to advance to the BRICS countries’
advantage.
In short, as representatives of the emerging forces in global governance, the
BRICS countries have initially shown their influence in the global economic
governance system. Although global economic governance still faces various
challenges, the BRICS countries will play a more important role in the reform
of the global economic governance system with the continuous improve-
ment of their economic strength, the further planning and implementation of
cooperation issues and the continuous advancement of the institutionaliza-
tion process. The BRICS countries not only actively participate in global gov-
ernance on the premise of universally recognized norms of international law
and maintain the stability of the existing global governance system, but also
actively promote international cooperation and innovation of global govern-
ance models through to some extent playing a leading role, and making posi-
tive contributions to improving and innovating global governance.

Notes
1 The data come from the IMF and WEO database.
2 Jim O’Neill, “Building Better Global Economic BRICs”, Global Economics Paper,
No. 66, New York: Goldman Sachs, 2001.
3 Xi Jinping: “Building partnership for a better future –​A speech at the Seventh
BRICS Summit”, People’s Daily, July 10, 2015, p. 3.
4 Ufa Declaration of the Seventh BRICS Summit, People’s Daily, p. 3, July 11, 2015.
8 
The BRICS countries and the global
financial governance
Wang Hao

The BRICS, consisting of China, India, Russia, Brazil and South Africa, is
a representative of emerging markets and economies, and an important new
force in the perfection and reform of global financial governance. Nowadays,
the BRICS countries are all at the stage of economic take-​off, with great poten-
tial and broad prospects. These countries, with abundant energy resources
and relatively independent economic systems, have achieved rapid develop-
ment and still enjoy great potential.
In addition, the BRICS countries are all major regional powers with a
strong sense of acting as a great power. Having remained active in regional and
international affairs, they can carry a number of countries forward and serve
as strategic fulcrum countries that should not be underestimated by global
powers. In terms of political system, except China, the other four BRICS
countries adopt federalism as the national structure. In the context of global-
ization, the BRICS countries are faced with the arduous task of transforming
their economic structure, as well as the pressure from developed countries
on international standards and rules, including economic development, cli-
mate change, intellectual property rights and protectionism. In addition, the
increasing economic strength of the BRICS countries and the gradual expan-
sion of their trade have given rise to a larger demand for mutual investment
and financing. Therefore, more financial systems, regulations, channels, facil-
ities and services are needed to support them. To this end, the BRICS coun-
tries have maintained close interaction and consultation within multilateral
frameworks such as the G20 summit and the World Trade Organization Doha
Round negotiations. In addition, the BRICS countries have been seeking to
strengthen mutual financial cooperation and have tried to institutionalize and
materialize such cooperation.
For example at the 2011 Sanya summit, the BRICS countries signed the
“Framework Agreement on Financial Cooperation within the BRICS Inter-​
bank Cooperation Mechanism”, which explicitly proposed to steadily expand
the scale of the local currency settlement and loan business, strengthen invest-
ment and financing cooperation in major projects, and carry out capital-​
market cooperation and information exchange. At the fourth BRICS summit
in 2012, the possibility of setting up a BRICS Development Bank was
 BRICS and global financial governance 131
discussed, which was expected to keep pace with the World Bank. The BRICS
countries clearly proposed global governance reform and the establishment of
a more representative international financial architecture so as to enhance the
voice and representation of developing countries. The 2010 Governance and
Quota Reform Plan was also required to be implemented, as scheduled, before
the annual meetings of the IMF and the World Bank in 2012. Two agreements
were signed to increase the size of the BRICS local currency settlement and
loan business, facilitating trade and investment among the BRICS countries.
At the Durban summit in 2013, the BRICS Development Bank and for-
eign exchange reserve pool were set up, and the BRICS Business Council and
Think Tank Council were announced to be established, forming new action
plans for cooperation in nearly twenty fields, including finance, economy
and trade, science and technology, sanitation, agriculture and humanities.
At the Fortaleza summit in 2014, the leaders of the five BRICS countries
formally announced the establishment of the BRICS New Development
Bank (NDB). The initial subscribed capital is contributed equally by the
founding members, and the bank is headquartered in Shanghai. At the
same time, an agreement on an emergency reserve arrangement with an ini-
tial capital of US$100 billion was established to help member states cope
with short-​term liquidity pressure and strengthen the global financial safety
net. In July 2015, the BRICS leaders met in Ufa, Russia, for the seventh
summit, focusing on issues of common interest on the international agenda
and on key priorities for further enhancing and expanding BRICS cooper-
ation. The Ufa meeting symbolizes that BRICS financial institutions have
come into force, including the new development bank and the contingency
reserve arrangement.
With the gradual progress of the financial cooperation mechanism among
the BRICS countries, many projects have been implemented and made certain
achievements, and the relevant areas and contents of cooperation have also
been greatly extended. Although there are still details to be further negotiated
and implemented by the BRICS countries, the general direction and trend
of BRICS countries’ active participation in improving global economic
and financial governance is clear, and the BRICS cooperation mechanism
is showing increasing vitality and competitiveness. The continued effective
promotion of BRICS financial cooperation at present and in the future
will not only contribute to the balance of the international trading system,
the monetary system and the improvement of commodity price-​formation
mechanism, but also have a positive long-​term impact on global geopolitics,
civilized networks and ecosystem.

1. Relationship between the BRICS countries and global financial

governance
In order to better analyse the relationship between the BRICS countries
and global financial governance, it is necessary to accurately understand
132 Wang Hao
the notions of “governance”, “global governance” and “global financial
governance”.

1.1 What is global financial governance?

“Governance” is a malleable and inclusive concept with a rich connotation.
According to the Global Governance Council in 1995, the basic meaning of the
term “governance” refers to the official or non-​governmental (NGO) public
management organization that maintains order and meets the needs of the
public by public authority within an established scope. Although definitions
vary,1 the purpose of governance is to use power to guide, control and regu-
late various activities of members in various institutional relationships, so as
to maximize the public interest. At the same time, governance can be reflected
as a public management activity and process, including necessary public
authority, management rules, governance mechanism and governance mode.
Although the concept of “governance” is fuzzy, it can be extended to local
and micro regions, national and macro regions or supranational levels. The
international community is pluralistic and has been undergoing fundamental
changes.2 On the global level, it constitutes global governance in a general
sense. To be specific, it means that countries, institutions and organizations
in the world build a series of binding international rules or various informal
arrangements through participation, negotiation and coordination, so as to
solve global problems and maintain the normal international political and
economic order.3 Among them, through the deconstruction and reconstruc-
tion of the international financial governance framework, effective global
financial governance is formed to achieve the goal of “good governance” of
the international financial ecology, which has become one of the important
contents of the reform and development of the current global governance
system. Global financial governance refers to the process that departments
of governments, international organizations and non-​ governmental
organizations, multinational companies and other market subjects participate
in the management of global financial affairs, avoiding and preventing sys-
temic financial risk, and maintaining economic and financial stability through
coordination, cooperation and reaching consensus, so as to establish or main-
tain good international financial order. In a word, global financial governance
is to “achieve coordination, seek benefits and avoid weaknesses” in the inter-
national financial field.
The proposal and implementation of global financial governance remain
inevitable. First, after entering the twenty-​first century, the globalization and
liberalization of the financial market have been accelerated, the new financial
products have emerged endlessly, ways to trade have been brought forth, and
the international financial markets have been interconnected, closer and inter-
dependent. Cross-​border assets, liabilities and scale became larger than in the
past, with growing uncertainties. Under such circumstances, it is impossible
for any country to fully understand and grasp the details of transnational
 BRICS and global financial governance 133
banks or investment companies and effectively regulate them. Second, the
existing institutional arrangements of the international financial system have
great restraints, and the original mechanism construction centring on Western
growth can no longer meet the needs of shifting the centre of global economic
growth. For example the unconstrained dollar standard system combined
with the lack of consistency of US macroeconomic policy, may easily lead to
frequent outbreak of international financial crises. There are many uncertain-
ties in the international exchange-​rate system that increase foreign-​exchange
risks and harm the interests of developing countries in international trade
and investment. The international financial institutions, like the International
Monetary Fund and the World Bank have not adequately performed or are
not fully capable of performing their due coordination responsibilities for
the international financial market. Third, the financial regulatory authorities
of various countries lack the necessary communication and coordination on
international financial regulation. There are not only differences in financial
regulation between different countries, but also inter-​departmental differences
within a country, which leads to regulatory arbitrage. Information sharing,
therefore, is required, especially the sharing of risk management and govern-
ance experience. Fourth, multipolar international trading regime, regional
investment cooperation mechanism, as well as emerging global financial regu-
lation and agreement, lead to the endless emergence of new situations and
new problems, which objectively require the market players to participate in
the global financial governance in time, to reduce external financial risks and
promote the sound development of global economic and the financial system.

1.2 How to interpret the relationship between the BRICS countries

and global financial governance?
Currently, many experts and scholars are optimistic about global financial
governance, believing that the new governance reform driven by the United
Nations, the World Trade Organization, the World Bank, the International
Monetary Fund and other international organizations will be promising, and
also remain optimistic about the development of G20 and the emerging econ-
omies, and especially about the propulsive role of the BRICS cooperation in
the development of global financial governance. They argue that the BRICS,
without regional identity, is a real global network that extends beyond Asia to
several continents. In addition, the advantage of the BRICS as being free of
geographical constraints determines its great potential in the future and that
it can be expanded to any region, providing much space for the growth of the
network. The BRICS countries are increasingly participating and becoming a
counterweight in global governance, which is of great significance for coord-
inating the interests and positions of developing economies, as well as pro-
moting the reform of the global economic governance mechanism.
The BRICS countries share many common interests, which lays a solid
foundation for wide-​ ranging and multitiered financial cooperation. For
134 Wang Hao
example Ivanov, the deputy head of Russian Foreign Economic Bank, favours
broader financial cooperation among BRICS countries. He pointed out
that policy innovations such as the BRICS New Development Bank could
greatly contribute to the formation of a new international financial system
and the enhancement of the status and roles of developing countries in inter-
national financial institutions.4 Nikonov, the chairman of Russian National
Committee on BRICS studies, also stated that further promotion of global
financial governance by the BRICS countries will stimulate the economic
potential of the developing BRICS countries and other emerging economies.5
Dlamini, the chief executive officer of the Southern African Development
Bank in South Africa, believes that it has become increasingly difficult for
the current international financial system to meet the needs of the emerging
markets after the outbreak of the financial crisis. The participation of the
BRICS countries in global financial governance will be conducive to meeting
the challenges of insufficient liquidity and financing, indirectly increasing the
rights of the BRICS countries in the international financial system, building
a parallel system beyond the existing system and breaking the monopoly
of European and American countries.6 Roudet, the chief economist of the
South Africa Efficient Group, believes that Africa and the BRICS economies
are highly complementary, and their cooperation has huge potential, saying
that if the Western countries are reluctant to share their power in the IMF
and the World Bank with emerging market countries, these countries can
create such a financial institution and promote the cooperation mechanism’s
standardized development to absorb more newcomers.7 Saran, the president
of RIS, an Indian national think-​tank, points out that in the system of the
World Bank, where the Western countries dictate lending resources with their
voting power often for political ends, the BRICS participation in global finan-
cial governance helps to achieve more democratic governance.8 Pimentel, the
minister of Brazil’s development, industry and trade ministry, pointed out
that the establishment of the BRICS’ development bank would help increase
the negotiating weight of the BRICS countries in the international finan-
cial system and address the urgent financial need of developing countries
in infrastructure and other areas. The establishment of the BRICS foreign
exchange reserve pool can promote the reform of the international financial
system, which may put pressure on the existing international financial system,
encourage developed countries to better face the reality and provide oppor-
tunities for the local currency settlement of trade between member states.9
In China, Chen Yuan, the former chairman of the China Development
Bank, believes that the BRICS countries can effectively promote economic
stability and sustainable development only through strengthening finan-
cial cooperation, exploring cooperation mechanisms, enriching cooperation
contents and improving cooperation modes.10 Some Chinese scholars have
conducted exploratory studies on specific issues of the BRICS cooperation
and global financial governance. For example Huang Renwei believes that
the core feature of the reform of the global governance mechanism is the
 BRICS and global financial governance 135
transformation from “Western governance” to “common governance” by
both Western and non-​Western countries.11 Xu Xiujun pointed out the non-​
neutrality of the BRICS cooperation mechanism, saying such kind of cooper-
ation should be open and inclusive enough to promote the gradual change
of international system and rules.12 Huang Wei discussed the basis, impetus
and progress of the BRICS cooperation, pointing out that the South-​South
Cooperation represented by the BRICS countries plays an important role in
promoting the democratization of global economic governance.13 Li Daokui
and Xu Xiang believe that the BRICS countries should work together to
transform the existing global-​governance structure through gradual reform,
raise the economic cooperation among the BRICS countries to a new level,
and strengthen the intellectual cooperation among the BRICS countries.14 Li
Bing verified that the BRICS countries are important subjects in promoting
the transformation of global economic governance from international system
to world system from the perspective of strength, consensus and motivation,
holding the view that financial cooperation among the BRICS countries
showed the embryonic form of global economic governance under the world
system.15 Wang Houshuang et al. believe that the establishment of the BRICS
cooperation mechanism is playing an increasingly important and positive role
in the reform and innovation of the traditional global economic governance
system and mechanism.16 Starting from the financial cooperation among the
BRICS countries, Xu Chao analysed the prospect, specific ways, and impact
of financial cooperation among the BRICS countries on global financial gov-
ernance mechanism.17
In contrast, some experts and scholars are pessimistic about the financial
cooperation among the BRICS countries. They believe that the instability
of current political and economic situations in the world, the heavy debt
burden of Europe and the United States, and the differences in national
conditions among the BRICS countries, still pose many challenges for the
BRICS financial cooperation. Especially from the experience of emerging
countries’ cooperation in international affairs, some technical disagreements
often mean political contradictions. Once they are not calmly treated and
properly solved, they would lead to deeper conflicts among member states
and the failure of the whole project.18 Many Western scholars even believe
that the lack of consensus among traditional international allies on polit-
ical, cultural and security issues makes the legitimacy of the group doubt-
able. Concerns among other BRICS members about China’s dominance
have long been an invisible barrier to closer integration within the BRICS
group, with China and India particularly at odds over border conflicts and
regional security. Although the views above may be slightly biased and
worthy of discussion, they nevertheless provide us with a differentiated
perspective on the BRICS participation in global financial governance and
should be acknowledged for their specific values.
In general, the current theoretical and practical research on the BRICS
cooperation and global financial governance is still in its developmental stage.
136 Wang Hao
Although views vary, they cover a wide range of levels and fields, which need
to be further refined, differentiated and analysed, so as to be properly applied.

2. Current situations, difficulties and feasible paths for the BRICS

countries to participate in global financial governance
After nearly a decade of evolution, the BRICS has become a new force to
promote the establishment of international financial cooperation mechanism
and reshape the international financial order. As important participants in
the international political and economic landscape, the BRICS countries have
been participating extensively in the effective allocation of global capital to
optimize the methods and means of financial regulation. The geographical
distribution, asset types and radiation effects of their outbound investment
are gradually expanding, and they are playing an increasingly powerful role in
the recovery of the world economy.
With the growth of their overall capacity, the BRICS countries have begun
to assume more and more obligations and responsibilities in the international
community, especially in combating trade protectionism, maintaining finan-
cial security, maintaining and developing an open world economy, as well as
balancing regional development and multilateral diplomacy.
First, the BRICS countries have been taking an active role in the existing
global financial governance system, participating in and paying attention to a
series of global activities, such as the Basel Ⅲ negotiation, the WTO agenda
talks, the G20 summit and TPP negotiations, and the reform of quota and
voting rights of the World Bank and the IMF, pursuing the reconstruction
of the framework of the existing international financial system and exploring
how to get a significant say for themselves. In addition, the BRICS countries
have been actively getting involved into the global value chain, and intro-
ducing and making use of foreign direct investment, so as to stabilize and
expand export, strengthen the coordination of the trade and industrial pol-
icies, and build a good interaction feedback loop with developed countries,
build the global integrated market and promote the balanced development of
world trade.
Second, the BRICS countries continue to strengthen mutual cooper-
ation on the state, society and market levels. They not only actively make
use of various forms like the summits, forums, and the agreements, but also
pay attention to the construction of financial entities and the cooperation
between non-​government organizations, steadily promoting regional trade,
investment, financial cooperation and regulation between member states. For
example the scales of local currency settlement and loan business among the
BRICS countries have been gradually expanding. China has signed currency-​
swap agreements with Brazil, Russia and other countries. The BRICS coun-
tries have also increased investment and financing in important areas, such as
resources, advanced technologies, low carbon and environmental protection,
and so forth.
 BRICS and global financial governance 137
Third, by adopting project platforms the BRICS countries have been
actively promoting the Asian Infrastructure Investment Bank, the BRICS
Development Bank and the foreign exchange reserve pool, which have
accelerated management innovation in all areas and strengthened cooperation
in economy and trade, finance, infrastructure construction and personnel
exchanges. Now they are moving towards the goal of integrated markets,
multitiered networks, connectivity by land, sea, and air, and greater cultural
exchanges.
Fourth, the BRICS countries have effectively consolidated the influence of
soft power in the Asian, African and Latin American regions, making African,
South Asian and Latin American new highlights of the world economy. At
the same time, they have paid attention to promoting balanced development
of developing countries as a whole, which fully demonstrates the positive
image of the BRICS countries in “seeking development at home and pro-
moting cooperation abroad”.
At present, the BRICS countries have accelerated their participation in
global financial governance and made some progress, but the work in this area
is still in its infancy, and there is a long way to go to achieve good global finan-
cial governance. First of all, there are still uncertainties in the international
development environment for the BRICS countries. Transnational finan-
cial and capital regulation problems, drastic changes in resource and energy
prices, escalation of global trade wars and adjustment of investment strat-
egies of transnational companies may all affect the economic development
and political stability of the BRICS countries. The BRICS countries, how-
ever, are at the middle and low end of the global value chain, with relatively
weak autonomy and innovation. They are prone to induce passive imbalance
in capital and trade circuits and then to fall into a deeper economic structural
imbalance. Second, the BRICS countries are still at their development stage,
with relatively weak financial regulation ability, unreasonable economic struc-
ture, great disparities in terms of regional development, relatively backward
infrastructure, and insufficient consumer financial products and services. The
settlement of these problems usually comes after the capacity of national gov-
ernance is gradually enhanced and the modernization of national governance
system is effectively promoted, which, however, cannot be achieved overnight.
At the same time, due to the imperfection of the BRICS countries’ financial
market, and the lack of an international financial centre with global radi-
ation ability (see Table 8.1), commodity pricing power, and their own global
international rating authority, they still rely on the institutions, organizations,
markets and the US dollar controlled by the developed economies. Finally,
there will always be multiple balances and conflicts in the old and new global
financial systems, so the BRICS countries still need to face great shocks and
challenges from countries with vested interests in the old global governance
structure. For example although the share and voting rights of the BRICS
countries in the international financial organizations have improved, this still
is unbalanced with their economic strength. Moreover, the BRICS countries
138 Wang Hao
Table 8.1 Categories and rankings of the cities of the BRICS and developed countries
in the Global Financial Centres Index

Extensive and Relatively Relatively Emerging

Deepened Extensive Deepened Financial
Financial Services Financial Financial Centres
Services Services

Global London (1) Peking * (29) Moscow* (78)

New York (2) Bombay* (59)
Hong Kong* (3)
Paris (37)
Amsterdam (36) Chicago (11)
Frankfurt (14)
Singapore (4)
Munich (40)
Dublin (46)
Multinational Tokyo (5) Los Angeles Edinburgh (71)
(49)
Boston (12) Copenhagen Shenzhen* (23)
(61)
Shanghai* (21)
Washington D.C.
(10)
Local San Francisco (9) Rio de Janeiro* St Petersburg*
(35) (81)
Sao Paulo* (31) Johannesburg* Dalian* (41)
(33)
Taipei* (26)

Source: Z/​Yen Group, Global Financial Centres Index 18, 2015.9. www.zyen.com/​research/​gfci.
html.
Notes: The numbers in brackets are the rankings. The cities with asterisks are those of the
BRICS countries.

are unable to play important roles in the selection of senior management

positions in international organizations and the setting of important agendas.
Without adequate ability and intelligence in the bargaining of a variety of
international financial regulations, they have failed to become a major force
to influence the global financial landscape. On specific issues, traditional
powers also often accuse emerging powers such as the BRICS countries of
“free-​riding” in the provision of global public goods.
In addition, the basis of common interests of the BRICS countries is
not solid enough, so that conflicts of interest often occur in the pursuit and
control of natural resources, market share and international power among
member states. In terms of institution, culture and historical traditions, the
BRICS countries are quite different, especially in terms of political homogen-
eity, boundary and territorial disputes and strategic competition for regional
and sub-​regional dominance, sharing different demands and propositions.
 BRICS and global financial governance 139
At last, the BRICS countries lack policies in important areas like the finan-
cial regulatory cooperation, and bilateral trade and investment. They share
common interests in terms of the construction of a regulation and manage-
ment platform, but still encounter disagreement when it comes to some key
issues, such as the location of the headquarters, the investment proportion
and the allocation of voting rights, and the proportion of senior management
personnel of the BRICS cooperation organizations and institutions, as well as
how to deal with the existing bilateral currency swap mechanism. It will be a
medium-​to long-​term process to resolve these issues properly.19
On the whole, the BRICS countries have not only made great achievements
in improving global financial governance, but also have faced a series of
problems. The Ukraine crisis may become an inflection point in the multi-
polar development of the world, and the differences between the values of the
West and the BRICS countries may be intensified. In the future, the BRICS
countries have to seize the opportunity to promote their own development,
to carry on adequate consultation and actively participate in the reform of
international financial institutions and organizations, effectively strengthen
the supervision of international financial markets and promote exchanges
and cooperation in the field of finance, trade, investment, and so forth, and
making the world’s financial system truly rely on, facilitate, and promote the
development of the real economy. To this end, several basic principles are
required to be established.
First, the concept of cooperation is needed. The countries in the world
are closely tied in terms of economy with shared common interests. The
BRICS countries, as important members of the globe, should expand their
shared interests. South–​South cooperation and North–​South dialogue in
the global financial field should be strengthened to promote the balanced
financial development of both developing and developed countries. Second,
the concept of inclusiveness should be established. As the Chinese poem
says, “All plants grow with affection, and tolerance can be found every-
where in the earth”. In a well-​governed global financial governance and
regulatory framework, the BRICS countries need to embrace the spirit of
harmony and absorb the widest range of sovereign states and non-​state
actors, as well as relevant cooperation networks and partners, to solve
global financial problems in a joint manner. Third, the pursuit of effective-
ness should be emphasized. The BRICS countries need to establish more
scientific, transparent and reliable mechanism and rules to guarantee the
legitimacy of global financial governance. Moreover, they should provide
a free, secure, open and fair trading system that is in line with global finan-
cial requirements and provide international public goods needed for inter-
national investment and financial stability, so as to effectively promote the
reform of regulatory governance. Fourth, the concept of equality should be
advocated. The BRICS countries should take the construction of the global
development partnership as an opportunity to actively call for international
financial organizations to respect the equal rights of the “underdeveloped”
140 Wang Hao
countries, promptly absorb ideas and talents from developing and emer-
ging countries, and strengthen coordination and cooperation within the
framework of international economic and financial institutions, such as
the United Nations, the G20, and so forth, to jointly build a global family
of financial development and security. Fifth, the concept of responsibility
should be clarified. The BRICS countries should follow the principle of
sustainable development, make infrastructure development a priority of
international development and cooperation, firmly uphold international
fairness and justice, and take the initiative to assume their due obligations
and responsibilities.

3. China’s stance and countermeasures

On 27 March 2013, Chinese President Xi Jinping delivered a keynote speech
entitled “Working Together for Common Development” at the fifth BRICS
summit, in Durban, South Africa, which charted the course for China’s par-
ticipation in global financial governance.

No matter how the global governance system changes, we need to take

an active part in it. The BRICS countries should strengthen solidarity
and cooperation, leverage their complementary strengths, provide each
other with more opportunities for trade and investment and financing,
jointly address risks and challenges, maintain inclusive growth and pro-
mote strong, sustainable and balanced growth of the world economy.

Xi Jinping continued:

At the same time, the BRICS countries should strengthen coordination

and cooperation within the UN, G20 and other frameworks to maintain
world peace and stability, promote reform of the international monetary
and financial systems, and take an active role in improving global eco-
nomic governance.

On 12 October 2015, President Xi presided over the twenty-​seventh col-

lective learning session of the Political Bureau of the CPC Central Committee
and stressed:

We should assess the situation, make great efforts to seize opportunities,

meet challenges, coordinate both domestic and international situations,
so as to promote the development of global governance system in a more
equal and reasonable direction, to create more favorable conditions for
the development of our country and world peace.

At the Informal BRICS Leaders’ Meeting held in Antalya, Turkey, on 15

November 2015, President Xi Jinping emphasized again that
 BRICS and global financial governance 141
we should strengthen cooperation within the G20 framework, urge
all parties to step up macroeconomic policy coordination, focus on
preventing short-​term financial risks and avoid currency wars and trade
wars. At the same time, we need to plan ahead, accelerate the institu-
tional construction of the BRICS new development bank and contin-
gency reserve arrangement, and jointly maintain international financial
stability, and that we should strengthen coordination and collaboration
within the IMF, the World Bank, the WTO and other mechanisms to
increase the representation and voice of developing countries and emer-
ging market countries in the international governance system.

Therefore, as a major member of the BRICS, China needs to further con-

struct a multifaceted global financial governance strategy in the face of the
changing international financial environment and the development of the
global financial system. In this strategy, we should attach great importance
to coordination and cooperation with the BRICS countries and other “emer-
ging economies”, give due consideration to the interests and responsibilities
of all parties, and strive for greater voice and decision-​making power in global
financial governance, so as to promote and guide the rational and effective
operation of global financial governance mechanism. To this end, from a
Chinese perspective, the following suggestions are proposed:
First, relevant research should continue to be strengthened and new
proposals and measures put forward in a timely manner on major issues such
as the framework of global economic growth, the reform of financial sector
and the reform of international financial institutions. It should be recognized
that the participation of the BRICS countries in the improvement and con-
struction of a new global financial governance paradigm will be a tortuous,
complex and intense process. Therefore, China should strengthen the research
on the other four countries, and consider the research of such great powers as
the strategic content to enhance its soft power so that the strategic decision-​
making process will be more scientific and both theoretical and policy
preparations will be made. China should grasp the general direction of global
financial governance and establish a grand strategy for global development.
In the BRICS cooperation, China should take the initiative and sometimes
dare to make concessions. To set a good example for the BRICS cooperation,
China should effectively coordinate the positions of member states with a
clear “BRICS spirit”.
The BRICS countries are making joint efforts in gradually endowing the
“BRICS spirit” with rich connotation in equal negotiation and pragmatic con-
sultation, including pursuing development through openness, collaboration,
inclusiveness and innovation, to constantly enhance the mutual understanding
between the BRICS countries, develop mutual trust, and promote the BRICS
cooperation towards a higher level. To this end, in order to converge the
strength of the BRICS countries and other groups, we should start with the
creation of a new international financial order, new rules and new patterns of
142 Wang Hao
behaviour. Then, we should lay out the innovative banner that represents the
trend of the era and put it into practice. For big countries that are neighbours,
including Russia and India, we need to implement our strategy of neigh-
bourhood diplomacy, giving full play to our trade and financial advantages,
downplaying geopolitics, and promoting cooperation through capital output
of the real economy. For Brazil, a country on the other side of the Pacific
Ocean ocean, we need o focus on distant diplomacy and commerce, follow
the arrangements of the global value chain, and take advantage of natural
resources, technological cooperation and market development. In addition to
paying attention to ways and means, we should seize opportunities and increase
dialogue and exchanges properly. With regard to South Africa, China needs
to enhance cooperation on financial innovation, give full play to its soft and
smart power, and effectively guide the flow of superior resources between the
two sides. In the implementation of these strategies, China should also attach
great importance to the coordination with the United States, Europe, Japan
and other countries, strengthen cooperation and exchanges with different
parties like international organizations and transnational corporations, and
eliminate unnecessary misunderstandings and suspicions.
Second, we need to build a national governance system to enhance the cap-
acity of China and other BRICS countries to participate in global financial
governance. On the one hand, we should “give the priority to our own country”
that the socialist system with Chinese characteristics should be perfected and
developed. The superiority of the system should be fully played, and the mod-
ernization of national management system and management ability should be
enhanced. The legitimacy, transparency, accountability, responsiveness and
effectiveness of the governance system will be guaranteed to further promote
the socialist legal construction with Chinese characteristics, strengthen the
stability, integrity and fairness of the system, and fully stimulate the partici-
pation and ability of the governance of various national main bodies (such
as global cities or local governments) and social actors (such as domestic or
multinational companies and social groups). The cooperation between actors
at all levels will be promoted to achieve their goals of governance so as to be
integrated into huge macro organism, who jointly participate in the improve-
ment of global financial governance. For example they will fully activate the
stock financial capital through the linkage of global and domestic financial
capital, and effectively promote the reform of financial and regulation to pre-
vent systemic financial risks. At the same time, China will always pay attention
to the development of global cities and actively deepen financial cooperation
between the Chinese mainland and Hong Kong, Macao and Taiwan. China
will support Hong Kong in consolidating and upgrading its status as an inter-
national financial centre, and accelerate the construction of Shanghai inter-
national financial centre. We need to open up our financial markets, create
new forms of investment among the BRICS countries, gradually promote the
convertibility of our own currencies, and reduce investment risks on a bilat-
eral or multilateral basis.
 BRICS and global financial governance 143
On the other hand, we should speed up the construction of China as an
innovative country, promote opening-​up to both the domestic and foreign
markets, as well as promote the combination of “bringing in” and “going
out”, giving full play to the function of the market. Moreover, China should
promote the orderly free flow of international and domestic factors, the effi-
cient allocation of resources, and the deep integration of the market, and in
the process, explore forms that make policies mutually compatible and con-
struct a compatible policy network in accordance with international rules,
to achieve the goal of promoting reform through openness. For example
China should continue to strengthen the ability of the national manage-
ment departments to participate in global financial governance, effectively
strengthen the dialogue and coordination between the national macroeco-
nomic and financial departments like the central bank, security, insurance
department, taxation department and business departments, and make in-​
depth research and raise major propositions and measures on the framework
of global economy, the reform of the financial sector and the reform of inter-
national financial institutions. It should also explore how to take initiatives
in the international financial organizations like the Financial Stability Board
and the Basel Committee on Banking Supervision, to seek more opportunities
for talents from the BRICS countries to hold senior management positions
in these organizations. For another example, in an era of global localiza-
tion, locality is no longer a passive role or the object to be eliminated. On
the contrary, local subjectivity is constantly stimulated. To this end, several
initiatives and approaches to further stimulate the role and potential of local
governments in global financial governance could be considered. Moreover,
multinational company is one of the important main bodies of the global
financial governance. Now, the multinational companies are no longer global
institutions, and they are mostly monopolized by the international capital of
the United States, Japan, or Britain, so they face intense competition and act
wilfully, who seem to be unrelated with “global governance”. However, it is
necessary to grasp the essential characteristics of the multinational company
capital to enhance China’s guiding ability, so that China can effectively make
use of these market organizations and play its positive role in promoting the
participation of the BRICS countries in the improvement of global financial
governance, and take decisions to China’s advantage
Third, we need to fully recognize the differences and common ground
between China and other BRICS countries. Respecting the differences, we
should try to seek common ground while shelving differences and seek the
greatest common denominator of international interests. The BRICS coun-
tries should be encouraged to participate in global financial governance and
work together to reform and develop the global financial governance system.
This means the BRICS countries should continuously strengthen and upgrade
governance cooperation, make unified standards within the groups, promote
exchange of information, mutual recognition of regulations and mutual
assistance in law enforcement, and optimize communication networks, to lay
144 Wang Hao
a solid foundation for better participation in the formulation of international
financial standards and rules. China is the largest economy among the BRICS
countries, so, while adhering to the principles of cooperation and keeping
the bottom line of compromise, it should open up necessary fields to other
BRICS countries in exchange for trust and mutual openness. It should take
the initiative to guide the BRICS countries to strengthen policy coordination
and network design, continuously carry out big-​project cooperation, promote
closer cooperation among their customs, trade, and financial sectors in terms
of direct investment and credit, reduce artificial barriers, pursue the estab-
lishment of an integrated system covering accounting standards, statistical
standards, trade rules, and the system of civil and commercial laws, and build
a financial security community to strengthen monitoring of global capital
flows and prevent cross-​border transmission of financial risks. China should
also guide the BRICS countries to give full play to their market dynamism,
enhance their penetration and affinity in global finance, trade and investment
markets, encourage the BRICS countries to set up an emerging market devel-
opment and stability fund that allows mutual investment, make full use of the
BRICS cooperation mechanisms at all levels to strengthen the foundation for
monetary and financial cooperation, reduce dependence on developed coun-
tries, continuously improve the investment of the BRICS’ internal reserve
assets, and actively promote the development of regional bond markets.
Fourth, China needs to enhance its sense of international responsibility
and make active use of regional governance to strengthen bilateral or multi-
lateral financial cooperation, provide international or regional public goods
in an “orderly” and incremental manner, and steadily promote the diversifi-
cation of the international monetary system. At present, it should guide the
BRICS countries with an open, inclusive and forward-​looking perspective
to effectively cooperate with regional groups like the Asia-​Pacific Economic
Cooperation, the League of Arab States, ASEAN Free Trade Area, the West
African Economic Community, Andean Group, Mercosur, Central American
Free Trade Area, and the Gulf Common Market, and actively participate in
the affairs of regional multilateral development agencies, including African
Development Bank, the Inter-​American Development Bank, the Caribbean
Development Bank, and so forth, so as to enhance the influence of China and
other BRICS countries, explore diverse ways of cooperation and promote the
use of important resources in the multilateral development institutions by
the BRICS countries. China and the BRICS countries should conduct in-​
depth discussions on how to gradually increase the variety of currencies in
the international reserve, study on how to strengthen bilateral or multilat-
eral currency swap, local currency trade settlement, mutual listing of local
currencies and other currency cooperation, encourage relevant governments
and institutions to issue Special Drawing Right denominated bonds to opti-
mize the investment portfolios of the BRICS countries, strive to improve the
inclusive cooperation mechanism that “pursues development through cooper-
ation and promotes cooperation through development”, enhance the internal
 BRICS and global financial governance 145
impetus for strategic cooperation among the BRICS countries, and push for
a networked mechanism for the BRICS cooperation. In addition, the BRICS
countries can implement the “going out” strategy, searching for the countries
or regions which share similar economic scale, development degree and similar
interests across the world to absorb them as new members if conditions are
ripe, so as to expand the scale of the BRICS organization, and finally con-
struct a sub-​global network structure aimed to “build consensus, strengthen
coordination and deepen cooperation”.
Fifth, China should continue to advocate the spirit of innovation, make
full use of various forms, including economic, political, technical, social
forms and cultural exchanges, and, in a gradual and orderly manner, forge a
leadership mechanism, an executive and consultative mechanism and a legal
mechanism that are in China’s interest and facilitate China’s efforts to pro-
mote its value. It should actively participate in the formulation of global rules,
promote the reform of the international monetary system and financial man-
agement, and restructure the internal governance structure of the IMF and
the World Bank to improve their relevance, legitimacy and representativeness,
so as to integrate the BRICS countries into global financial governance in
all aspects. In fact, only when reform of the traditional global financial gov-
ernance system and the establishment of the new system and constitution go
hand in hand and take a two-​track incremental path can we finally establish
the new global financial governance system and constitution that are more
just, orderly, balanced and inclusive. In this process, the BRICS countries
should attach greater importance to the unique role of the BRICS cooper-
ation mechanism and the G20 mechanism as the main platforms, actively pro-
mote the reform of the international monetary system and effectively improve
the governance structure of various international economic organizations.
China should also attach importance to the BRICS New Development Bank
and the Asian Infrastructure Investment Bank as platforms to provide an
excellent international infrastructure financing channel for the developing
countries. The establishment of the BRICS New Development Bank and its
emergency reserve arrangement for developing countries is a milestone for the
reform of global governance system. Financial cooperation and its resulting
real economic cooperation will further narrow the gap between the BRICS
countries and the developing countries, which is beneficial for the developing
countries to strengthen pragmatic cooperation in all fields. This will enable
them to adopt a variety of ways to promote the reform of global governance
system, and play their role in the formulation of the governance rules and the
settlement of international affairs, thus help them seek common governance
with the developed countries in the political, economic and financial field of
the world. In the future, branches, divisions and regional headquarters of the
bank, and the contingency reserve will be set up across all the continents,
so research should be conducted to explore how to optimize the governance
structure of these platforms, how to balance the needs and interests of parties
in aspects such as project selection and financing conditions, and how to
146 Wang Hao
gradually perfect and improve the efficiency of operation mode and man-
agement, gain an edge in the competition with existing multilateral develop-
mental financial institutions like the IMF and the World Bank and establish
effective cooperation mechanisms. Currently, the institutional construction
and institutional arrangements remain to be further improved.
Sixth, it is necessary for the BRICS countries to focus on civilization inter-
action and cultural exchanges, and, while establishing the official multitiered
strategic dialogue and coordination mechanism, strengthen communication
through unofficial channels to fully mobilize the enthusiasms of the market
and people. To some extent, the concept of global financial governance is
about the balance between big countries and small countries, between eco-
nomic power and humanistic care, and ultimately between capital and people.
However, how to rein in the conflicts and maintain the competition order
within capital and ensure its sustainability with greater flexibility still remains
its main responsibility. In fact, long-​term and stable cooperation between
countries must be recognized and supported by their domestic societies, so as
to generate goodwill among their people in the process of mutual exchanges
and build consensuses among their government departments. The BRICS
countries are all undergoing profound social changes. Russia has just survived
from the turmoil of its institutional transition. It is only 30 years since Brazil
got rid of military dictatorship and 20 years since South Africa ended racial
rule. These major changes have made their societies rather active. India, Brazil
and South Africa are probably the largest developing countries with the most
active non-​governmental organizations, and the World Social Forum has been
held in Brazil and India. Non-​governmental organizations of these countries
are also very influential in the international community, with some enjoying
close links with Western NGOs, while others are mutually antagonistic.
These NGOs have a profound influence on the domestic and foreign policies
of their home countries. While pushing for the BRICS cooperation, China
should also explore the functions of multinational companies, intellectual
resources, international organizations and non-​governmental organizations,
in order to strengthen communications between each other in various fields at
all levels including unofficial diplomacy, education, science and technology,
culture, sports, health, youth, women, and localities, expand the influence of
information sharing and exchange platforms of the BRICS countries, and
try as hard as possible to strengthen the cooperation with multinational
corporations, think-​tanks, scientific research institutions and NGOs that are
friendly or neutral towards the BRICS countries so that they, together with
BRICS countries’ own “third-​party” organizations, can issue a stronger say
on the global financial governance. In addition, in view of the complexity of
the public opinion environment in the process of global financial governance,
it is also necessary to strengthen non-​governmental and cultural exchanges
to reconcile the unfavourable context for the BRICS countries to participate
in global governance. Under the influence of the Western public opinion
and values, some of them will change their original views in many cases, if
 BRICS and global financial governance 147
communication is strengthened, which is beneficial not only to the BRICS
countries’ participation in improving global financial governance, but also to
their domestic governance.

4. Conclusion
In conclusion, the in-​depth participation of China and other BRICS coun-
tries in global financial governance is beneficial for the more equitable and
reasonable development of the new international financial order and the
lifting of their international influence and global status. The BRICS coun-
tries should respect the consensus, seek common ground while shelving
differences, accurately grasp the historical opportunities and respect the
basic principle of democracy in international relations. They should also
explore human wisdoms and appeals in the global governance paradigm,
timely and clearly put forward the new world view and the concept of global
governance that reflect the trend of the new age and sublimate them into
attractive words and ideas.
In the process, the BRICS countries should not only focus on incre-
mental participation in the reform of global financial governance, but also
integrate with and harness global financial governance in an exquisite and
smart way to complement existing multilateral institutions. In addition, the
BRICS countries should strengthen the coordination of global economic
and monetary policy to advance the construction and development of the
Asian Infrastructure Investment Bank, the BRICS New Development Bank,
the BRICS Contingent Reserve Arrangement, and the Silk Road Fund, so
as to actively and effectively provide global economic public goods. China
and other BRICS countries should further strengthen their cooperation in
the aspects of economy and trade, as well as investment, to provide more
“positive energy” for the creation of a more fair and reasonable international
financial order.

Notes
1 For example, the British scholar Rhodes generalized six definitions, while Stoke
generalized five definitions –​Gerry Stoke, Governance as a Theory: Five Arguments,
International Social Sciences (Chinese version), 1999(2) –​and Dutch scholars Kees
Van Kersbergen and Frans Van Waarden generalized nine definitions.
2 Thomas G. Weiss, “Governance, Good Governance and Global
Governance: Conceptual and Actual Challenges”, Third World Quarterly, Vol. 21,
No. 5, October, 2000, pp. 795–​814, 806.
3 Yu Keping, “Introduction to Global Governance”, Marxism and Reality, No. 1,
2002, p. 25.
4 Liu Yue, Liu Kai. An exclusive interview with Sergei Ivanov, the vice president of
VTB, March 25, 2013.
5 Xinhua, “Rising Global Influence of the BRICS Countries”, March 28, 2012.
6 Caijing, “The BRICS Development Bank Set Sail”, March 25, 2013.
148 Wang Hao
7 CRI Online, “South African Scholars: The BRICS Countries Have Huge Potentials
in the Cooperation with Africa, the BRICS Bank is around the Corner”, March
26, 2013.
8 Caijing, “The BRICS Development Bank Set Sail”, March 25, 2013.
9 Securities Times, “The BRICS Summit Opens, Development Bank Attracts
Attention”, March 27, 2013.
10 Urumqi Online, “At the Right Time for the BRICS Financial Cooperation”, April
14, 2011.
11 Huang Renwei, “The Reform of Global Economic Governance Mechanism and
New Opportunities for the Rise of the BRICS Countries”, International Relations
Research, No. 1, 2013, pp. 54–​70.
12 Xu Xiujun, “Institutional Non-​neutrality and the BRICS Cooperation”, World
Economy and Politics, No. 6, 2013, pp. 77–​96.
13 Huang Wei. “The BRICS Cooperation: the Foundation, Impetus and Progress”,
International Economic and Trade Exploration, No. 12, 2014, pp. 46–​58.
14 Li Daokui, Xu Xiang, “The BRICS Cooperation Mechanism from the Perspective
of Global Governance”, Reform, No. 10, 2015, pp. 51–​61.
15 Li Bing, “The BRICS Countries Promote the Transformation of Global Economic
Governance from the International System to the World System”, Studies on
International Relations, No. 4, 2015, pp. 97–​107.
16 Wang Houshuang, Guan Hao, Huang Jinyu, “The Impact of the BRICS
Cooperation Mechanism on Global Economic Governance System and
Mechanism Innovation”, Asia-​Pacific Economy, Vol. 3, No. 3, 2015, pp. 3–​8.
17 Xu Chao, “The Financial Cooperation among the BRICS countries: Motivation,
Influence and Prospect”, Foreign Theoretical Trends, No. 12, 2015, pp. 14–​20.
18 Zhang Huan, “The BRICS Financial Cooperation Promote the International
Power of Discourse”, March 29, 2012.
19 Xu Xiujun, “The BRICS Development Bank: Lessons and Innovation,” China
Foreign Exchange, No. 7, 2013, pp. 19–​21.
9 
Construction of free trade zones in the
BRICS countries
Cai Chunlin

Economic globalization and foreign trade zone (FTZ) construction are two
megatrends in the global economy today. The financial crisis has led to a
growing trend of international trade protectionism. To avoid that, economies
in the world are accelerating regional economic cooperation of different levels
in varied forms to tighten links with one another. By allowing the infiltration
of economic activities, each economy can benefit from others through regional
cooperation. Countries and regions, including the United States and Europe,
vigorously promote United States-Mexico-Canada Agreement (USMCA)
and Comprehensive Progressive Trans-Pacific Partnership (CPTPP) negoti-
ations as part of an effort to exert influence on the global economic govern-
ance rules system. As their institutional power in developing international
economic and trade rules are at the risk of being weakened, the BRICS coun-
tries, as representatives of emerging economies, have started to view the devel-
opment of FTZs as an important means to enhance their economic strength
and international influence. Based on their respective realities, the five coun-
tries have successively developed their FTZ strategies. An analysis of the stra-
tegic interest and conflicts of interest related to the establishment of FTZs
among the BRICS countries and the provision of constructive suggestions
will help China strengthen its economic and trade relations with the other
BRICS countries and elevate the level of economic and trade cooperation
among the five countries.

1. FTZ development strategies of the BRICS countries

1.1 Brazil’s FTZ development strategy

Brazil’s FTZ development strategy mainly includes the following three aspects.
First, leveraging regional integration as a means of enhancing its strength
and position in the multilateral trading system. As a robust facilitator of
FTZ construction, Brazil believes bilateral and regional trade agreements
are a useful complement to the multilateral trading system in that they can
effectively strengthen market integration, enhance the role of trade in eco-
nomic development and enable domestic enterprises to achieve economies of
150 Cai Chunlin
scale. By cooperating with developing countries at the regional level, espe-
cially through preferential trade arrangements, Brazil sought to enhance its
position in the Doha Round negotiations on the multilateral trading system.
Such an aim is particularly reflected in the negotiation of preferential trade
arrangements for developing countries.
Second, taking advantage of Mercosur, or officially the Southern Common
Market, as a bargaining chip to conduct regional integration negotiations
with the outside world. Based on its economic strength and position in the
global political economy, Brazil believes that when promoting the establish-
ment of FTZs, uniting the Southern Common Market as a whole to nego-
tiate with the outside world, is more conducive to realizing its demand for
interests and gaining greater bargaining power. Therefore, Brazil puts the
Southern Common Market at the core of its FTZ policy in accordance with
World Trade Organization (WTO) rules on regional trade agreements. In
September 2006, the first IBSA (India, Brazil and South Africa) Summit was
held in Brasilia to discuss the basic conditions for establishing a free trade
agreement (FTA) among the Southern Common Market, South Africa, and
India. Brazil hopes to establish a free trade agreement between Mercosur and
the two countries mentioned above. Brazil has signed a free trade agreement
with Andean Group and reached a free trade agreement and a regional trade
security agreement on automobile trade with Argentina. It has also initiated
negotiations on a free trade agreement with Mexico and began to evaluate
and study the potential to reach a free trade agreement with China, India,
and other countries. In these negotiations, consultations, or researches, Brazil
mostly leverages the Southern Common Market as an important bargaining
chip and basis for asking price. In July 2015, the Southern Common Market
held a summit to discuss issues related to economic difficulties and FTA nego-
tiations with the EU.
Third, viewing major trade partners as key targets for regional integration.
In line with its strategy to participate in regional integration, Brazil focuses on
its main partners as targets for FTZ negotiations. For example, the European
Union, the United States, and Argentina are Brazil’s main trading part-
ners, with whom Brazil is actively promoting the integration process. China,
India and South Africa are also its main trading partners. Brazil, as a part
of the Southern Common Market, has begun to negotiate with India and
South Africa on a free trade agreement and expressed the willingness to nego-
tiate and study the possibility of signing an FTA with China. The Southern
Common Market has reached a framework agreement on reciprocal trade
with India, Mexico and South Africa, and has participated in launching the
initiative to establish a community of Americas countries. In June 2012, the
Brazil-​led Southern Common Market and China signed the Joint Statement
on Further Strengthening Economic and Trade Cooperation, which stipulated
that measures would be taken to diversify the trade structure and increase
the trade volume between China and the members of the Southern Common
 Free trade zones in BRICS countries 151
Market in a balanced manner. At present, Brazil’s strategy is to leverage
the Southern Common Market to conduct comprehensive regional trade
agreement negotiations with China, the EU, and other countries in order to
enhance its global influence, as well as the external demand that drives its eco-
nomic development.

1.2 Russia’s FTZ development strategy

Russia’s FTZ development strategy mainly includes the following three
aspects.
First, accelerating the construction of FTZs. Historically, Russia mainly
engaged in the industrial division of labour and economic and trade cooper-
ation with other Eastern European and Commonwealth of Independent
States (CIS) countries. This is essentially regional cooperation in economic
and trade terms. In the early 1990s, Russia established close ties, economic
ties in particular, with Europe and the United States. However, the 1997–​1998
Russian financial crisis made Russia believe that the other CIS countries were
the true force always behind its back. Therefore, it turned to re-​strengthen
regional cooperation with those countries. However, at that time Russia did
not have a clear strategy for regional integration. Obviously, Russia lagged
behind in terms of FTZ establishment. Thanks to the acceleration of eco-
nomic liberalization and the enthusiasm of the world’s major economies for
regional trade agreements, Russia has begun to pay close attention to the
trend of FTZ construction. While actively integrating into the multilateral
trading system, it has initiated an attempt to promote FTZ construction,
which has been elevated by the country to strategic heights in order to emu-
late the forerunners.
Second, developing an FTZ strategy that balances the East and the West.
After the painful failure of the “shock therapy”, Russia began to imple-
ment a regional development strategy that stressed a balance between the
East and the West, and has developed a rough framework for trade devel-
opment. At present, Russia has signed five FTAs, including the Armenia-​
Russia Free Trade Agreement and the Uzbekistan-​ Russia Free Trade
Agreement. In March 2012, the Russian State Duma and the Council of the
Federation ratified an agreement to establish FTZs within the framework of
Commonwealth of Independent States. While cooperating with countries in
the region, Russia has also begun to consider the necessity and possibility
of establishing FTZs with major economies, including the United States,
the European Union, Japan, China and India. Members of the Eurasian
Customs Union, including Russia, Belarus, and Kazakhstan have already
negotiated with the European Free Trade Association and New Zealand
on the establishment of FTZs. In February 2012, Russia intended to start
consultations with ASEAN on the establishment of FTZs. In September
2012, Russia announced that it would sign agreements with certain
152 Cai Chunlin
Asia-​Pacific Economic Cooperation (APEC) members to establish FTZs.
In April 2015, the German Chancellor indicated the possibility to negotiate
with Russia on the establishment of a free trade zone. In February 2016, the
Egyptian Ministry of Industry also announced that it would discuss with
Russia about the establishment of an FTZ.
Third, leveraging energy resources as a bargaining chip to gain an upper
hand in FTZ negotiations. Russia is blessed with abundant energy resources,
especially oil and natural resources. That is why energy becomes the main
negotiation point for regional economic and trade cooperation with the
EU. In regional economic and trade cooperation with economies such as
the United States, Japan, India, and China, Russia still leverages oil and
gas as a bargaining chip to earn profits. Russia believes that the other econ-
omies’ demand for energy is an important reason for them to cooperate with
Russia in regional economic activities. Therefore, Russia’s use of energy as an
important bargaining chip in promoting the establishment of FTZs is one of
its primary strategies.

1.3 India’s FTZ development strategy

India’s FTZ development strategy mainly includes the following three aspects.
First, advancing in tandem multilateral and regional cooperation in FTZ
establishment by balancing political, security and economic interests. India’s
participation in regional economic cooperation started in December 1985,
when it became a member of the South Asian Association for Regional
Cooperation (SAARC). Subsequent changes in the international political
and economic situations made India believe that cooperation at the regional
level was essential to maintaining national politics, security, and economic
development. Therefore, it began to adjust its foreign-​trade policy. In the mid-​
to-​late 1990s, India implemented the Gujral Doctrine, which specified that
India did not ask for reciprocity from neighbouring countries but gave all that
it could in good faith and trust, in order to improve and develop relations
with them. At that time, India actively promoted regional economic cooper-
ation among SAARC members, thereby pushing the development of SAARC
into a new stage. Since 2000, India has begun to accelerate FTZ construction
and signed a number of regional trade agreements. However, the multilat-
eral trading system remains the main means for India to improve the living
standards of its people, while regional trade arrangements are only comple-
mentary to multilateral trade liberalization.
Second, simultaneously promoting intraregional and interregional cooper-
ation in FTZ construction for a global presence and higher international
status as a major country. India has always desired to become a global power.
Its FTZ strategy is also aimed to serve this purpose. To that end, India has
been promoting regional economic and trade cooperation simultaneously
with developed and developing economies. India’s earlier trade arrangements
include the Asia-​Pacific Trade Agreement, South Asian Free Trade Area, Bay
 Free trade zones in BRICS countries 153
of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation,
India-Singapore Comprehensive Economic Cooperation Agreement,
Framework Agreement for Establishing Free Trade Area Between India
And Thailand and Framework Agreement on Comprehensive Economic
Cooperation Between the Republic of India and the Association of Southeast
Asian Nations. Since 2010, India has taken the EU and ASEAN as important
targets for negotiations to accelerate the construction of FTZs. In October
2010, leaders of the EU and India issued a joint statement in which they
agreed to sign an FTZ agreement as soon as possible. In April 2015, the
German chancellor stated that the suspended negotiations on a trade and
investment agreement between India and the EU may be reopened, though a
deal might require concessions from all parties.
Third, promoting in tandem trade in goods and services and international
direct investment, as part of an effort to further regional economic integra-
tion. India’s effort to continue developing FTZs is accelerating. Previous
negotiations on regional economic and trade cooperation mainly focused in
the field of trade in goods. The free trade agreements signed also primarily
involved concessions in that field. As the status of India’s services industry
in the national economy rises and its international competitiveness improves,
India attempts to include trade in services and even investment in FTAs.
For example, in 2005, the Comprehensive Economic Partnership Agreement
signed between India and Singapore involved not only goods but also services
and investment.

1.4 China’s FTZ development strategy

China’s FTZ development strategy mainly includes the following three aspects.
First, promoting the construction of FTZs as an important supplement to
steady integration into economic globalization. Before the 1990s, China did
not participate in any regional free trade and economic cooperation apart
from APEC. Nor did it sign any bilateral free trade or investment agreements.
In 2000, China proposed to establish an FTZ with the Association of
Southeast Asian Nations (ASEAN), marking the transformation of China’s
policy to make regionalism an important complement to China’s participa-
tion in economic globalization. China has recognized the importance of par-
ticipating in FTZ establishment from a strategic perspective and has clearly
pledged to “actively carry out regional cooperation and implement an FTZ
strategy”. The goal is to build a comprehensive institutional framework of
regional economic cooperation, with strategic planning and specific imple-
mentation measures. China seeks to foster common interests in relevant
regions through regional economic cooperation and establish a new regional
order of equality, cooperation, mutual benefit, and mutual assistance in eco-
nomic interactions. Dedicated to eliminating the barriers and confrontation
between neighbouring countries, China takes regional cooperation as an entry
point to fully participate in international economic coordination. In addition,
154 Cai Chunlin
China explores and gradually establishes new norms of national interests and
international economic relations as part of an effort to enhance its position
and influence in the global economy and create a benign international eco-
nomic environment. Several Opinions of the State Council on Accelerating
the Implementation of the Strategies for Free Trade Zones once again clearly
defined the FTZ strategy as an important part of China’s renewed effort
to open up wider to the outside world. In the Opinions, it is proposed that
China will

further optimize the plan to construct FTZs and gradually create a global
network of FTZs by establishing FTZs with most emerging economies,
large developing countries, major regional economic blocs and certain
developed countries, with the ultimate aim to building integrated markets
of BRICS countries, emerging economies, and developing countries.1

Second, fully participating in the construction of FTZs. Compared with

other economies, China is a latecomer in implementing an FTZ strategy. Since
2000, China has initiated a comprehensive effort to construct FTZs as part of a
combined diplomatic and political strategy. At present, China’s participation in
FTZ construction takes three forms. One is regional-​cooperation organizations
or agreements with substantive content, such as the China-​ASEAN Free Trade
Area. Another is regional cooperation mechanisms that serve only as forums,
such as APEC, ASEM, and East Asia Summit. In addition, there are regional
or subregional cooperation organizations with a particular set of mechanisms,
such as the Shanghai Cooperation Organization and Northeast Asia Regional
Cooperation. China is implementing the FTZ strategy across the board, by
not only establishing a free trade zone with ASEAN, but also negotiating the
establishment of the ASEAN-​China-​Japan-​South Korea Free Trade Zone
within the “ASEAN Plus Three (APT)” framework and advocating negoti-
ations on China-​Japan-​South Korea cooperation and East Asian economic
integration. In the meantime, China is actively carrying out comprehensive
regional economic cooperation with Latin American countries such as Brazil,
Argentina, Chile, and Cuba. As of December 2019, China has signed free trade
agreements with ASEAN, Australia, Chile, Costa Rica, Georgia, Iceland,
Maldives, Mauritius, New Zealand, Pakistan, Peru, Singapore, South Korea,
and Switzerland. Third, advancing the construction of FTZs in a systematic
and focused manner. Zhang Yansheng, secretary-​general of the Academic
Committee of the National Development and Reform Commission, uses the
general equilibrium model to theoretically analyse the effects of China’s par-
ticipation in FTZ establishment.2 He comes to the following conclusions after a
comparative analysis of the combined effects of six different types of FTZs: the
APT free trade zone development plan is most beneficial to China; the sub-
optimal plan is to establish a China-​Japan-​South Korea FTZ; the third-​best
plan is an FTZ between China and the EU; the fourth plan is an FTZ between
China and ASEAN; the fifth plan is an FTZ between China and Australia; the
 Free trade zones in BRICS countries 155
sixth plan is an FTZ between China and Brazil. This result is highly relevant
in guiding the research and development of China’s FTZ strategy. In prac-
tice, China’s regional integration strategy has gradually become clearer. The
strategy is to first establish solid relations with neighbouring countries and
then break geographical restrictions to build ties with countries from other
continents through bilateral, multilateral and regional cooperation agreements
featuring RTA and FTA. High-​level FTZs will be constructed by improving
the level of open trade in goods, expanding the opening up of the services
industry, relaxing policies on investment access, promoting negotiations on
international trade rules, advancing cooperation in institutional arrangements
and facilitating natural person mobility. The contents of FTZ construction
will be enriched by incorporating economic and technological cooperation
topics such as industrial cooperation, development cooperation, global value
chain, as part of China’s effort to promote pragmatic cooperation with its
trading partners.3

1.5 South Africa’s FTZ development strategy

South Africa’s FTZ development strategy mainly includes the following three
aspects.
First, vigorously promoting economic transformation by shifting the
trading target from Europe to the East. Although South Africa has the
smallest economic size and lowest growth rate among the BRICS countries,
it has the entire African continent, the world’s most promising market, as its
support. Moreover, the economy of South Africa is in a period of transition
from trade and investment in Europe to those in the Asia-​Pacific region as
part of a national strategy. South Africa continues to strengthen trade and
investment with China, Russia, and other Far East countries.
Second, temporarily avoiding the establishment of FTZs with major
powers. In 2004, China and the South African Customs Union (SACU)
began negotiations on the establishment of an FTZ. However, affected by the
global financial crisis, South Africa explicitly stated that it would not consider
setting up FTZs with China and other big countries because it did not enjoy
a comparative advantage over them. Despite that, South Africa has confi-
dence in strengthening economic and trade cooperation with China. In 2015,
the bilateral trade volume between China and South Africa totalled approxi-
mately US$46 billion. By the end of 2019, China had been South Africa’s
largest trading partner, export market and source of imports for seven con-
secutive years. The growth speed of trade volume between the two countries
far exceeded that between China and other BRICS countries. At present,
South Africa hopes China will purchase more high value-​added products
from South Africa as a way to strengthen the economic and trade ties between
the two countries.
Third, vigorously promoting the construction of an African free trade
zone with an aim to consolidate its strategic position as the gateway to
156 Cai Chunlin
Africa. In October 2010, South Africa and Egypt reached an agreement on
establishing an African free trade zone. The free trade zone, which involved 26
African countries, was aimed at expanding trade among themselves, enabling
effective use of economic resources, and promoting the rapid development
of the African economy. In June 2011 at the Seventeenth Ordinary African
Union Summit, African heads of state decided to establish an African free
trade zone within three years. The establishment of the FTZ will not only
help promote the growth of intra-​African trade and the regional economic
integration process, but also prompt African countries to leverage the gateway
role of South Africa to strengthen their relations with other economies in the
world, especially economic and trade exchanges with other BRICS countries.
In February 2015, 26 countries in eastern and southern Africa pledged to
establish Africa’s largest free trade zone to achieve the free flow of goods and
services. The FTZ led by South Africa will significantly enhance the country’s
international status and influence.

2. Common interests and conflicts of interest among the FTZ

development strategies of the BRICS countries

2.1 Common interests

The BRICS countries have broad common interests, which are reflected in the
following three aspects.
First, there is a strong economic complementarity among the member coun-
tries. The rise of the BRICS countries as a group has its inherent economic and
industrial development logic:4 Russia enjoys a leading edge in energy and basic
sciences; India in software technology; Brazil in clean technology and modern
agriculture; China in manufacturing and processing; and South Africa in mining
technologies. Therefore, there is a huge potential for them to cooperate with
one another.5 The five BRICS countries are respectively the “world’s factory”
(China), “world’s office” (India), “world’s raw material base” (Brazil), “world’s
gas station” (Russia) and Africa’s gateway and bridgehead (South Africa). They
are all representatives and guardians of the interests of developing countries.6
The BRICS countries are all emerging economies that have the common desire
to optimize their industrial structure, improve the external development envir-
onment, and enhance their international status.7 They share the same interests
in opposing trade protectionism, promoting reform of the international
financial system, and responding to global climate change.8 In the 2015 art-
icle “Research on the Trade Complementarity between China and the other
BRICS Countries”, Zhao Yuhuan, Zhang Jihui, and Zhao Yujie analyse the
trade complementarity between China and the other BRICS countries from the
perspectives of trade in both goods and services.9 The results show that China
complements the other BRICS countries well in the trade of goods, and enjoys
a competitive advantage in the capital-​and human capital-​intensive industries.
Moreover, China and the other BRICS countries have strong complementarity
 Free trade zones in BRICS countries 157
in the trade of services, though not as strong as that of goods. Therefore, it is
suggested that China actively advocate the establishment of FTZ in BRICS
countries to promote the development of mutual trade.
Second, the BRICS countries consider FTZ construction as an effective
complement to the multilateral trading system. Since the early 1990s, the
number of free trade agreements or preferential trade arrangements concluded
by economies in the world has increased rapidly. Developed economies
represented by the United States have been keen to reach free trade agreements,
especially regional economic and trade agreements with developing countries.
Viewing FTZ construction as an important way to enhance their economic
strength and international influence, the BRICS countries have formulated
FTZ development strategies based on their actual conditions. In this regard,
the BRICS countries have a consensus that FTZ is a great complement to the
multilateral trading system. That is why they commit a lot of effort to pro-
moting the construction of FTZs around the world.
Third, in the long run, the economic and trade ties among the BRICS coun-
tries will likely be strengthened through the construction of FTZs. One common
point of the FTZ strategies of the BRICS countries is to treat main trading part-
ners as the prime targets of regional integration. In terms of trade among the
BRICS countries, the volumes between countries other than the pairs of China
and Pakistan, China and Russia, China and India, and China and South Africa,
are not very large. Therefore, those pairs are not yet major trading partners. For
example, India ranks 17th among Russia’s trading partners, while Brazil and
South Africa rank even lower. China is the largest trading partner of the other
four countries. China is Brazil’s largest export market and the second largest
source of imports, Russia’s sixth largest export market and the largest source of
imports, India’s third largest export market and the largest source of imports,
and South Africa’s largest export market and source of imports. In the long run,
any advances in the BRICS cooperative mechanism will bring economic and
trade relations among the five countries even closer. Each member country, espe-
cially China, will become an important target for FTZ negotiations for another.
It will become a consensus of the BRICS countries to tighten economic and
trade ties through the establishment of FTZs.

2.2 Conflicts of interest

Although common interests are why BRICS countries have come together,
there are some conflicts of interest among them. Such conflicts are mainly
reflected in the following three aspects.
First, intensified international economic and trade competition and
increasingly obvious conflicts of interest. There is a certain degree of trade
homogeneity, substitution, and competition among the BRICS countries.10
Moreover, the mutual trust among them in terms of geopolitics and security
is relatively low,11 thereby leading to conflicts of interest on certain economic
issues, for example, trade and resources.12 Moreover, conflicts of interest
158 Cai Chunlin
among these countries as emerging economies may arise from the pursuit and
control of natural resources, the occupation and competition in market shares,
the expectations and efforts to develop their economies, and the maintenance
and fight for international political and economic power.13 The BRICS coun-
tries have some divergences and contradictions on bilateral trade, commodity
pricing, RMB exchange rate, international currency, and the reform of the
international economic order.14 The existing BRICS cooperative mechanism
is also plagued by problems such as an unstable operation model, weak foun-
dation of common interests, uncertainties in the development prospects of
member states, and great external competitive pressures.15
Second, different functional positioning and cognition of FTZ and different
demand for interest. Boasting a large economy, India is experienced in dealing
with trade friction. To avoid being left behind by other countries, India adopts
an aggressive strategy for comprehensive FTZ development by pursuing the
maximization of political, economic, and security interests. In contrast, Brazil
and South Africa adopt a defensive strategy that centres respectively on the
Southern Common Market and the African Continental Free Trade Area
(AfCFTA) and pursues the maximization of economic interests and regional
influence. Russia started relatively late as a participant in FTZ construc-
tion and did not become a WTO member until 2012. It adopts a resources-​
oriented strategy. Although such a strategy is claimed to balance the East and
the West, it is actually an effort to build FTZs within the CIS countries, with
an aim to strengthen Russia’s capability in international negotiations. The
FTZ development strategy adopted by China is both aggressive and defensive.
The difference in FTZ development strategy indicates that the BRICS coun-
tries have varied functional positioning and cognition of FTZ, and different
demand for interests. In the long run, such difference may produce a negative
impact on the BRICS’ mechanism of economic and trade cooperation and
result in conflicts of economic and trade interests.
Third, the possibility of being excluded from one another’s endeavour to
construct FTZs in the short term. The lack of a clear target for FTZ resource
integration among the BRICS countries may render the strategic conflicts of
interest even more obvious. As different countries compete for more shares
in the global market and more FDI, trade frictions and protectionism would
occasionally emerge. India and Brazil are among the countries that have
adopted the most trade-​protection measures against China in recent years.
Russia often leverages oil and gas resources as a bargaining chip in inter-
national negotiations. India, Brazil, and South Africa gain their profits from
iron ore resources. However, China, as a resource-​demanding country, has
encountered difficulty in effectively securing its legitimate interests in import.
In the short term, BRICS countries other than India are more or less shying
away from establishing FTZs. In particular, South Africa has clearly stated
that it will not, for the time being, establish FTZs with major powers and will
be fully committed to promoting the construction of an African free trade
zone as part of an effort to consolidate its strategic position as the gateway to
 Free trade zones in BRICS countries 159
Africa. Brazil also puts its focus on the Southern Common Market, using it
as a bargaining chip to negotiate with the outside world on regional integra-
tion, in order to avoid the establishment of FTZs with any big countries that
may threaten its own economic competitiveness. Although Russia claims to be
balancing the East and the West, it has made little progress. In this sense, the
timing is not yet mature for China to establish FTZs with the other BRICS
countries, despite its strong desire to do so.

3. Directions and paths for interest coordination of the FTZ

development strategies of the BRICS countries

3.1 Conducting evaluation on the common interests of the BRICS

countries in economics and trade and joint research on the metrics
It is recommended to adopt the method of econometric modelling for the
design of metrics by taking the economic and trade complementarity as an
entry point to evaluate and quantify the common economic and trade interests
among the BRICS countries. The metrics, which cover economic structure,
trade structure, industrial structure, and economic development stage, among
other indicators, can be leveraged to analyse common interests of the BRICS
countries respectively as the “world’s factory”, “world’s office”, “world’s raw
material base”, “world’s gas station” and Africa’s gateway and bridgehead in
their efforts to pursue economic development. The metrics for the common
interests among the BRICS countries can be designed to incorporate seven
perspectives, that is, industry, employment, trade, finance, market, resources,
energy and environment, and human capital and technology, so that all aspects
of the interest relations among the BRICS countries can be reflected. In the
meantime, the metrics can be divided into three sections: specific indicators
showing broad common interests among the BRICS countries, those showing
moderate common interests and those showing limited common interests. The
position of each indicator on the spectrum is de-​dimensionalized to become a
percentage point. Then, a stepwise weighted average method is used to derive
an intuitive and visible final score, which can reflect how broad or limited
common interests are among the BRICS countries. Used to comprehensively
assess the common interests of the BRICS countries in different economic
and trade fields, the final score can provide a realistic basis for advancing eco-
nomic and trade cooperation among the BRICS countries.

3.2 Identifying and analysing the conflicts of interest among the BRICS
countries in economics and trade
In the context of economic globalization, the economic and trade interests
have become all the more complicated, and the main actors and the means
of realizing benefits more diversified. Different issues may cause countries to
form varied groups of common interests. Such groups are unfixed and may be
160 Cai Chunlin
subject to the issue in question. It is recommended to identify and analyse issue-​
specific economic and trade conflicts of interest among the BRICS countries,
and then comprehensively analyse the economic and trade relations among the
five countries. To be specific, it is advised to analyse the conflicts of interest
among the BRICS countries on issues such as international trade, inter-
national finance, international investment, and international environment,
as well as the profound characteristics, complexity, extensiveness of inter-
national economic and trade interests in the context of globalization, and
the important characteristics, causes, and trends of the issue-​oriented interest
combinations.

3.3 Establishing mechanisms for the distribution and coordination of

economic and trade interests among the BRICS countries
The BRICS countries actively pursue their respective economic and trade
interests and attempt to achieve a balance of interests by seeking common
interests and resolving conflicts of interest. To that end, the most urgent task
is to build mechanisms for balancing and coordinating the economic and trade
interests among the five countries. A properly designed mechanism will be
able to balance the economic and trade interests among the BRICS countries,
and enable mutual cooperation and benign interactions, thereby ensuring the
expected results are achieved for the member countries. The basic principle of
the mechanism is to achieve sharing-​based cooperation and inclusive develop-
ment. The purpose is to promote the proper handling of economic and trade
relations among the BRICS countries in the long run. Such a mechanism will
contribute new values and mainstream ideas to the construction of FTZs and
provide strategic thinking and ideas for addressing major global issues.

3.4 Advocating the establishment of FTZs among the BRICS countries to

expand economic and trade cooperation, and consolidate the foundation of
common interests
As the largest developing economies, the BRICS countries should advocate
development-​oriented regional economic and trade cooperation, not only in
the form of preferential trade arrangements and free trade agreements, but
with a focus on macroeconomic policies that can promote overall economic
growth and improve economic structure, including monetary and financial
arrangements, large infrastructure construction, and industrial policies. It is
suggested that the BRICS countries establish FTZs to expand economic and
trade cooperation and consolidate their common interests. Given the com-
plexity of the strategic interests of the BRICS countries, an all-​out effort to
construct FTZs is unlikely to start immediately. In the short term, framework
agreements can be signed in certain areas as part of a step-​wise approach.
For example, on 14 April 2011, the Framework Agreement on Financial
Cooperation within the BRICS Inter-​bank Cooperation Mechanism was
 Free trade zones in BRICS countries 161
formally signed, marking the official launch of a more open regional finan-
cial cooperation system for the BRICS countries. This move is conducive
to steadily expanding local currency settlement for facilitated trade and
investment among the BRICS countries and strengthening investment and
financing cooperation in important areas such as resources and low carbon.
It also serves to promote cooperation among capital markets, including
bonds-​issuance and IPO, and strengthen the information exchanges in the
financial sector among the BRICS countries. Realizing local currency settle-
ment in mutual trade can effectively avoid exchange-​rate fluctuations and
mitigate risks.

4. Conclusion
At present, the number of FTZs in the world is increasing steadily. Topics
covered are constantly expanding, and the level of liberalization has been
greatly improved. Accelerating the implementation of FTZ strategies is an
objective requirement for the BRICS countries to adapt to the new trends
of economic globalization, and also an inevitable choice for them to make
structural adjustments of their domestic economy and construct a new open-​
ended regional economic system. As the BRICS countries promote their
respective FTZ strategies, it is necessary to conduct an evaluation of their
common interests in economics and trade, and joint research on metrics, so as
to fully tap the common interests of the BRICS countries by promoting the
FTZ strategy and minimize conflicts of interest among them. When neces-
sary, the BRICS countries may establish mechanisms for interest distribution
and coordination. FTZs may also be established to expand economic and
trade cooperation among the five countries as an integrated market of win-​
win cooperation. This will also serve to consolidate the BRICS comprehensive
cooperation mechanism for the achievement of common strategic interests.

Notes
1 Several Opinions of the State Council on Accelerating the Implementation of the
Strategies for Free Trade Zones, Gazette of the State Council of the People’s Republic
of China, January 10, 2016.
2 Zhang Yansheng, “The Motivation and Strategy of China’s Participation in
Regional Economic Integration”, Thematic Meetings of CPPCC, June 2007.
3 Several Opinions of the State Council on Accelerating the Implementation of the
Strategies for Free Trade Zones, 2015.
4 Huang Renwei, “The Rise of the BRICS Countries and Global Governance
System”, The Contemporary World, No. 5, 2011.
5 Lin Yueqin, “Evaluation of the Economic Growth Model of Emerging
Economies: An Analysis Based on the BRICS Countries”, Comparative Economic
& Social Systems, No. 5, 2011.
6 Wang Yongzhong and Ma Shaoqing: “Why BRICS Countries Can Work Together”,
World Affairs, No. 8, 2011.
162 Cai Chunlin
7 Yang Jiemian, “The Purpose, Spirit and Mechanism of BRICS Cooperation”,
The Contemporary World, No. 5, 2011.
8 Zheng Xinli, “Strengthening Economic Cooperation among BRICS Countries”,
Review of Economic Research, No. 49, 2011; Li Xiangyang, “How to Extend the
BRICS Development Path?”, Contemporary Economics, No. 5, 2011.
9 Zhao Yuhuan, Zhang Jihui, and Zhao Yujie, “Research on the Trade
Complementarity between China and the other BRICS Countries”, Journal of
Latin American Studies, No. 1, 2015.
10 Lin Yueqin and Zhou Wen, “The Driving Forces Behind the Rise of the BRICS
Countries: The Shift from Comparative Advantage to Competitive Advantage”,
China Financial and Economic News, April 21, 2011.
11 Yao Zhizhong, “The Role of BRICS Countries in Global Economic Governance”,
Economy, No. 5, 2011.
12 Zhong Longbiao, “BRICS Countries in the Process of International System
Transformation”, Journal of the Party School of Tianjin Committee of the CPC,
No. 9, 2011.
13 Wang Yuhua and Zhao Ping, “The Characteristics and Problems of the BRICS
Cooperative Mechanism and China’s Countermeasures”, Contemporary Economic
Management, No. 11, 2011.
14 Wang Yongzhong, “The Intersection and Divergence of the Economic Interests of
the BRICS Countries”, Asia & Africa Review, No. 3, 2011.
15 Wang Yuhua and Zhao Ping, “The Characteristics and Problems of the BRICS
Cooperative Mechanism and China’s Countermeasures”, Contemporary Economic
Management, No. 11, 2011.
10 
The BRICS countries and new
international direct investment rules
Huang He

The financial crisis led to profound changes in the global economic land-
scape, where the foreign direct investment (FDI) by enterprises from the
BRICS countries saw a rapid increase. In the meantime, Western countries
generally believe that the common feature of multinational corporations
from the BRICS countries is that the governments play an important role
in their business operations. That is how a number of large state-​owned
enterprises (SOEs) are established in certain strategically important indus-
tries. These state-​owned enterprises, also known as “state-​controlled entities”,
have become an emerging force in international direct investment. In response
to the rapid development of overseas M&As by multinationals based in the
BRICS countries, the United States has started to adopt the third-​generation
trade and investment norms featuring pre-​entry national treatment plus nega-
tive list as a strategic means for reshaping the international trade, invest-
ment, and world economic landscape under the guidance of the “sequential
negotiation” strategy. The introduction of varied measures by the developed
countries, in particular, the United States, in the formulation of international
investment rules will inevitably affect the efforts of multinationals from the
BRICS countries for overseas M&As.

1. The growth of FDI from the BRICS countries

In November 2001, Jim O’Neill, chief economist at Goldman Sachs, used the
term “BRICs” to define the world’s developing countries with the most poten-
tial, namely Brazil, Russia, India and China, in an article titled “The world
needs better economic BRICs”, in the 66th issue of the Global Economic
Report published by the organization. In 2010, the addition of South Africa
made BRIC into BRICS. Since 2009, the BRICS countries have been holding
a summit annually. In less than a decade, “BRICS” has materialized from an
economic concept to institutional arrangements.1 Since then, this group of
developing countries has been known by and aroused the attention of the
international community. The concept of “BRICS countries” has gradually
become clear. In economic terms, the gap between the BRICS countries and
developed countries has gradually narrowed; and in political terms, their voice
164 Huang He
in global issues has been amplified. As a robust emerging force in world pol-
itics, the BRICS countries are promoting extensive and profound changes to
international relations. The rise of the BRICS countries is most evident in the
economic realm –​the economy of these countries has maintained rapid and
stable development for more than a decade. From a global perspective, such
comprehensive and sustained growth has, to a considerable extent, elevated
their position in the global economic arena.2
For example, the BRICS countries contribute more than 50 per cent of
global GDP growth. The GDP of the five countries accounts for 20 per cent
of the world’s total, and trade for 15 per cent of world’s total. China is known
as “the world’s factory”, Russia the “world’s gas station”, India the “world’s
office”, Brazil the “world’s granary”, South Africa the “bridge to Africa”.3
From 2001 to 2010, the average annual growth rate of trade among BRICS
countries was 28 per cent, a 15-​fold growth in 10 years. The trade volume
in 2010 totalled approximately US$230 billion. China’s bilateral trade with
Russia, India, Brazil, and South Africa grew at a rate of 43.1 per cent, 42.4 per
cent, 47.5 per cent, and 59.5 per cent, respectively, in 2010, all higher than the
overall growth rate of China’s foreign trade in the same period (34.7 per cent).
In 2011, the trade among BRICS countries continued to grow, registering
more than $320 billion. Recent years have seen the rapid development of
mutual trade among the BRICS countries. The average annual growth rate of
import and export of the BRICS countries since 2002 is nearly 10 percentage
points higher than that of world trade, except 2009 when the global financial
crisis was on. In 2011, the total import and export trade of the BRICS coun-
tries reached US$5.75 trillion, 5.74 times that of 2000. The total trade among
the BRICS countries reached 15.86 times that of 2000, while the world trade
in the same period was merely 2.87 times that of 2000.4
In terms of investment, the United Nations Conference on Trade and
Development (UNCTAD) pointed out in a dedicated report issued in
March 2013 that the BRICS countries have played an important role in pro-
moting emerging economies to substitute developed economies as the source
of global direct investment.5 The facilitator’s role of the BRICS countries
and the characteristics of investment companies are mainly reflected in the
following four aspects.

1.1 The stock of bilateral investment expands rapidly

The stock of bilateral investment among the BRICS countries rose sharply
from US$260 million in 2003 to about US$28.6 billion in 2011, a hundred-​
fold increase. The total stock of bilateral direct investment among the
BRICS countries accounted for 0.1 per cent of that of foreign direct invest-
ment by the BRICS countries in 2003 and rose to 2.5 per cent in 2011. The
mutual investment between India and Russia is substantial, accounting for
more than three-​quarters of their stock of investment in other BRICS coun-
tries (see Table 10.1).6 In November 2013, the Russian authorities announced
 BRICS and direct investment rules 165
Table 10.1 Scale and share of direct investment among the BRICS countries in 2011
(Unit: million dollars, %)

Sources of Destinations of FDI Proportion

FDI
BRICS Brazil China India Russia South World
Africa

BRICS 28,599.5 1,222.4 13,570.8 1,795.6 7,671.5 4,339.1 130,238 2.5

Brazil 514.1 -​ 447.5 15.8 0.1 50.7 202,586 0.3
China 9,552.5 1,071.8 -​ 657.4 3,763.6 4,059.7 424,781 2.2
India 1,987.1 73.9 228.7 -​ 1,409.1 194.1 62,600 3.2
Russia 1,139.9 -​ 123.1 982.3 -​ 34.5 361,738 0.3
South Africa 15,405.8 76.8 12,771.5 140.1 2,417.4 -​ 78,533 19.6

Source: UNCTAD, Global Investment Trends Monitor (Special Edition), March 25, 2013. Cited
from Zhang Youwen et al., A More Open International Environment: Changes in the International
Landscape and New Trends in Globalization, Shanghai Academy of Social Sciences Press, 2013,
pp. 286.

that they would invest in western India to provide comprehensive support

for the construction of a butyl rubber plant in Gujarat. The plant would be
the first butyl rubber production facility in India. In February 2012, SIBUR
and Reliance Industries Ltd. (RIL) established a joint venture –​Reliance
Sibur Elastomers Private Limited, which would be used for the production
of butyl rubber. RIL owns 74.9 per cent, and SIBUR 25.1 per cent of the
joint venture.7

1.2 Overseas direct investment grows exponentially

Recent years have witnessed the recovery and further growth of the world’s
overseas direct investment (ODI) to the level prior to the global financial
crisis. The ODI flows of the BRICS countries are showing the momentum
of rapid growth. The average annual growth rate of ODI flows in the BRIC
countries between 2002 and 2009 was: Brazil the highest (591.98 per cent),
followed by China (250.69 per cent), then India (69.96 per cent) and Russia
(53.18 per cent). In comparison, the annual growth rate of ODI flows in the
world was merely 11.68 per cent in the same period.8 This shows that the ODI
of the BRIC countries was developing at a speed much faster than the world’s
average. The ODI flows of India and Russia have been growing steadily in
recent years. The annual growth rate of ODI flows in India is higher than that
of Russia. The stable and robust growth of India’s ODI flows indicates that
India has been vigorously investing directly overseas since 2000. China’s ODI
flows fluctuated in the early twenty-​first century and soon started to show
the momentum of rapid growth. Although the annual growth rate of Brazil’s
ODI flows is the highest, the fluctuations are also strong, indicating that ODI
flows are unstable and vulnerable to changes in the domestic and foreign eco-
nomic environments.9
166 Huang He

1.3 Cross-​border M&As of the BRICS countries vary greatly

In terms of cross-​border M&A, China stays far ahead of other BRICS coun-
tries; Russia and India are on a par with each other; Brazil lags relatively
behind. In terms of the weight of cross-​border M&A, India is close to China;
India and China are far ahead of Brazil and Russia if the negative impact of
the financial crisis is not taken into account. For example, in 2015, Chinese
investors made direct investments in 6,532 enterprises in 155 countries and
regions, cumulatively achieving non-​financial FDI of US$118.02 billion, a
year-​on-​year increase of 14.7 per cent. By the end of 2015, China had cumula-
tively achieved non-​financial foreign direct investment of US$863.04 billion.
The accumulated non-​financial direct investment for the whole year totalled
around US$90 billion, making 2015 the fifteenth consecutive year of con-
tinuous growth.10 UNCTAD statistics show that the amount of Russian FDI
totalled US$12 billion in 2005, US$23.5 billion in 2006, US$47.8 billion in
2007,11 and US$53.759 billion in 2008.12

1.4 SOEs actively participate in cross-​border M&A activities

The characteristics of cross-​border M&A activities by companies from the
BRICS countries are as follows: a large proportion of cross-​border M&A
projects are extensive M&A in the resource sector completed by SOEs, while
cross-​border M&A by private companies has rarely seen any success, indi-
cating that it has its limitations (see Table 10.2). For example, statistics show
that by the end of 2012, the total assets of the 47 largest Chinese SOEs reached

Table 10.2 Four major cross-​border M&As by Chinese SOEs in 2014 (Unit: US$100
million, %)

Chinese Overseas Target Amount Industry Proportion

companies investment country/​ of shares
targets region

1 China Las Bambas Peru 58.5 Mining 100

Minmetals Copper
Corporation Mine
2 Baosteel Aquila Australia 14.0 Mining 85
Resources
3 COFCO Nidera (Dutch Netherlands 12.1 Manufacturing 51
food trader)
4 Sinopec AUSTRALIA Australia 10.0 Mining 10
PACIFIC
LNG PTY
LTD

Source: BVD-​ZEPHYR, “Database for Global M&A Analysis”, cited from Zhang Ming, Wang
Yongzhong et al., 2015 Report of Country-​Risk Rating of Overseas Investment from China, China
Social Sciences Press, 2015, pp. 112–​113.
 BRICS and direct investment rules 167
3.8 trillion yuan, accounting for 85 per cent of that of the country’s 100 lar-
gest multinational companies. The total overseas income of the 47 companies
reached 4 trillion yuan and the total number of employees reached 448,000.13
In the meantime, M&A efforts of Chinese and Russian companies are mainly
focused on the primary sector, and much less in manufacturing and services
(see Table 10.3). At present, 50 per cent of Russia’s FDI goes to the oil and
natural gas industries, and about 25 per cent to the metallurgical and mining
industries. In 2007 and 2008, Russia committed a much larger portion of its
FDI in the fuel, energy and metallurgy industries. In 2007, about 54 per cent
of Russian overseas M&A efforts were made in the metallurgy and mining

Table 10.3 Number of overseas acquisitions by Chinese companies by sector/​industry

in 2005–​2012 (Unit: pcs)

Sector/​industry M&A volume

2005 2006 2007 2008 2009 2010 2011 2012

Total 4 4 20 20 26 43 44 35
Primary sector 1 1 6 6 17 14 17 7
Agriculture, forestry, animal -​ -​ -​ -​ -​ -​ 1 1
husbandry and fishery
Mining and quarrying 1 1 6 6 17 14 16 6
Manufacturing 2 1 9 8 7 15 20 13
Food, beverages, and tobacco 1 1 3 2 3
Textile, clothing, tanning -​ -​ -​ -​ 1 2 3 -​
Wood products and plastic -​ -​ 1 -​ -​ 1 1 -​
products
Chemical products -​ -​ 1 -​ -​ 1 1 -​
Machinery and industrial -​ -​ 4 4 2 3 4 7
products
Electrical and electronic 1 -​ 1 3 -​ 1 6 2
equipment
Cars and accessories -​ 1 1 1 1 4 1
Services industry 1 2 5 6 2 14 7 15
Electricity, gas, and water -​ 1 -​ 1 -​ 3 3 -​
Construction industry -​ -​ -​ -​ -​ -​ -​ 1
Accommodation and dining -​ -​ -​ -​ -​ -​ -​ 1
Transportation, warehousing, -​ -​ -​ 2 1 1 1 3
and communication
Financial -​ 1 1 1 1 -​ 3
Business services 1 -​ 1 1 2 -​ 1
Education, medical care, and -​ -​ -​ -​ -​ 1 1 2
health care
Film and television -​ -​ -​ -​ -​ -​ 1 1
entertainment
Software and network services -​ -​ 3 2 -​ 6 1 3

Source: Ma Jincheng, Jiao Guannan, and Ma Mengxiao, “Dynamic Changes in the Industries
of Chinese Enterprises’ Overseas M&A Activities in 2005–​2012 and the Driving Factors”,
Macroeconomic Research, No. 1, 2014, pp. 37.
168 Huang He
industries, 12 per cent in machine manufacturing, 9 per cent in construction
and real estate, 6 per cent in the oil and natural gas industries, 6 per cent
in energy and television communication, and 13 per cent in other industries.
Among the top Russian multinationals with the largest overseas assets, Luke
Oil, Gazprom, Severstal and Rusal are all in the oil, gas, metallurgical and
mining industries.14

2. BRICS multinationals and “state-​controlled entities”

BRICS multinationals refers to the international companies from BRICS
economies that engage in FDI activities and those that engage in value-​added
activities in one or more countries and conduct effective control over cross-​
border operations. In 2013–​2014, China and Russia ranked third and fourth,
respectively, among the top 20 host countries of foreign investment. Among
the top eight cross-​border M&A transactions in the oil and gas industries
conducted by multinational companies from developing and transition econ-
omies from 1987 to 2005, multinational companies from the BRICS countries
occupied six seats (see Table 10.4).15
According to UNCTAD’s World Investment Report 2014, state-​owned
transnational corporations (SO-​TNCs) were relatively few, but the number
of foreign affiliates. and the size of foreign assets they managed were enor-
mous. UNCTAD estimated that at least 550 SO-​TNCs were from developing
countries, and SO-​TNCs-​led FDI investments were expected to reach US$160
billion in 2013. Although the number of SO-​TNCs was less than 1 per cent
of that of all multinational companies, the assets they managed exceeded
11 per cent of global FDI flows.16 At present, among the top 100 global
multinationals, 19 are SOEs, more than half (56 per cent) of which are located
in emerging economies (see Table 10.5).17
Although the BRICS multinationals show high heterogeneity in the coun-
tries of origin, selected industries, competitive advantages, target markets,
and internationalization paths, Western scholars have discovered that the
common feature of successful multinationals is that the governments play
an important role in their transnational operations. On the basis of gradual
expansion of foreign investment, the BRICS countries have reformed the trad-
itional state-​owned economy and created a number of large state-​controlled
SOEs in certain strategic industries. These companies are also known as “state
controlled-​entities” and have become a new force that drives foreign direct
investment and shows obvious asset-​seeking motives in their M&A efforts in
developed markets.
For example, Western countries believe that the Russian government con-
tinues to strengthen control of strategic resources, despite having experienced
a transition from the government’s intervention in economic adjustment
to the state monopoly. When Putin took office, he claimed that one of the
important tasks directly related to the economic growth rate was to continue
reforming the natural monopoly. In Russia, there are quite a few people who
 BRICS and direct investment rules 169
Table 10.4 Top 8 cross-​border M&A transactions in the oil and gas industries by
multinational companies from developing and transition economies, 1987–​
2005 (ranked by sales)

Acquired Acquiring company Sales Proportion Increased Year

company (country) (Million of shares reserves
(country) US dollars) through (million
M&A (%) barrels)

Petro CNPC (China 4,141 100.0 503 2005

Kazakhstan National Petroleum
(Canada) Corporation)
Nelson Lukoil (PJSC Lukoil 2,000 100.0 -​ 2005
Resources Oil Company)
(Canada)
Maxus Energy YPF SA (Yacimientos 1,844 100.0 209 1995
(US) Petrolíferos Fiscales)
Egyptian LNG Petronas (Malaysia 1,766 35.0 -​ 2003
(Egypt) National Petroleum
Limited)
Sakhalin-​1 ONGC (Oil and 1,700 20.0 460a 2001
consortium Natural Gas
(Russia) Corporation
Limited)
Perez PEtrobras (Brazilian 1,028 58.6 730 2003
Companc SA Petroleum
(Argentina) Corporation)
Greater Nile ONGC (Oil and 768 25.0 281b 2003
Petroleum Natural Gas
(Sudan) Corporation
Limited)
Repsol-​YPF’ CNOOC (China 592 100.0 360 2002
oil field in National Offshore
Indonesia Oil Corporation)

Source: UNCTAD, Transnational M&A Database (www.unctad.org/​fdistatistics), increased

reserves are derived from various media outlets and related company web pages.
Notes:
a The total reserve was 2,300 million barrels (increased reserve is derived from the 20% of shares).
b The total reserve was 1,124 million barrels (increased reserve is derived from the 25% of shares).

believe the government should also form large multinationals because they
have become the most important economic entities in the global economy.
A rational and comprehensive analysis of Russia’s existing monopolies,
such as Gazprom and RAO UES, shows that such large multinationals
will not only free the Russian economy from the financial crisis, but also
make it a frontrunner in the world economy. Economists, including Leonid
Abalkin, stressed that Russia’s natural monopolies should be regarded with
national pride because they are unparalleled in many aspects of the world
economy. They proposed that economic reforms should not dissect large
Table 10.5 Multinationals headquartered in the BRICS among the 200 largest non-​
financial multinationals (Unit: %)

Name of SOE Country Industry Proportion of

government’s shares

CITIC Group China Diversified 100.00

China Ocean Shipping China Transportation, 100.00
(Group) Company shipping and
warehousing
Petrobras Brazil Natural resources 66.00
China National China Natural resources 100.00
Petroleum
Corporation
Oil and Natural India Natural resources 74.14
Gas Corporation
Limited
Sinochem Group China Natural resources 100.00
China Resources Hong Kong, Natural resources 51.38
Group mainland
China
China National China Natural resources 100.00
Offshore Oil
Corporation
China Railway China Construction 100.00
Construction
Corporation
Limited
China Minmetals China Natural resources 100.00
Corporation
SINOPEC China Natural resources
100.00
Vale Brazil mining Brazilian government
holds 39.7% of total
Tata Steel India Metal and metal Indian government
products holds 15.74% of
total
South African Mobile South Africa Telecommunications South African
Phone Network government holds
17.63% of total
First Pacific Co., Ltd. Hong Kong, Electrical and Chinese government
mainland electronic holds 10.37% of
China equipment total
Sasol (China) South Africa Chemical South African
Chemical Co. Ltd. government holds
30.00% of total
Steinhoff International South Africa Diversified South African
Holdings NV government holds
14.89% of total
Sappi Limited South Africa Wood and paper South African
products government holds
11.9% of total
Lenovo Group China Electrical and Chinese government
electronic holds 36.00% of
equipment total
 BRICS and direct investment rules 171
Table 10.5 Cont.

Name of SOE Country Industry Proportion of

government’s shares
ZTE China Telecommunications Chinese government
holds 32.45% of all
shares
TPV Technology Ltd. China Wholesales Chinese government
holds 35.06% of
total

Sources: Karl P. Sauvant and Jonathan Strauss, “State-​owned multinationals control nearly
US$2 trillion worth of foreign assets”, Colombia Foreign Direct Investment Outlook, No. 64,
April 24, 2012; United Nations Conference on Trade and Development, “Non-​Equity Modes
of International Production and Development”, World Investment Report 2011, China Financial
and Economic Publishing House, 2012, pp. 19.

companies into small ones by simply adopting non-​monopoly measures,

but rather adjust the relationship between the government and such large
companies for promoting the development of large Russian industrial
groups because they help improve the competitiveness of Russian products
in both domestic and foreign markets.18 In August 2004, Putin signed an
order restricting the privatization of 549 large companies of strategical
importance. In September 2004, Putin approved the merger of Gazprom
and Rosneft, which were 100 per cent owned by the state, to form a Russian
“aircraft carrier” in the field of energy. In April 2007, Putin put forward a
clear initiative in his State of the Union address that, by May 2008, Russia
would use one year to establish six large national group companies, each of
which would have charters and tasks developed by dedicated federal legisla-
tion, and be assigned the responsibility of revitalizing the Russian economy,
implementing major national construction projects, and developing high-​
tech industries. Rosneft and Gazprom hold each other’s shares, and Rosneft
has become a subsidiary of Gazprom.19
Brazil, another member of the BRICS economy, had already established
654 SOEs by the late 1970s, of which 198 were owned by the federal gov-
ernment. Federal government-​owned companies exist in almost all economic
sectors in Brazil, and many have become leading companies in the country.20
As the owner of SOEs, the Brazilian government assigns board members to
make the most important business decisions for controlling SOEs. The results
of such decisions are mainly reflected in the planning guidance, investment in
the public and basic sectors, and SOE management. Therefore, the impact of
decision-​making on relevant parties is in direct proportion to the government’s
planning, investment, and management capabilities. The government develops
and implements economic development plans through enterprises to form a
planned market economic system under capitalism.21
The above-​mentioned SOEs’ business model is considered by the Western
countries to represent a new economic model different from the previous
state-​owned economy. This new model is what makes emerging economies
172 Huang He
such as Russia and Brazil succeed. This model is characterized by that the
national government establishes and supports the rapid development of SOEs
as they compete with multinationals from developed countries in various
fields of the world economy. Needless to say, these companies are relatively
less transparent out of security and strategic concerns of sovereign countries.
They rarely disclose details such as their asset structure, investment motiv-
ation, investment behaviours, and returns of investment.

3. New changes in international direct investment rules

Rules are the norms that constrain or motivate the actions of actors. In this
sense, the above-​mentioned international investment rules are the norms that
constrain the activities of different international investment actors in the
international arena. These different actors include countries, international
organizations, businesses, and individuals. International investment rules are
the regimes or rules that countries, individuals, and companies need to comply
with when engaging in international investment activities. The global industrial
competition is more about rules, international rules in particular, than the com-
petition at the technical and service levels. Whoever dominates the development
of rules will likely stand in an advantageous position in the competition.22

3.1 Problems in international investment governance

The lack of international investment governance rules due to the long gridlock
in the Doha Round has produced rampant problems in global investment.
Specifically, such problems can be divided into the following three categories.
First, global investment protectionism is on the rise. After the end of the
Cold War, in the context of increasing globalization, different interest demand
arising from changes in the scale, flow pattern, and investment form of inter-
national direct investment activities led to debates around whether to protect
against and promote foreign investment. Developed and developing countries
conducted repeated game and negotiation over the purpose, structure and spe-
cific content of international investment rules at the bilateral, regional and
multilateral levels. After more than 60 years of development, a system of inter-
national investment rules has gradually taken shape, with bilateral investment
treaty (BIT) and Preferential Trade and Investment Agreement (PTIA) as the
main body, and the coexistence of bilateral, regional and multilateral invest-
ment agreements. As of the end of 2012, there were 3,196 international invest-
ment agreements, of which 2,857 were bilateral investment agreements and 339
were other agreements. These agreements reflect the different interest demand
of the host countries, home countries and multinational corporations in the pro-
cess of international direct investment flows in different historical contexts.23 In
fact, when formulating international direct investment rules, there have always
been debates about whether to “strengthen review” or “promote liberalization”.
Starting from the end of the 1990s, certain countries have implemented strict
 BRICS and direct investment rules 173
review over foreign M&As out of “economic security”, “strategic industries”,
among other reasons. Investment from SOEs and state-​owned institutions has
aroused strong aversion in developed countries, which started to adopt “invest-
ment protectionism”.24 According to the World Investment Report, in 2011, the
proportion of policy changes concerning investment protectionism reached
22.4 per cent, which means that nearly one-​third of policy changes showed a
tendency of investment protectionism (see Table 10.6).
Second, US dominance has severely fragmented global investment rules. In
recent years, the United States has gradually realized that, after the BRICS
countries joined the WTO, their ability to leverage the implementation mech-
anism of international economic rules to curb certain targeted investment
protectionism is also growing. In the meantime, as the WTO continues to
develop, the dispute between the North and the South has intensified again,
and the Doha Round negotiations have not been able to make any progress.
Scholars at the Peterson Institute for International Economics in the United
States, therefore, argue that it is time to end the stagnant state of the Doha
Round because the old model of the post-​war global trade and investment
agreements is on the brink of collapse. It provides a perfect opportunity
for the United States to regain its dominant position in international trade
and investment rule-​making. As more and more developing countries such
as China and India have increased their international competitiveness, the
United States is worried about how to protect the interests of US companies
under the “fair trade” rule. Therefore, it hopes to introduce competitive neu-
trality and labour protection provisions through new international agreements
to weaken the competitiveness of companies from BRICS countries.25

Table 10.6 Changes and adjustments of foreign investment policies and regulations in

different countries from 2000 to 2011

Year Number of Regulatory Conducive Not conducive Neutral/​ Ratio of

countries adjustments to FDI to FDI uncertain unfavourable
concerned policies (%)

2000 45 81 75 5 1 6.2
2001 51 97 85 2 10 2.1
2002 43 94 79 12 3 12.8
2003 59 126 114 12 0 9.5
2004 80 166 144 20 2 12.0
2005 77 145 119 25 1 17.2
2006 74 132 107 25 0 18.9
2007 49 80 59 19 2 23.8
2008 41 69 51 16 2 23.2
2009 45 89 61 24 4 27.0
2010 57 112 75 36 1 32.1
2011 44 67 52 15 0 22.4

Source: UNCTAD, World Investment Report, 2012.

174 Huang He
Third, the serious defects of the global investment governance system
put its legitimacy on shaky ground. In the current global economic gov-
ernance system, there are the World Trade Organization (WTO) in the
trade field and the International Monetary Fund (IMF) in the financial
sector. However, there are no global multilateral investment frameworks
or corresponding supporting institutions in the investment field. The
existing multilateral governance frameworks in the investment field have
their limitations, though providing certain investment protection and facili-
tation functions.26 In the meantime, more and more developing countries
have become middle-​income countries. In this context, developing coun-
tries represented by the BRICS countries strongly demand that the global
economic governance order can truthfully reflect the new political and
economic landscapes and new realities in today’s world, so as to further
enhance their voice in multilateral international economic governance
mechanisms. All of these pose serious challenges to the rules of inter-
national economic organizations that were established under the leadership
of the United States and the European Union and that mainly reflect the
political and economic interests and the global governance theory of the
developed countries.27
Given the rapid development of overseas M&As by multinational
corporations from the BRICS countries, many developed countries plan to
adopt new policies and measures to constrain FDI made by BRICS’ state-​
owned multinationals. Developed countries believe that the ownership and
governance structure of state-​owned multinationals from the BRICS coun-
tries will cause host countries to worry about unfair competition and national
security problems that may arise. For example, France has expanded the
review over foreign capital inflows into six new areas: energy supply (electri-
city, natural gas, oil or other energy), water supply, transportation networks
and services, electronic communication networks and services, construction
and facility operation for defence purposes, and public health protection. The
above provisions serve to safeguard national interests in terms of public order,
public safety and defence. Germany revised its foreign investment law in 2009
by allowing government authorities to review FDI from outside the European
Union. Italy has established procedures for the government to exercise spe-
cial power related to defence and investment in the national security field as
part of the security-​related investment inspection mechanism established in
2012. In 2015, Canada amended the National Security Review of Investments
Regulations to allow the government flexibility to extend the period of review
on investment that could undermine national security.28

3.2 Impact of the existing international investment rules on the

BRICS countries
At present, in line with the “sequential negotiation” strategy adopted by the
United States, the third generation of trade and investment norms centred on
 BRICS and direct investment rules 175
“pre-​entry national treatment plus negative list” is evolving into a strategic
means for the United States to reshape international trade, investment, and the
global economic landscape. The introduction of measures by the developed
countries, in particular, the United States, in the formulation of international
investment rules will inevitably affect the efforts of multinationals from the
BRICS countries for overseas M&As. The influence is reflected mainly in the
following three aspects.
First, in the TPP negotiations dominated by the United States, the issue
of SOEs naturally becomes an important topic of multilateral discussion and
game. The United States shows a clear intention to formulate rules benefi-
cial for its SOEs to participate in international competition by leveraging
TPP, TTIP, TISA and BIT 2012.29 On January 20, 2014, US President Barack
Obama delivered his sixth State of the Union address to Congress. Obama
mentioned China when talking about US trade and investment policies.
He said,

Twenty-​first-​century businesses, including small businesses, need to sell

more American products overseas. China wants to write the rules for
the world’s fastest-​growing region. That would put our workers and our
businesses at a disadvantage. Why would we let that happen? We should
write those rules.30

If the rules in TPP, TISA and BIT 2012 were upgraded as global standards,
BRICS’ companies (including SOEs) would face a new international business
environment, which would pose challenges for the existing trade, investment,
and development models of the countries concerned. For example, as the
highest standard in international investment, BIT 2012 not only covers all
traditional issues in international investment agreements, such as minimum
standards of investment treatment, MFN treatment, expropriation, transfer,
subrogation, loss compensation, and investment-​related dispute settlement,
but also includes new provisions such as pre-​entry national treatment, state-​
owned enterprises, labour, environment, and performance requirements. The
contents involved are almost the same as TTP and TTIP. The standards and
rules are higher than other free trade agreements currently being negotiated
or signed, and also higher than the existing ones of the WTO. At present,
in the TTP, TTIP and TISA negotiations, major emerging countries such as
China, Russia and India are all “excluded”, clearly showcasing the United
States’ intention to consolidate its leadership position in the global trade and
investment system. Regional trade agreements, including TPP and TTIP, will
focus on expanding intra-​regional trade and investment. For that reason, the
emerging economies and developing countries that are excluded from such
agreements will naturally be restrained.31
Second, the European Union and the United States have begun to
adopt new principles in their respective investment policies and called on
other countries to consider adopting these principles to consolidate the
176 Huang He
international investment market. In April 2012, the United States and the
European Union issued the Statement of the European Union and the United
States on Shared Principles for International Investment, which listed seven
principles: (1) open and non-​discriminatory investment climates; (2) a level
playing field; (3) strong protection for investors and investments; (4) fair and
binding dispute settlement; (5) robust transparency and public participation
rules; (6) Responsible Business Conduct; and (7) narrowly-​tailored reviews of
national security considerations.32 These seven principles reflect the position
of the United States and European Union in the development of international
investment rules. US Deputy Secretary of State Robert D. Hormats pointed
out that, thanks to the support of their governments, SOEs can gain a com-
petitive advantage in the US market or third-​country markets, even without
the need to improve their production efficiency or research innovation cap-
abilities. Therefore, the United States must take countermeasures to eliminate
such a competitive advantage. In Hormats’ view, the markets dominated by
SOEs in different economies have impacted those dominated by private com-
panies –​world trade needs a re-​balance. Under the multilateral framework,
the United States attempts to include more provisions restricting the competi-
tive advantage of SOEs in the competition neutrality framework by popular-
izing the concept of competition neutrality through the intergovernmental
platform of the Organization for Economic Co-​operation and Development
(OECD). The Statement of the European Union and the United States on
Shared Principles for International Investment in 2012 called for the United
States and Europe to eliminate economic protectionism and provide an open
and non-​ discriminatory investment environment, while claiming that the
two parties will work together to cope with the real challenges posed by the
business enterprises that benefit from state power.33
Third, the United States and the European Union began to consider
international investment issues within the framework of international pol-
itics and economics because they believe that economic reciprocity will not
stop the rivalry. Globalization entails enforcers (or overlords), large-​country
partnerships, or global governance arrangements, which are capable of
ensuring fair application of rules. Without a political framework that positions
national interests, the economic framework is destined to be fragmented, and
radical nationalism will crowd out global commitments. For example, the
launch of the BIT program by the United States was based on a series of eco-
nomic, legal, and political considerations. In economic terms, the intended to
protect US investment from threats such as discrimination, foreign exchange
control, and tax collection. In legal terms, the United States intended to make
up for the shortcomings of customary international law in protecting foreign
investment through the BIT program. In political terms, the US government
needed to show the Congress and American companies its determination and
attitude to protect the US’ overseas investment.34
As can be seen from the above, the BRICS countries headed by China
do not enjoy the advantage of structural power in the future development
 BRICS and direct investment rules 177
of a possible general agreement on international direct investment, as in the
GATT. Today, when military conflicts give way to economic wrestling, the
BRICS multinationals have to accept the existing rules when they enter the
international market because the BRICS countries do not have sufficient
structural power to compete with developed countries. The mechanisms
that drive the BRICS multinationals to “voluntarily” accept such rules come
mainly from the following aspects: First, meeting specific rules has become a
prerequisite for entering a certain market. Second, due to the rapid develop-
ment of international direct investment, international production networks
and outsourcing, more and more industries in the BRICS economies have
been included in the value chain already established by Western multinationals
through an international division of labour. Therefore, accepting the product
standards, technical regulations, and certification system of these Western
multinationals becomes a precondition for normal production, sales, and
management. Third, as the development of the intermediary system in the
BRICS markets lags behind, multinationals based in these countries have to
accept the certification of multinational intermediaries from developed coun-
tries, thus becoming the passive receiver of the standards set by developed
countries. For example, in international capital markets, the financing costs
of countries and companies are directly linked with their credit ratings. The
internationally accepted credit rating standards mainly include Moody’s,
Standard & Poor’s, and Fitch IBCA.35

4. Conclusion
Striving to establish a reasonable international economic order constitutes the
common interest of the BRICS countries. Neither social transformation nor
economic development can happen without a favourable international envir-
onment. After the Cold War, driven by the wave of globalization, the social
transformation and economic development of the BRICS countries have
progressed rapidly. The economic growth rate of the BRICS countries has
always been higher than the global average. However, the 2008 global finan-
cial crisis fundamentally changed the external environment of the BRICS
countries. The depression of the world economy has caused shrunken foreign
trade and slowed economic growth to the BRICS countries. The instability
of the international monetary system has made the BRICS countries deeply
feel the consequences of the crisis passed down by developed countries. The
stagnation of the Doha Round negotiations has put the BRICS countries
under tremendous pressure from trade and investment protectionism. The
global financial crisis once again demonstrates that the structural frame-
work of international governance determines the distribution of economic
interests among nations. These grim facts have led the BRICS countries to
issue a common voice and take joint actions to establish a reasonable inter-
national economic order, thereby securing a good external environment and
international space for their own transformation and development. That
178 Huang He
is the rationale behind the active participation of the BRICS countries in
global governance.36
In the meantime, the BRICS countries will face substantial challenges
in the development of new international economic and trade rules.
According to the IMF, since the implementation of the Fed’s Exit Strategy
for Monetary Policy, the economic growth of Brazil, China, and India
has slowed down by more than 0.5 percentage points. Many developing
countries such as India, South Africa, and Mexico, are facing both fiscal
and international payment deficits. The employment situation in some
countries is also quite worrisome. In 2013, the unemployment rate in
South Africa was around 25 per cent, and that among people under 35
even reached 70 per cent. In the context of a heightened risk of economic
slowdown in emerging markets and developing economies, the Obama
administration might leverage TPP, TTIP, BIT 2012 and TISA to reshape
international trade and international investment in order to maintain a
US dollar-​based international financial system. In 2016, TPP and TISA
may produce phased results, which would make up for some of the losses
arising from the Obama administration’s failed medical reform, and add
some weight to the Democratic mid-​term elections, serving as a valuable
political legacy of Obama’s eight-​year term.37
Therefore, in order to avoid the decentralization and fragmentation of
international investment rules, the BRICS countries must actively participate
in the creation of a multilateral investment framework and truly become the
makers of international multilateral investment rules, as part of an effort to
drive their economic development. For example, the “competition neutrality”
rule has been incorporated in the international law-​making process. This rule
promoted by the United States and the European Union deliberately ignores
the level and characteristics of economic development in developing coun-
tries and transition economies. However, the level of industrial development
and the legal and political systems vary by country. Obviously, it is unrea-
sonable to require all countries to achieve the same standard of “competitive
neutrality”. The BRICS countries should pay close attention to the devel-
opment trend of the “competitive neutrality” rule, in order to get ready for
the negotiations on international trade and investment agreements related to
the rule.

Notes
1 Chen Zheng, “BRICS Countries and the Responsibility to Protect”, Foreign Affairs
Review, No. 1, 2015, pp. 1–​2.
2 Gao Zugui, Wei Zonglei, and Liu Yu, “The Rise of Emerging Economies and Its
Impacts”, International Data Information, No. 8, 2009, p. 1.
3 cept for Development and BRICS Cooperation, Fudan University, 2015, p. 51.
4 Fan Yongming, “Trade Facilitation: Consensus of the BRICS Cooperation”, World
Market, No. 6, 2014, pp. 8–​9.
5 UNCTAD, Global Investment Trends Monitor, Special Edition, March 25, 2013.
 BRICS and direct investment rules 179
6 Zhang Youwen et al., A More Open International Environment: Changes in the
International Landscape and New Trends of Globalization, Shanghai Academy of
Social Sciences Press, 2013, pp. 285–​287.
7 Cui Xiaoming, “Russia Invests in the Construction of a Butyl Rubber Plant in
Western India”, China Rubber/​Plastics Technology & Equipment, No. 12, 2013, p. 54.
8 UNCTAD, World Investment Report, 2002–​2010, cited from Huang Lujin and
Liang Cheng, “Comparison of Characteristics of Foreign Direct Investment by
the BRICS Countries”, Commercial Times, No. 23, 2012, p. 57.
9 Huang Lujin and Liang Cheng, “Comparison of Characteristics of Foreign Direct
Investment by the BRICS Countries”, Commercial Times, No. 23, 2012, pp. 57–​58.
10 Yang Ting, Tian Yunhua, and Zou He, “Characteristics and Trends of China’s
Foreign Direct Investment in 2013–​ 2014”, Journal of International Economic
Cooperation, 2014, No. 1, p. 25.
11 Wang Dianhua, “Research on Foreign Investment in Transition Countries:
Characteristics, Advantages, and Prospects of Russia’s Foreign Direct Investment”,
Russian, Central, and Eastern European Studies, No. 4, 2010, p. 51.
12 Economic and Commercial Counsellor’s Office of the Embassy of the People’s
Republic of China in Russia, cited from Zhang Baoyan, “Russia’s Foreign Direct
Investment: Theory, Status Quo, and Impact”, Russian, Central Asian & East
European Studies, No. 5, 2009, p. 46.
13 Yang Ting, Tian Yunhua, and Zou He: “Characteristics and Trends of China’s
Foreign Direct Investment in 2013–​ 2014”, Journal of International Economic
Cooperation, No. 1, 2014, p. 25.
14 Zhang Baoyan, “Russia’s Foreign Direct Investment: Theory, Status Quo, and
Impact”, Russian, Central Asian & East European Studies, No. 5, 2009, p. 46.
15 See UNCTAD, World Investment Report 2011, Economy and Management
Publishing House, 2011.
16 UNCTAD, World Investment Report, 2014. See the website of the Institute of
International Economics of Nankai University: www.nkiie.com/​news1.asp?
ArticleID =1312, access time: December 31, 2014.
17 United Nations Conference on Trade and Development, “Non-​Equity Modes
of International Production and Development”, World Investment Report 2011,
China Financial and Economic Publishing House, 2012, p. 19.
18 Tian Chunsheng, “The Formation and Characteristics of Russia’s state
Capitalism”, Economics Perspectives, No. 7, 2010, pp. 125–​126.
19 Wang Wei, “Russia’s National Group Companies: Establishment and Operation”,
reprinted in Institute of Russian Eastern and Central Asian Studies, Chinese
Academy of Social Sciences, 2009 Report on the Development of Russian, Eastern
European and Central Asian Countries, Social Sciences Academic Press, 2009.
Cited from Tian Chunsheng’s “The Formation and Characteristics of Russia’s
‘state Capitalism”, Economic Perspectives, No. 7, 2010, p. 126.
20 Victor Bulmer-​Thomas, The Economic History of Latin America since
Independence, New York: Cambridge University Press, p. 344.
21 Ye Xiangsong, “Management System of Brazilian State-​owned Enterprises and
Its Implications”, Finance and Economics, No. 6, 1996, p. 65.
22 Li Li, “The Impact of Low-​carbon Economy on International Trade Rules and
China’s Countermeasures”, Finance and Trade Economics, No. 9, 2014, p. 114.
23 Li Yumei and Sang Baichuan, “International Investment Rules: Comparison,
Trends, and China’s Countermeasures”, Comparative Economic & Social Systems,
No. 1, 2014, p. 176.
180 Huang He
24 Zhao Xiaoping, “The Construction of International Direct Investment Rules and
Coordination Mechanism: Status Quo and Future”, Marketing Herald, No. 5,
2008, p. 61.
25 Zhu Wenhui and Li Hua, “Thoughts on the Strategy for Negotiating China-​US
Bilateral Investment Agreements”, China Opening Journal, No. 5, 2013, p. 20.
26 Wang Biqun, “China’s Opportunities and Challenges in Participating in Global
Investment Governance”, International Economic Review, No. 1, 2014, p. 103.
27 Fan Ying and Chen Yang, “International Trade Governance in the Post-​Financial
Crisis Era”, reprinted in Zhu Liqun et al., Global Governance: Challenges and
Trends, Social Science Academic Press, 2014, pp. 110–​111.
28 UNCTAD, World Investment Report 2015: Reforming International Investment
Governance, Nankai University Press, 2015, p. 123.
29 Mao Zhiyuan, “Deduction of Investment National Treatment in TPP’s State-​
owned Enterprises Rules”, International Economics and Trade Research, No. 1,
2014, p. 93.
30 Xinhuanet, “US President Barack Obama Mentioned China Three Times in the
Seventh State of the Union Address to the Congress”, January 22, 2015.
31 Zhao Chunming and Zhao Yuanfang, “Challenges and Responses to the New
International Trade Rules”, Red Flag Digest, No. 21, 2014, p. 19.
32 Wang Ting, “Competition Neutrality: A New Focus on International Trade
and Investment Rules”, Journal of International Economic Cooperation, No. 9,
2012, p. 75.
33 Mao Zhiyuan, “Deduction of Investment National Treatment in TPP’s State-​
owned Enterprises Rules”, International Economics and Trade Research, No. 1,
2014, p. 93.
34 Shan Wenhua and Zhang Sheng, “A Study on the New Template of the US
Investment Treaty and Its Acceptability”, Modern Law Science, No. 5, 2013,
p. 150.
35 See Li Xiangyang, “Mechanism for the Implementation of International Economic
Rules”, World Economy, No. 12, 2007, p. 5.
36 Fan Yongming, “BRICS Cooperation and Diversified Development of Asia”,
Journal of Fudan University, No. 6, 2013, pp. 151–​152.
37 Wang Haifeng, “Trends for the Change to the International Economic and
Governance Landscape”, Macroeconomic Management, No. 2, 2014, pp. 84–​87.
11 
The BRICS countries and international
energy cooperation
Liu Wenge and Wang Lei

Over the recent years, the BRICS countries have seen rapid growth in their
comprehensive economic strength and therefore have become an important
engine for stimulating the world economic recovery and growth. In the mean-
time, their fast-​growing energy demand will inevitably have an impact on
the global energy landscape. Today, due to the constant fluctuation in global
energy prices and environmental pressure imposed by many developed coun-
tries, it seems quite necessary to delve into the relevance between the energy
industry and economic development in the BRICS countries, so as to assess
their energy development potential and identify opportunities for energy
cooperation, while finding the optimal development path for China’s future
energy strategy.

1. Energy production and consumption of the BRICS countries

The five BRICS members are located in Eurasia, South America and the
African continent. All of them are the most important emerging economies
in these regions. At the same time, as major non-​Western countries among the
G20, the five countries are exerting increasing influence on the world economic
order. However, the BRICS is now neither a regional cooperative organization,
nor has it developed mature regional cooperation mechanisms. It is in essence
a meeting mechanism between the five major emerging economies. Since the
BRICS serves as a relatively independent international dialogue platform, its
five members urgently need new directions in their future cooperation, with
energy cooperation at the centre of their long-​term strategies. Cooperation in
the energy field can help establish a new global energy cooperation mechanism
that, in turn, will promote the restructuring of the global governance system
and the sustainable development of the global economy and society. From a
global perspective, the BRICS countries play a pivotal role in the supply and
demand of energy products. According to the statistics of the BRICS Joint
Statistical Manual (2015), the BRICS countries’ primary energy production
in 2014 accounted for 39.7 per cent of the world’s total, while its energy con-
sumption accounted for 36.1 per cent of the world’s total. In addition, each of
the five countries has a significant impact on the world energy landscape.
182 Liu Wenge and Wang Lei

1.1 Energy production and consumption of China

China is a major energy producer with large energy reserves, but is also a
major energy consumer. According to the latest data from the BRICS
Joint Statistical Manual (2015), China’s total primary energy consumption
accounted for 23.2 per cent of the world’s total in 2014, surpassing the US’s
19.1 per cent, and continues to be the world’s largest energy consumer, while
its gap with the United States is widening. China is the world’s largest coal
supplier, and its coal reserves account for about 14 per cent of the world’s
total, but its coal consumption accounts for 47 per cent of the world’s total.
If this consumption is not effectively controlled, China’s coal resources will be
exhausted in 35 years. In terms of oil, China’s proven remaining reserves are
basically at around 2 billion tons, and the ratio of reserves to production has
fallen to less than ten years now. Although the world’s fourth-​largest oil pro-
ducer, China consumes more than it produces and therefore heavily relies on
imports. In contrast, its natural gas exploitation and exploration fall relatively
behind, and there is still much room for development in the future. China’s
natural gas supply and demand prospects are a major factor in changing the
natural gas trade landscape and geopolitics in Eurasia and beyond. Whether
China can tackle its own energy problems and how it does that concern not
only China, but also the region and the whole world.1
The fast-​growing energy consumption in China and the resulting relation-
ship between energy efficiency and economic growth are attracting widespread
attention. China’s economic growth data show that, since 1990 –​a golden
development period for China’s industrialization –​its energy consumption
and economic growth have been closely related, with a correlation coeffi-
cient of 0.9873, which indicates that the expansion of energy consumption
has powerfully supported its rapid economic growth. After 2000, the growth
rate of per capita energy consumption has obviously picked up its pace. The
oil equivalent per capita rose from 0.82 tons in 2000 to 1.89 tons in 2014, an
increase of 121 per cent, and the correlation between China’s per capita GDP
and per capita energy consumption reached 0.99, indicating that both eco-
nomic growth and the continuous improvement of people’s living standards
were closely related to energy consumption.
China’s energy consumption might be better explained by its energy con-
sumption elasticity and intensity coefficients. The energy consumption elas-
ticity coefficient is usually expressed as the ratio of the growth rate of energy
consumption to the annual average growth rate of the national economy.
According to the China Statistical Yearbook and the BRICS Joint Statistical
Manual, China’s average energy consumption elasticity in the past decade has
reached 0.91, indicating that its energy consumption scale growth has basic-
ally remained consistent with its economic growth. Now take another look
at the energy consumption intensity coefficient, also known as the energy
consumed per unit of output value, which refers to the energy consump-
tion per unit of GDP of a country in a given period of time. It seems, after
 BRICS and international energy cooperation 183
calculation, that since the 1990s, China’s energy consumption intensity has
been declining, quite similar to the continuous decline in energy consump-
tion intensity that many developed countries experienced in mid-​twentieth
century. But the rationales behind the phenomena are completely different.2
For the developed countries, it is mainly because they were transiting from
the industrialization period to the post-​industrialization period. However,
for China, which has not yet reached its industrialization peak, the primary
reason is its existing transition from a planned economy to a market economy.
This is, in itself, a reflection of efficiency factors released by China’s economic
reform. Therefore, from this perspective, it can be predicted that China, unlike
those developed countries, will see a new round of energy consumption inten-
sity growth in the near future.

1.2 Energy production and consumption of the other BRICS countries

1.2.1 Russia’s economic development and energy balance

Russia is a major economy in the world. According to IMF data, Russia’s
GDP in 2014 was US$1.86 trillion, ranking ninth in the world, with per
capita GDP around US$10,000. Russia features an extremely unreasonable
economic structure. Most of its revenue comes from resource industries,
including oil, natural gas, ore and timber, and is particularly vulnerable to
price fluctuations in such commodities. Due to the “Great Recession” in 2009,
the Russian economy has experienced its first negative growth since 2000,
registering a decline more than that of the G20 and the BRICS countries.
From 2014 to this day, Russian economy has been affected by factors such as
Western sanctions and falling international energy price, evidenced by a drop
of more than 3.7 per cent in 2015 compared with 2014. The decline in the
Russian economy is first and foremost caused by its economic structure imbal-
ance and heavy dependence on energy exports, that is, raw material-​based
economic pattern. In 2014, Russian oil and gas export revenue accounted for
66.3 per cent of its total exports and 18.7 per cent of its GDP. In 2015, the
average price of international oil fell to around US$50 per barrel, a nearly 50
per cent drop compared with that in 2014, and consequently, Russia suffered
more than US$90 billion revenue loss. Russia has always claimed to reform its
economic structure, but it is always more talking and less doing and its unrea-
sonable structure issue is worsening. Given plummeted energy prices over
the past two years, the Russian economy is very passive, lacking new driving
forces and development highlights. Russia’s energy products are mostly about
oil and natural gas. The BRICS Joint Statistical Manual (2015) reveals that,
in 2014, Russia’s total output of energy products was 1.39 billion tons of oil
equivalent, of which natural gas accounted for 44.3 per cent and oil for 42.5
per cent, and coal for 12.1 per cent. Its total primary energy consumption was
740 million tons of oil equivalent, of which natural gas accounts for 52.3 per
cent, oil for 21.1 per cent, and coal for 13.0 per cent. In the twenty-​first century,
184 Liu Wenge and Wang Lei
as global energy supply-​demand imbalance is deteriorating, the Russian gov-
ernment gradually started to value the long-​term sustainable exploitation of
its energy resources, and in 2007 formulated a long-​term energy development
strategy. According to this strategy, Russia’s total energy production and pri-
mary energy consumption are expected, respectively, to reach 1.75 billion tons
and 1.05 billion tons of oil equivalent in 2030. In recent years, thanks to the
development of international energy cooperation, Russia’s energy product
exports have grown significantly, reaching 630 million tons of oil equiva-
lent in 2010. Nevertheless, the corresponding imports were less than 1/​20th
of such exports. According to the Russian government’s energy-​development
strategy, its future energy exports will gradually shrink, and the proportion of
its energy product exports to its total energy production will remain at around
40 per cent in the next 20 years.

1.2.2 India’s energy consumption and economic development

India is the second most-​populous country in the world after China. In 2014,
its economic aggregate ranked 8th in the world, and its economic develop-
ment level calculated by per capita GDP ranked 137th. Similarly, in 2014,
India’s GDP was US$2.07 trillion, and GDP per capita was US$1,631.
Among the GDP components, the service industry accounted for 53.1 per
cent, industry for 28.8 per cent, and agriculture for 18.1 per cent. From
1970 to 2014, India’s GDP rose from US$36.6 billion to US$2.07 trillion,
a fortyfold increase in forty years; its per capita GDP grew from US$110
to US$1,631, a tenfold increase and more. According to the BRICS Joint
Statistical Manual data, Indian primary energy consumption reached
602 million tons of oil equivalent in 2014, an eightfold increase from the
65 million tons of oil equivalent in 1970, and its per capita primary energy
consumption also grew from 120 kg to 480 kg, a threefold increase. Based on
relevant data and calculations, it could be found that the correlation between
energy consumption and economic growth in India is as high as 0.986,
and the correlation between per capita energy consumption and per capita
output is also as high as 0.971, which jointly shows that India’s economic-​
development level and energy-​consumption scale growth are closely related.
Now looking from energy-​consumption elasticity and intensity coefficients
previously introduced, India’s energy consumption elasticity coefficient
in recent years is always under 1, which is consistent with India’s national
conditions, where the modern information service industry is the leading
industry. The information service industry has greatly reduced the consump-
tion demand for energy resources, while bringing India an economic boom.
Now, take another look at its energy consumption intensity. The calcula-
tion results show that India’s energy consumption intensity in recent years is
similar to that of China, both declining. Moreover, India’s intensity is always
the lower one, indicating that India, like China, has not reached its industri-
alization peak and is still in the initial stage.
 BRICS and international energy cooperation 185
1.2.3 Energy development and investment opportunities in South Africa
and Brazil
Though a middle-​ income developing country, South Africa is the most
developed country in Africa. In 2014, its GDP was US$349.82 billion,
ranking 28th in the world, accounting for about 20 per cent of Africa’s GDP;
its per capita GDP was US$6,478, ranking 76th in the world. Its four eco-
nomic pillars are mining, manufacturing, agriculture and service industries,
and technologies such as deep-​well mining are world-​leading. In recent years,
in order to improve the imbalance in regional economic development, the
South African government has promoted employment, and poverty reduction
for a smoothly running economy by a range of measures, including increasing
adjustments on macroeconomic policies, enhancing infrastructure construc-
tion, granting priority to industry development, and boosting education and
human-​resource training. In natural gas exploitation, South Africa is now
still facing challenges that require urgent solutions, mostly in two respects,
namely technology and policy. Natural gas is only a small part of South
Africa’s energy structure, and weak infrastructure is also a major obstacle
to its development leap. Lack of Liquefied Natural Gas (LNG) processing
plants has seriously hindered the exploitation and transportation of natural
gas in South Africa. But now, the South African government has recognized
the importance of energy development, and its policies have begun to tilt
towards the exploitation of energy resources such as natural gas. Therefore,
as long as the South African government can continue its investment increase
in research and development (R&D) of exploitation technologies of natural
gas and other energy resources, formulate clear energy supporting policies,
and improve relevant laws and regulations, its domestic-​energy exploitation
market will surely grow rapidly, and investment opportunities coming along
would be extraordinary .
As Brazil’s oil industry investment has significantly increased, and its oil
production continues to grow, Venezuela and Mexico are rapidly losing their
decades-​long dominance in Latin American oil production. Brazil plans to
double its oil production and more by 2020 and has the potential to become
a major oil exporter. With the promulgation and implementation of Brazil’s
2030 National Energy Plan, Brazil will pour more funds into its energy field
to develop power generation by nuclear, hydro, thermal, wind and bioenergy,
thereby meeting the economic growth needs of the next few decades. The
Brazilian government’s vast investment plan in its energy sector will greatly
stimulate domestic demand for energy-​related products, enabling the energy
industry to maintain its rapid development momentum, which is a good
investment and development opportunity for energy companies in Brazil and
abroad.
In general, the BRICS countries differ from one another in energy devel-
opment, but all have already established considerable influence in domestic,
regional and even global energy. Their differences determine that they will
186 Liu Wenge and Wang Lei
have great complementarity and broad space for cooperation in the energy
field, and that will also become a future focus in global energy economy and
politics. It can be said that the BRICS countries are the key factors for chan-
ging and innovating the current global energy landscape and determining
the future world energy development trend. If the BRICS countries make
outstanding progress in the field of energy cooperation and form a mature
cooperation mechanism, they will play a decisive role in the global energy
structure reform, climate improvement and sustainable development of the
world economy.

2. The game of the BRICS countries on energy cooperation

Although the BRICS countries enjoy great complementarity and devel-
opment space for future energy cooperation, if not handled properly their
cooperation will definitely be a road full of thorns due to obstacles such as
geographical restrictions, historical contradictions, and economic gaps. For
this reason, the energy cooperation between BRICS countries must first build
on the close relationship between a country’s economic development and its
energy industry development. It is the latter’s important driving force to the
former that determines the necessity of such country’s energy cooperation
with other countries. The energy cooperation between BRICS countries will
be a long-​term game between the five countries. This section will also justify
their positive participation in the field of energy cooperation and propose
game paths on the basis of analysing the close relationship between economic
development and energy industry in the five countries.

2.1 Status quo of energy cooperation among the BRICS countries

As the BRICS countries have been building increasingly closer ties with one
another in recent years, energy cooperation is becoming a main cooperation
content. Seeing from the BRICS cooperation reality in recent years, China is
pivotal to energy cooperation and development. Among this, the Sino-​Russia
cooperation and ties in the energy industry seem to be the most extensive and
in-​depth. Oil and gas trade are now the most important energy cooperation
field for China and Russia. In 2014, China’s oil imports from Russia accounted
for 11.3 per cent of China’s total oil imports, and it is still on the rise. In the
meantime, China has been seeking cooperation with Russia in the upstream
of oil and gas field, and striving to play an active part in the cooperation and
development of Russian oil and gas fields. In terms of technical services, as
Chinese technology and equipment are gradually recognized in the Russian
market, China has, in recent years, actively participated in Russian oil and gas
services, including geophysical exploration, construction of Far East crude
oil pipelines, and supply of, and technical services on, drilling rigs, workover
rigs, drill bits and other equipment. In order to secure rapid economic growth
and realize their own rise, both China and India attach great importance to
 BRICS and international energy cooperation 187
energy security. Since they are the two largest developing countries in the
world, the Sino-​India energy cooperation is in the common interest of both
countries. With respect to energy security, China and India started exchanges
and cooperation in the energy field as early as in 2004. In July 2014, the
Sixth BRICS summit was held in Brazil, with energy security among the hot
topics. When meeting with Indian Prime Minister Narendra Modi, Chinese
President Xi Jinping pointed out that China and India have broad common
interests in international and regional affairs, and that China is willing to join
hands with India to address energy security issues to safeguard their mutual
interests. Their common energy demand has created a huge space for energy
security cooperation. In addition to energy cooperation with Russia and
India, China’s energy cooperation with Brazil is gradually maturing. As of
2012, Chinese companies have invested nearly US$30 billion in Brazil, with
90 per cent of that in energy and minerals. Due to strong economic comple-
mentarity in the field of energy cooperation, China and Pakistan share strong
willingness and sufficient impetus in future energy cooperation.
Furthermore, India–​Russia energy cooperation in recent years has also
been fruitful, mostly in nuclear energy and oilfield development. Since Russia
has the richest fossil energy in the world, any country would like extensive
energy cooperation with it. Energy cooperation with Russian, particularly on
its Far East oil development, has always been a focus of intense competitions
between China and Japan. But in the early twenty-​first century, another
strong rival, India, has come in and seemed to catch up from behind. For the
past few years, India has been once again proactive in the international com-
munity. It has not only been seeking to participate in Russian oilfield devel-
opment, but also concluded a comprehensive economic partnership with
Japan to further bolster the energy cooperation. India seems to be releasing
a new round of passion for overseas energy cooperation. In addition to oil-
field development, India and Russia have also made significant progress in
nuclear energy cooperation. In December 2015, Indian Prime Minister Modi
visited Russia, and the two sides signed cooperation agreements in the field
of nuclear energy, oil and gas, transportation, industry, military technology
and other large projects. There is no doubt that nuclear power will be the
focus of their future cooperation. According to these agreements, Russia will
build at least 18 nuclear reactors in three locations in India in the future. In
order to cooperate with India on nuclear power, Russia will inevitably com-
pete with companies based in Japan, France, the United States and others,
and its advantages lie in its strong complementarity with India in the fields of
oil and gas and nuclear energy. Therefore, many scholars predict that India
will become Russia’s main overseas nuclear power market in the next 15 years.

2.2 Game analysis of the BRICS countries on energy cooperation

Energy cooperation among the BRICS countries can be analysed based
on a mixed-​strategy game model. A mixed strategy is a strategy selection
188 Liu Wenge and Wang Lei
method in game theory, in which the player chooses the pure strategy, and
distributes a probability to each of the possible options, to generate a new
procedure method of randomly selecting strategy.3 As the previous analysis
mentioned, China is the pivotal of existing energy cooperation among the
BRICS countries. Let us take China as one party, and the other BRICS
countries as another. The later comprehensive analysis will gradually expand
to energy cooperation among other BRICS countries. The model assumes
that the two parties have successively selected two strategies, namely posi-
tive cooperation and negative cooperation. Therefore, a game payoff matrix
is constructed based on the status quo of their energy cooperation (see
Table 11.1).
In Table 11.1, under different strategy combinations, A1, A2, A3, and A4
represent China’s payoff,4 while B1, B2, B3, and B4 represent other BRICS
countries’ payoffs. And A1>A2>A3>A4, B1>B2>B3>B4 are satisfied. Pa and Pb
(0≤Pa≤1, 0≤Pb≤1) respectively indicate the probability that China and other
BRICS countries adopt a cooperative strategy in the game. Therefore, as
shown in Table 11.1, the probability of the two parties adopting a negative
cooperation strategy is 1-​Pa and 1-​Pb. When both parties adopt a negative
cooperation strategy, both of them get the lowest payoffs, namely A4 and
B4, due to a slow cooperation progress; when one country adopts a negative
cooperation strategy and the other adopts a positive one at the same time, the
former will, at a low cost, benefit from its partner, and ultimately receive the
highest payoff utility, while the latter still, in the case of its positive cooper-
ation strategy, obtains a payoff slightly higher than that in cooperation ter-
mination. As a result, the payoff outcome is (A1, B3) or (A3, B1); finally, when
both parties adopt a positive cooperation strategy, the energy industry devel-
opment and exchange will be smooth and both parties will obtain payoffs
within a reasonable range, namely A2 and B2.
According to the Von Neumann-​ Morganstein utility function (VNM
utility function), the expected utility that China can obtain in the payoff
matrix shown in Table 11.1 is: E(A) = Pa* [Pb*A2+ (1-​Pb) *A3] + (1-​Pa) *
[Pb*A1+ (1-​Pb) *A4] (1)
And because the Nash equilibrium in the mixed strategy builds on the con-
dition that “every player must have no preference for each pure strategy”, so
for China: Pb*A2+ (1-​Pb) *A3 = Pb*A1+ (1-​Pb)*A4 (2)

Table 11.1 Game payoff matrix for energy cooperation among the BRICS countries

Other Countries Positive cooperation Negative cooperation

China (pb) (1-​pb)

Positive cooperation (pa) (A2,B2) (A3,B1)

Negative cooperation (1-​pa) (A1,B3) (A4,B4)

Source: Courtesy of the author.

 BRICS and international energy cooperation 189
From equation (2), Pb = (A4-​A3)/​(A2-​A3-​A1+A4) is obtained, and the value
is set equal to e. Similarly, for other BRICS countries, Pa = (B4-​B3)/​(B2-​B3-​
B1+B4) is obtained, and the value is set equal to e’. Then the probability
Pb = e and Pa = e’ is non-​pure strategy Nash equilibrium in the mixed strategy.
However, it would be too ideal to attribute strategy choice in an actual game
to an exact probability. In fact, the strategy choice is usually greater or lower
than the equilibrium point.5
Obviously, when Pb>e, only Pa = 0 can maximize E(A) value, namely
Pb*A1+(1-​ Pb)*A4. In such case, China adopts a negative cooperation attitude;
when Pb<e, only Pa = 1 can maximize E(A) value, namely Pb*A2+(1-​ Pb)*A3.
In such case, China adopts a positive cooperation attitude.
To sum up, when China believes that other BRICS governments are more
likely to choose positive cooperation strategies, that is when Pb>e, it will
choose a negative cooperation strategy, namely Pa = 0; yet when China believes
that they are more likely to choose negative cooperation strategies, that
is: When Pb<e, it will choose a positive cooperation strategy instead, namely
Pa = 0. Therefore, “positive cooperation, negative cooperation”, “negative
cooperation, positive cooperation” is the result of Nash equilibrium in the
traditional mixed-​strategy game model. However, it can be seen from such
model that, this result is in itself based on the economic cooperation between
China and another country. The fact is the comprehensive game is among the
BRICS countries, that is, there is also cooperation room among the so-​called
other BRICS countries in the model. As a result, based on the conclusion that
one party chooses the positive cooperation while the other party chooses the
negative one, the result of continuous derivation will be no country tends to
be cooperative. Apparently, the case that no country engages in cooperation
or all choose negative cooperation strategies is not in line with the economic
interests of each country and the BRICS as a whole. The main reason is that
the model lacks further condition at the level of national interest differences.
Therefore, the original model needs to be further revised.
Considering the interests difference of energy cooperation between coun-
tries, a country must choose one of the two strategies, namely “positive
cooperation” and “negative cooperation”, based on its own gains and losses
of interests. Therefore, a “decision cost” concept can be set, which is the max-
imum cost limit resulted from a country’s affordable cooperation losses. If
a country loses more than the “decision cost” when it loses its cooperation
opportunities, it will not choose a negative cooperation strategy. Otherwise,
it will fight for itself.6 It is clear that, for each country, cooperation loss cost
is directly related to the importance of energy cooperation to its economic
development. And the close relationship between the energy industry and eco-
nomic development of the BRICS countries has been proved earlier. Assume
the “decision cost” of China and other countries is Ac and Bc respectively
(see Figure 11.1).
After years of development, the BRIC(S) countries have created a
cooperation mechanism, especially since South Africa joined in 2010. It is a
190 Liu Wenge and Wang Lei

Failure cost of cooperation for

II I
(A1, B3) (A2, B2)

other countries
BC
III IV
(A4, B4) (A3, B1)

AC
Failure cost of cooperation for China

Figure 11.1 The revised game model of the BRICS countries on energy cooperation.
Source: Courtesy of the author.

multilayered cooperation framework, which highlights government leaders’

meetings. In addition, the mechanism includes meetings for high-​ranking
representatives on security issues, foreign ministers, and permanent envoys
at multilateral organizations. The system also involves cooperation in many
fields, such as think-​tank, industry and commerce, and banking. So far, there
has been no coordination body as high-​level as the World Trade Organization
yet, in a sense, this cooperation mechanism of emerging-​market countries
based on their consensus has begun to play its role in coordinating their
cooperation and exchanges. For this reason, after adding the constraint of
the formation of the BRICS cooperation mechanism to the model, it can be
inferred that the “decision cost” for cooperation between China and other
BRICS countries will continue to increase. Hence, as shown in Figure 11.1,
the cost lines, Ac and Bc, move to the right and up, respectively. Under this
trend, it can be found that the original “A1, B3” or “A3, B1” area is shifting to
the area that the “A2, B2” originally covered. According to the model, in this
case, the sole and better strategy choice will be “A2, B2”, that is, all countries
adopt a positive cooperative attitude. It can be understood from the model
analysis that it is difficult for the BRICS countries to achieve mutual trust and
further positive cooperation, by their own developments alone. That is exactly
why a coordination body is necessary.

2.3 Functional expectations for energy cooperation among the BRICS

countries

2.3.1 Stabilize Russia-​centred energy supply and strengthen medium-​and

long-​term energy strategic security
Since the first global oil crisis in 1973, the world’s major energy consumers have
established their own oil reserve systems. Now due to the constantly unstable
world economic and political security situation, it is increasingly urgent for
countries across the globe, especially the BRICS countries, to diversify their
 BRICS and international energy cooperation 191
oil and natural gas-​based energy import channels. Take China as an example.
Nearly 80 per cent of its current oil imports are from the Middle East and
transported through the Straits of Malacca. There is a huge security risk in
terms of both the country of origin and the transportation path. The same
applies to countries other than China and Russia.7 Given the actual energy
resource reserves of the BRICS countries, Russia will play an extremely
important supplier role in the traditional energy cooperation among BRICS
countries. However, to stabilize such Russia-​centred energy supply cooperation
mechanism, many challenges await ahead. On the one hand, from the perspec-
tive of the world, the developed countries headed by the United States, Japan,
and so forth, often create obstacles in energy cooperation between Russia and
other countries in order to weaken the energy security of other countries and
maintain their own energy control status. In addition, since many oil fields
in the Gulf States are actually controlled by American oil companies, once
a stable cooperation mechanism is formed between BRICS countries, their
oil demand in the Gulf States will be reduced accordingly.8 On the other
hand, from Russia’s internal point of view, Russia still has a complex mindset
towards other countries, especially China, a fast-​ growing economy. Plus,
owing to the complex relationship among multiple interest groups, the Russian
government’s voice is greatly limited and, also, that is the underlying reason
behind the breakthrough in the Sino-​Russian oil pipeline cooperation pro-
ject after more than ten years. In summary, if, upon the efforts of the BRICS
countries, a Russia-​centred energy supply cooperation system is formed and
stabilized, the five countries’ medium-​and long-​term energy strategic security
will certainly be improved. The BRICS countries should take advantage of
extensive economic cooperation in various fields in recent years to jointly
establish a BRICS energy strategic reserve system based on oil and natural gas.
The establishment of such a system promoted by the BRICS energy cooper-
ation can significantly inhibit the impact of world energy price fluctuation on
the domestic economic development of BRICS countries which, in turn, will
help with their sustained, healthy and stable economic development, as well as
their increased overall competitiveness under the global environment.

2.3.2 Promote the overall energy development planning of the BRICS

countries and identify their advantages
The energy cooperation among the BRICS countries, particularly the cooper-
ation field, could be fully leveraged to give full play to the strengths of the five
members for advantageous complementarity, putting together their different
energy advantages and jointly promoting the smooth start and quick finish
of major energy cooperation projects. Different development features of the
energy industry among BRICS countries enable the BRICS to enjoy a unique
advantage in energy cooperation that other global cooperation mechanisms
do not enjoy. For example, Russia and China enjoy great advantages in
energy reserve, Russia and Brazil in exploitation and processing, and Brazil
and South Africa in new energy development. Therefore, giving full play to
192 Liu Wenge and Wang Lei
the advantages of the five members can secure the successful completion of
large complex energy cooperation projects, improve all members’ employment
levels, and benefit their economic development.

2.3.3 Promote the complementary development of the energy industry in

China and Russia
Since China and Russia are the two most important energy powers in the
BRICS countries, their energy industry cooperation strategy plays a vital
role in energy cooperation among BRICS countries. More importantly, this
energy cooperation will also be an unprecedented opportunity for the devel-
opment of both China and Russia’s energy industry. China enjoys a leading
edge in labour and market, while Russia boasts abundant energy resources
and competitive R&D technologies. As the world’s major energy consumers
and producers, these two countries can fully leverage the energy cooperation
between BRICS countries to achieve advantage complementary in the field of
energy, and establish and develop a comprehensive, long-​term, stable, mutu-
ally beneficial and win-​win energy strategic partnership, for enriched conno-
tation of their pragmatic cooperation and improved strategic partnership.

2.3.4 Promote the value maximization of energy advantages in Brazil,

South Africa and India
As mentioned above, Brazil has already been a world leader in the develop-
ment and application of bioenergy technology. After South Africa decided
to abandon its traditional energy consumption model, which highly relies on
coal, it also made great achievements in new energy product R&D in recent
years; in addition, both Brazil and South Africa have abundant natural gas and
oil resources. Unlike other BRICS countries, India simply has its increasingly
growing energy consumption market and rich experience in international energy
cooperation. Therefore, all BRICS countries have their own energy develop-
ment features and obvious advantages. It is hard for them to break existing
bottlenecks through independent developments. However, thanks to the energy
cooperation mechanism between BRICS countries, the value of energy devel-
opment advantages of the five countries will be maximized. In particular, with
the establishment of close energy cooperation relations with China and Russia,
a member can increase the overall competitiveness of its energy industry.

3. Path for future energy cooperation among the BRICS countries

3.1 Strengthen energy demand management and promote the

development and application of new energy technologies
Undeniably, there is gap in the level of energy technology R&D and manage-
ment between the BRICS countries and developed countries in the Western
 BRICS and international energy cooperation 193
Hemisphere. But from another point of view, that can be a way for future
energy cooperation between BRICS countries. They can establish a new
energy cooperation mechanism by jointly developing energy technologies and
discussing efficient, comprehensive energy utilization solutions. To be specific,
China and Russia, as the two major energy countries in the BRICS, should
assume their leading responsibilities: to proactively ally with other BRICS
countries, launch initiatives for enhanced energy demand management, and
further promote the standard management of energy demand and negoti-
ation rules for climate change in global energy governance.9 The development
and application of energy technologies can differ from one BRICS country
to another, through mutual learning and introduction of advanced technolo-
gies, and starting from clean coal technology, deep sea technology, new energy
development, and shale gas exploitation. The previous game analysis also
indicates that all BRICS countries long for positive cooperation, which needs
to be driven by major countries like China and Russia.

3.2 Promote the establishment of a substantial energy cooperation

mechanism among the BRICS countries
Thanks to the increasing importance of the overall economic strength of the
BRICS countries across the globe, they have also become rather important
emerging economies in the G20. Therefore, from this perspective, future energy
cooperation between the BRICS countries will inevitably pose a challenge to
the West-​led global governance system and will inevitably affect the forma-
tion of a new global energy system. The BRICS countries can discuss the
establishment of specialized energy cooperation institutions as permanent
institutions, while jointly establishing energy-​research bases as group think-​
tank. On this basis, energy cooperation could be used as a breakthrough for
the construction of the future cooperation mechanism between the BRICS
countries. The establishment of a substantial energy cooperation system can
promote the formation of entity cooperation system among the BRICS coun-
tries. Therefore, in the future, the BRICS countries should ignore the regional
restrictions, gradually discuss global energy supply and demand balance on
a global scale, propose adjustments, discuss the common energy policies and
programs for all mankind from a global perspective, and coordinate major
energy conflicts between countries. In addition, the BRICS countries should
also actively participate in global energy forums and related dialogues and
call for and value communication and collaboration between different energy
cooperation mechanisms.

3.3 A major direction for future energy development of BRICS

countries –​new energy
As traditional energies are running out and environmental pollution is
worsening, new energy has become irreplaceable in future mainstream
194 Liu Wenge and Wang Lei
development trends. Countries around the world have also listed new energy
development as an important strategic goal in their new economic develop-
ment plans. After comparing the main contents of previous BRICS meetings,
it can also be seen that new energies are becoming the focus of many parties.
In December 2011, more than three hundred delegates of friendship cities and
local government officials, association leaders, experts, scholars and business
representatives from China, Brazil, Russia, India and South Africa attended
the “Energy Strategy” sub-​forum of the first BRICS Friendship Cities and
Local Governments Cooperation Forum held in Sanya, Hainan Province,
China. Representatives of the five countries agree that the BRICS countries
have their own characteristics and advantages in new energy development,
and their cooperation potential is great in the field of new energy. Based on
the previous description, in terms of a specific country, South Africa features
a relatively simple energy structure and tight electricity supply, which is
another important factor restricting the further development of the South
African economy. To solve that, the South African government has proposed
to vigorously develop new energy and increase the application proportion
of new energies such as solar energy and wind energy. Business cooperation
is an important part of the BRICS cooperation mechanism. Other BRICS
countries have leading edges in new energy development and application.
For instance, China’s solar products are quite popular in the South African
market; Brazil has accumulated rich experience in developing bioenergy; India
and Russia are examples to learn from for their achievements in new energy
technology R&D; and South Africa is a world leader in coal-​to-​liquids tech-
nology. Therefore, on the basis of such comprehensive analysis, the BRICS
countries can focus on cooperation in the field of new energy in the future and
take this as a breakthrough to establish a comprehensive energy cooperation
mechanism for a broad win-​win result.

4. Conclusion
Since the BRICS countries initiated energy cooperation in 2010, relevant
topics have been brought up at several summits. However, due to underlying
reasons such as premature framework of the cooperation mechanism between
the BRICS countries, their geographically scattered locations, and eco-
nomic gaps, the leaders of the BRICS countries have not yet started formal
discussions on energy cooperation over the past few years. Nevertheless, due
to a range of factors, such as the continued fermentation of the Ukrainian
crisis and US and European sanctions against Russia, and wildly fluctuated
global energy market prices and supply and demand structure, this balance is
being broken. In the field of international energy, each BRICS country now
has considerable influence in their respective region and even in the whole
world. In the meantime, each of them is distinctive. As a major energy sup-
plier, Russia is facing tricky challenges both at home and abroad, and there-
fore urgently longs for diversification in energy export channels. According to
 BRICS and international energy cooperation 195
BP Energy Outlook 2030, the net growth in global coal demand will entirely
come from China and India in the next 20 years, along with 94 per cent net
growth in global oil demand, 30 per cent in natural gas demand and 48 per
cent in non-​fossil fuel demand. Plus, Brazil and South Africa have achieved
rapid development and innovation in the energy industry in recent years. In
this sense, the BRICS countries represent a market with the greatest poten-
tial for growth. Hence, from a comprehensive perspective, the five countries
have strong complementarity in the energy field and broad space for cooper-
ation, and their energy cooperation is still a major focus of the world’s energy
economy, energy geopolitics and diplomacy. It can be said that the BRICS
countries are the key factors that challenge the existing world energy supply
and demand landscape and change the future energy development trend. If
the BRICS countries strengthen cooperation in the energy field and form
an effective cooperation mechanism, they will exert a significant impact on
global agendas such as global energy governance, global climate change gov-
ernance, and global sustainable development.

Notes
1 Lin Boqiang, “Structural Change, Efficiency Improvement and Energy Demand
Forecasting”, Economic Research Journal, No. 5, 2003, pp. 57–​93.
2 Chen Liping, “Review of the Status Quo of Researches on Energy Sustainable
Development”, Land and Resources Information, No. 11, 2005, pp. 31–​38.
3 William C. Clark and Nancy M. Dickson, “Sustainability Science: The Emerging
Research Program”, Proceedings of the National Academy of Sciences of the United
States of America, Vol. 100, No. 14, 2003, pp. 59–​61.
4 In game theory, payoff refers to the sum-​up of the cost and benefit of a strategy, i.e.
the income the participants may get.
5 Lenzen M., “Primary Energy and Greenhouse Gases Embodied in Australian
Final Consumption: An Input-​Output Analysis”, Energy Policy, No. 6, 1998,
pp. 495–​511.
6 Per F. Peterson, Terry Collins, “Choosing the Sources of Sustainable Energy”,
Science, Vol. 5, No. 7, 2001, pp. 189–​197.
7 Qi Shaozhou, Yun Bo, and Li Kai, “China’s Economic Growth and the Convergence
in Energy Intensity Gap and Its Economic Mechanism”, Economic Research, No. 4,
2009, pp. 56–​64.
8 Liu Tian’en and Wang Chaofeng, “Russian Energy Policy Research”, Heilongjiang
Foreign Economic Relations & Trade, No. 2, 2011, pp. 55–​58.
9 Li Guozhang and Huo Zongjie, “Total Factor Energy Efficiency of China and Its
Convergence and Influence Factors –​An Empirical Analysis Based on Provincial
Panel Data from 1995 to 2006”, Economic Review, No. 6, 2009, pp. 101–​109.
12 
The BRICS countries and international
cooperation on climate change
Kang Xiao

In this book, the uniformity about the global governance of climate change
refers to the international community having a shared mission to address cli-
mate change by reducing greenhouse gas emissions caused by human activ-
ities. The diversity about the global governance of climate change refers to the
differences in national interests between developed and developing countries
due to different stages of development. It is the contradiction between the uni-
formity and the diversity that hinders the progress of global negotiations on
climate change. Therefore, it is necessary to carry out smaller-​scale cooperation
between certain countries to improve the efficiency of global governance on
climate change. The BRICS countries have the common desire to develop an
international climate order for the future to safeguard their own right to devel-
opment. In the meantime, they need to transform their development models
for a sustainable rise. These constitute the exogenous and endogenous drives
for BRICS cooperation on climate change. The establishment of the BRICS
Development Bank provides an opportunity for financially supporting the
development of low-​carbon economy in the five countries. This mechanism
may be further improved to provide better financing services for technological
innovation-​driven development of a low-​carbon economy.

1. Features of global governance on climate change

Climate change distinguishes itself from general environmental issues primarily
in its extensive coverage on all continents and countries. This feature was once
again manifested in the Synthesis Report to the Fifth Assessment Report of the
United Nations Climate Change Committee (IPCC) in 2014. According to the
report, compared with 1986–​2005, the surface temperature of the Earth will
increase 0.3–​4.8°C by the end of the twenty-​first century (2081–​2100). The
temperature rise in the polar regions will be significantly faster than in other
regions. It is safe to assume that such change will most likely lead to extreme
weather conditions in more areas, including more frequent heat waves and bit-
terly cold winters.1 Therefore, since 2007, the delegates to the Conference of
the Parties to the United Nations Framework Convention on Climate Change
have agreed to control global warming within 2 degrees Celsius, despite all
 BRICS and cooperation on climate change 197
the differences they have. This is the most important uniformity concerning
the global governance of climate change. In December 2015, a new note was
given to this uniformity at the 21st Conference of Parties (COP21) in Paris,
and concrete results were reflected in the Paris Agreement concluded at the
conference. A primary breakthrough made in the agreement was to avoid a
“climate catastrophe” by holding the increase in the global average tempera-
ture to well below 2 degrees Celsius above pre-​industrial levels and “pursue
efforts” to limit the temperature increase to 1.5 degree Celsius above pre-​
industrial levels. In the meantime, the agreement reiterated equity and the
principle of common but differentiated responsibilities. This reflects that the
parties had not given up on the consensus to address climate change through
global cooperation, despite the disagreements on how to share the responsi-
bilities. It also explains why the basic framework of the existing international
mechanism for addressing climate change has not collapsed in the face of
unsurmountable conflicts of national interests. In order to make this con-
sensus more actionable, the agreement made a series of new regulations, such
as requiring the parties to communicate a nationally determined contribu-
tion every five years, conducing an assessment of relevant emissions reduction
actions every five years, and urging the developed economies once again for
the performance of their responsibilities of transferring funds and technolo-
gies to developing economies.2
The Synthesis Report to IPCC’s 2014 Assessment Report reaffirmed in a
more explicit way that human activities are the main cause of climate change,
and reducing the use of fossil energy is the fundamental way to combat climate
change. These statements touched upon the principal contradiction involved in
the global governance of climate change, that is, the difference of development
stage between developed and developing countries. First, developed countries
cannot evade their responsibilities in global greenhouse gas emissions in recent
years. Their main source of emissions is their luxury lifestyle, including the use
of high-​emissions cars and housing. Second, industrial activities are among
the most important reasons for the increase of greenhouse gases. As most
developing countries are in a period of rapid industrialization, restrictions on
industrial emissions will seriously hinder their socio-​economic development.
Third, global warming has a devastating impact on the agricultural sector,
which will in turn lead to more global problems such as reduced grain pro-
duction. More importantly, agriculture is the primary sector in developing
countries, which are plagued by backward agricultural technologies. As such
backwardness will lead to increased greenhouse gas emissions, it is important
that developing countries modernize their agricultural sector as a fundamental
measure to address climate change. The upgrading of the agricultural sector
in the developing countries requires a lot of money and technology. However,
the developed countries are reluctant to fulfil their obligations in this regard.
Instead, they entertain the unrealistic hope that developing countries will
restrict their agricultural development, which would directly harm the sur-
vival of those countries, especially the least developed ones. The result is the
198 Kang Xiao
backward agricultural sector in the developing countries remains one of the
sources of greenhouse gas emissions and poses the most daunting challenges.
This contradiction reflects one of the features that distinguishes climate change
from other environmental problems –​its impact far exceeds that of ordinary
environmental problems to affect all regions and populations in the world. It
is so complicated that no country will be able to address it single-​handedly. In
the meantime, climate change may cause harm to almost all areas of human
production and life. Therefore, the fundamental way to successfully control cli-
mate change has to be drastically changing human production and life. As the
degree and speed of climate change are accelerating by the day, such change
becomes all the more urgent.
However, emphasizing the difference in the development stage between
developing and developed countries is not to deny the shared idea of dealing
with the threat to the human community, but to highlight the fact that the
international system is tempted to confuse facts with ideas. The idea that
the global climate crisis requires the human community to work in unison
should not override the fact that the development stages of sovereign coun-
tries are different. When Alexander Wendt emphasizes the social attributes of
interests, he insists that there are five objective needs that cannot be socially
constructed. These five needs are the physiological need, the ontological need,
the need for social interaction, the need for social respect, and the need for
transcendence. Wendt believes that only when these needs are progressively
met will the corresponding interests be constructed.3 The participation of
sovereign states in global governance is actually a process of socialization.
Socialization refers to

the process through which an individual develops his/​her unique person-

ality and characters, transforms from a biological being to a social one,
and adapts to social life through the internationalization of social culture
and the study of his/​her social role, in the constant interactions with the
society. In the process, social culture is accumulated and passed down; the
social mix is maintained and developed; and the individuality of humans
is improved.4

In this sense, socialization is all about the individual’s study of social norms,
which may be easily interpreted as that the individual can only passively
accept those social norms. For example, the main mechanism of socializa-
tion –​role-​playing –​is considered by some sociologists as unchangeable. The
socialization of individuals is aimed to restrict them with specific behaviours
and the corresponding social norms that are consistent with these roles. But
as Anthony Giddens puts it,

This idea is wrong [because] it assumes that individuals simply accept

roles, instead of creating or negotiating on them. In fact, socialization
is a process by which humans can exert their influence. Humans are
 BRICS and cooperation on climate change 199
not passively waiting to be instructed or arranged. Individuals grad-
ually understand and accept their social roles through continuous social
interactions.5

It is worth noting that the Paris Agreement, while emphasizing the threat of
climate change to the human race as a whole, highlighted the bottom-​up, self-​
determined emission reductions by all parties. Contributions to greenhouse gas
emission reductions are no longer mandatorily allocated. Instead, countries
are supposed to put forward their nationally determined contributions and
gradually increase such contributions according to their national conditions.
The Paris Agreement also allows the use of internationally transferred miti-
gation outcomes to achieve nationally determined contributions under the
agreement, though double accounting should be avoided. The agreement calls
for the establishment of a mechanism for the voluntary use of such inter-
nationally transferred mitigation outcomes to support the sustainable devel-
opment of the host countries while mitigating greenhouse gas emissions. The
mechanism was not finalized at the COP21, though the agreement required
the specific rules, modals and procedures for the international transfer mech-
anism to be adopted at the first meeting of the parties to the Paris Agreement.
The responsibility of developed countries to transfer funds and technologies
to developing countries is the biggest difference of opinion issue in the global
governance of climate change. The Paris Agreement made a further clarifica-
tion to this by requiring developed countries to raise their level of financial
support and develop a practical road map for the provision US$100 billion
annually by 2020. After 2020, the parties are supposed to set a new quanti-
tative target for the years before 2025 by taking into account the needs of
developing countries, and the annual financial support should be no less than
US$100 billion. These requirements are made under the general framework
of global emissions reduction agreements, while respecting the differences in
emissions reduction contributions due to different national realities. Although
the implementation details need to be specified, in the context of the unpre-
cedented complexity of the current global climate negotiations, they serve
well the purpose of reconciling the contradiction between the uniformity and
diversity in the global governance of climate change. That is why the Paris
Agreement is considered a milestone that marks the launch of a new global
climate order.6
Based on this theory, sovereign states will also compare their objective
needs with the norms of the international community when they partici-
pate in the global governance of climate change. Only when their needs are
satisfied will they actively internalize the international norms for reducing
greenhouse gas emissions and accelerate the transformation of their develop-
ment models. Although the backward production sector in developing coun-
tries produces a huge amount of greenhouse gases, these are the emissions
necessary for sustenance, which constitute a sharp contradiction with the
radical emission reduction targets set by the international community and
200 Kang Xiao
the emissions for luxury purposes of developed countries. To dissolve such
contradiction, smaller-​scale cooperation on climate change among major
developing countries such as the BRICS is needed, in addition to the finan-
cial and technological assistance of developed countries to developing coun-
tries. Such cooperation will serve to create a more equitable and reasonable
global climate order and safeguard the interests of developing countries, and
conduce to enhancing the ability of the global community to tackle climate
change because the developing countries will take more proactive measures to
transform their development models.

2. The exogenous drive of cooperation on climate change

According to Hedley Bull, international order refers to a pattern of activity
between and among states that sustains the basic goals of the society of
states, which include (1) preservation of the system and society of states itself;
(2) maintaining the independence or external sovereignty of individual states;
(3) preserving peace, in terms of the absence of war; and (4) general goals of
social life (limitation of violence, keeping promises, stability of possession).7
According to this line of reasoning, the international climate order refers to
a series of institutional arrangements that are subjectively designed by the
international community, which consists primarily of sovereign states and
non-​state actors, to deal with climate change, including the goals, principles,
rules and enforcement mechanisms of the order. The goal of the international
climate order is that the threat of climate change can be mitigated through a
joint effort of the international community to reduce greenhouse gas emissions
caused by human activities. To achieve this goal, the international community
must take into account the specific national conditions of different countries
in its effort to enforce emissions reduction and adhere to the principles of
common but differentiated responsibilities, equity and respective capabil-
ities. The rules of the international climate order are essentially the standards
of conduct, that is, the specific quantitative emissions reduction targets and
related measures, formulated to ensure the goal is achieved and the principles
implemented. The enforcement mechanism of the international climate order
is a compliance system designed to oversee how the objectives and measures
are enforced. A reliable enforcement mechanism is a sure route to the effective
operation of the international climate order.
Therefore, the international climate order actually stipulates the space for
emissions by each country in the future. The space for emissions is actually the
space for development –​whoever has the right to formulate the specific rules
of the international climate order has the opportunity to reserve more space
for development. Despite that the rapid expansion of the BRICS economy
has brought about changes to the international landscape,8 developed coun-
tries are still controlling the right to formulate international rules, including
the international climate order, thanks to their technological and institu-
tional advantages. Therefore, they have repeatedly called for setting binding
 BRICS and cooperation on climate change 201
emissions reduction targets for the emerging countries, as represented by the
BRICS members, in hopes of postponing the transformation of the inter-
national landscape by reducing the development speed of those countries,
while at the same time evading their own responsibility for emissions reduc-
tion and capital and technology transfer. Therefore, the competition for the
right to formulate rules for the international climate order constitutes the
exogenous drive for BRICS cooperation on climate change, which has been
reflected in the recent international summits and negotiations on climate
change.
Thanks to the close cooperation of the BRICS countries and the joint
efforts of developing countries, the UN Climate Summit in September 2014 re-​
emphasized the consensus of the international community on climate change,
with an aim to prevent even greater damage to the already challenging global
climate negotiations by such incidents as that certain countries exited the Doha
Climate Conference and pondered over developing alternative plans. Article
One of the “Lima Call for Climate Action”, which was concluded at COP20
held in Lima, Peru, in December 2014, reiterated the value of the Durban
Platform, as a new global legal framework for emissions reduction applicable
to all parties after Kyoto Protocol. It laid the foundation for a final agreement
at the 2015 Paris Climate Conference.9 However, the main actors of the inter-
national order are still sovereign states. To prevent developed countries from
leveraging the new comprehensive convention to undermine the sovereignty
of developing countries, Article Three of the “Lima Call for Climate Action”
underscores the principle of common but differentiated responsibilities and
respective capabilities, in light of different national circumstances.10 This does
not mean that developing countries are against emissions reduction, but that
emissions reduction targets must be set according to their economic realities,
so that the efforts to reduce emissions and seek economic development are
better synthesized for gradually eliminating the threat of climate change. It
is precisely for this reason that more intense national conflicts of interest in
future global climate negotiations may emerge as the international landscape
continues to change. Although the Paris Agreement has ostensibly bridged
the differences between the parties, many substantive issues that remain unre-
solved foretell the expansion of conflicts. For example, the block of developing
countries went on separate paths in international negotiations; small island
countries required China, India and other developing countries to undertake
more emissions reduction responsibilities; and at COP21, there was even a
“High Ambition Coalition” formed by new developing countries aside from
China and India. The United States and the European Union have taken
advantage of such contradictions in climate negotiations by implementing a
strategy of “catching the big and uniting the small”. “Catching the big” refers
to the effort to incorporate all the major emitters into the same emissions
reduction framework. It advocates that the requirement for “developed coun-
tries to reduce emissions” be changed to that for “major countries to reduce
emissions”. It also negates the negotiation framework of the Kyoto Protocol,
202 Kang Xiao
and urges the implementation of quantitative emissions reductions targets for
developing countries. “Uniting the small” refers to the effort to unite small
developing countries to ask major developing countries to undertake their
responsibility of quantitative emissions reduction. The European Union took
advantage of the demand of the least developed countries and small island
states for more stringent emissions reduction measures by the international
community. The aim was to exert pressure by promising to provide money
and technical assistance for these countries. The European Union even linked
the emissions reduction contributions of China and other developing coun-
tries with its commitment of financial assistance.11 The contradiction between
large and small emitters is mingled with that in their stage of development,
making it even more difficult to develop a fair and reasonable international
climate order. As Giddens says when discussing the relationship between geo-
politics and governance on climate change, “Indeed, a multi-​polar world can
promote cooperation through the balance of power; but it also brings about
serious divergences and conflicts that hinder the resolution of problems”.12
Therefore, a compliance mechanism is needed to ensure the effectiveness of
the international climate order. Even if the international climate order can
get all parties at the negotiation table, the indecision after deliberation or
inaction after decision will eventually render the order illegitimate. Therefore,
to ensure that developed countries fulfil their commitment of transferring
money and technology to developing countries, the BRICS countries must
join hands to exert pressure on them. Specifically, Article Four of the “Lima
Call for Climate Action” urges developed countries to provide the financial
support they pledged to developing countries for ambitious mitigation and
adaptation actions, especially to those that are particularly vulnerable to the
adverse effects of climate change.13 At COP21 in 2015, the BRICS countries
once again questioned the commitment of developed countries on providing
financial support and demanded strengthened supervision over the imple-
mentation of the commitment. This move led to the inclusion of an article
in the Paris Agreement, that is, a tracking mechanism must be put in place to
oversee how the commitments of the parties are delivered. This marks one of
the main achievements of the agreement.
In the meantime, it should be noted that non-​state actors in the era of
globalization have injected new vitality to the development of international
order. Climate change is a typical global governance issue, which non-​state
actors are obviously more active in addressing. Non-​state actors, such as
private organizations, multinational corporations, and even individuals, are
making their voices heard in global climate negotiations. The international
order dominated by sovereign states should give some space to non-​state
actors. This does not mean to allow the latter to replace the former. Quite
the contrary, sovereign states should effectively control non-​state actors and
continuously enhance their state capabilities and initiatives amid interactions
with these actors. A review of history will show that sovereign states have
been challenged since their birth in the mid-​seventeenth century by non-​state
 BRICS and cooperation on climate change 203
actors, such as mega corporations like the East India Company. But in fact,
most sovereign states did not lose in the competition with non-​state actors.
Instead, they became even stronger through competition. This in turn gave
them control over non-​state actors, or even sovereignty over such actors,
and allowed them to take advantage of these actors’ activities worldwide to
benefit each other in terms of resources acquisition. Sovereign states will not
be able to handle typical global issues like climate change single-​handedly.
Therefore, it is important that we seriously consider cooperation with non-​
state actors to cope with the crisis, rather than adopting a mutual-​exclusion
policy. Only in this way can a fair and effective international climate order
be built. Multinational corporations are an important product of the era of
globalization, and the capital, technology, and human resources they have
are indispensable for tackling the climate crisis. For example, one of the keys
to addressing climate change is to find a low-​carbon economic path that is
consistent with the national conditions of each country. The development of
low-​carbon industries must rely on inter-​company cooperation. Therefore,
by building a platform through inter-​ governmental cooperation, benign
interactions will be established between states and enterprises, and between
governments and markets through technological R&D and market devel-
opment by companies and other actors. In so doing, a global climate order
dominated by states and undertaken by enterprises will be built. The BRICS
countries are facing the urgent task of economic transformation, which serves
as the main driver for the development of low-​carbon industries. They should
leverage low-​carbon business enterprises that are capable of mastering core
technologies through joint R&D efforts –​and who enjoy international com-
petitiveness –​to break the monopoly of developed countries in low-​carbon
technologies and provide robust technical support for developing rules of the
new international climate order.
In short, the international climate order is related to the development space
of all countries. As the BRICS countries are in dire demand for development
space from the perspectives of population and economic size, it is legitimate
that they demand a role to play in the future international climate order. By
leveraging their growing economic aggregate, the BRICS countries may strive
for a greater voice in the international community in their efforts to build a
more equitable and rational international climate order. They may also try to
duplicate the power contrast relationship embodied in the transformation of
the international landscape in the international climate order and maintain a
dynamic balance between human morality and national interests.

3. The endogenous drive of cooperation on climate change

The reason of the BRICS countries’ rise has something in common, that is,
they all pursue sustained and rapid economic growth through government
investment, labour cost advantages, and export promotion, on the premise
of political stability. However, such extensive growth models cause major
204 Kang Xiao
problems to the five countries, which are now facing resources, energy, and
environmental bottlenecks due to high emissions and pollution. The reasons
for these problems include over-​ emphasis on fast economic growth and
expansion of economic size while ignoring growth quality and sustainability;
declining advantages of endowed resources and slow growth of innovation-​
driven competitiveness; backward institutional mechanisms, which are insuf-
ficient to ensure economic efficiency; deteriorating external environment due
to the financial crisis; and insufficient control of the BRICS countries over
their domestic economic stability.14 Take the energy mix as an example. In
2012, the coal consumption in the BRICS countries respectively accounts for
50.6 per cent (China), 9.3 per cent (India), 2.3 per cent (South Africa), 2.2
per cent (Russia), and 0.4 per cent (Brazil), of the world’s total. India’s coal
consumption saw an 11.1 per cent increase in 2014, which marked the biggest
increase in coal consumption in that year.15 Coal consumption has led to an
increase in the total greenhouse gas emissions and per capita emissions in the
BRICS countries, thus exerting increasing pressures on them to reshape their
development models.
Faced with a new wave of technological revolution brought about by the
dual pressures of the financial crisis and climate change, the BRICS countries
must not only sustain high-​speed economic growth to further enhance their
overall national strength, but also transform their economic development
models in order to occupy a favourable position on the future international
landscape. To make that happen, it is important to link economic growth with
the transformation of the economic development model by tapping into new
energy.

As climate change and low-​carbon economy become the top issues of

global development, new and renewable energy will change the distri-
bution of labour in the new round of industrial revolution. The ability
to occupy the technological commanding heights of new and renewable
energy will directly affect the global distribution of interest and strength
combination.16

In this regard, the BRICS countries have adopted a proactive policy. In 2009,
the Brazilian government set its target as reducing greenhouse gas emissions
further by 36.1–​38.9 per cent by 2020 on the basis of its previous anticipa-
tion. To this end, it has vigorously developed new energy sources, in particular
biomass energy, and in the meantime, implemented a plan for the reduction
of pollutants emitted from road vehicles. The plan yielded substantial results,
and in 2012, was upgraded to impose restrictions on emissions of heavy-​
duty vehicles.17 Before COP21, Izabella Teixeira, the Brazilian Minister of
the Environment, argued that the conference should focus on finding prac-
tical solutions to the transition to a low-​carbon economy, rather than just
revolving around the climate issue and trying to strike some letters of intent or
commitments that are not legally binding. At the conference, Brazil proposed
 BRICS and cooperation on climate change 205
an experimental project for halting the deforestation of forest resources in the
states of Mato Grosso and Acre before 2020. If the experiment went smoothly,
the model would be extended to all states of Brazil.18 As the world’s third-​
largest emitter of greenhouse gases, Russia has developed a climate policy
aiming to reduce greenhouse gas emissions by 20–​25 per cent by 2020 on the
basis of the 1990 levels. In 2011, Russia released the Climate Doctrine of the
Russian Federation by 2020 as a guidance policy with specific measures, such
as vigorously promoting the use of hybrid vehicles, implementing the national
act for improving energy efficiency, and building more energy-​efficient homes
for demonstration purposes.19 In his speech at the Lima Climate Conference,
the Indian representative presented the climate policy of the Modi administra-
tion, including a twofold increase in the coal tax; an increase in clean energy
funds of more than US$3 billion; an increase in solar installed capacity from
20,000 MW to 100,000 MW, equivalent to investing US$100 billion to reduce
165 million tons of carbon dioxide emissions per year, while increasing US$6
billion in afforestation to increase carbon sinks; an additional investment of
US$200 million to the National Adaptation Fund for Climate Change for
developing new energy; and an investment of US$1.2 billion to build 100 smart
cities in India that can adapt to and mitigate climate change.20 In January 2016,
French President François Hollande said that India played a decisive role in the
achievement of the Paris Agreement and that the French would like to estab-
lish a “post-​coal world” together with India. South Africa’s National Climate
Change Response Green Paper 2010 stipulated that the objectives of its climate
policy included making efforts to stabilize greenhouse gas concentrations in the
atmosphere to avoid climate catastrophe, and improving South Africa’s ability
in adapting to the climate change threat in social, economic and environmental
terms. South Africa adheres to the principles of common, but differentiated,
responsibilities, precaution, polluter pays, special needs and circumstances,
informed participation, and intra-​and inter-​generational sustainability, in its
response to climate change, and has adopted specific measures in fields such
as water resources, agriculture, health, energy, industry and transportation.21
According to the National Plan on Climate Change 2014–​2020 issued by the
National Development and Reform Commission of China, China’s quan-
titative targets for tackling climate change include by 2020 cutting carbon
emissions per unit of GDP by 40–​45 per cent from 2005 levels; increasing the
percentage of non-​fossil fuels in primary energy consumption to 15 per cent;
reaching 58 million kilowatts of installed capacity of nuclear power; reaching
200 million kilowatts of installed capacity of grid-​connected wind power;
reaching 100 million kilowatts of installed capacity of solar power generation;
and reaching 30 million kilowatts of installed capacity of biomass power gen-
eration.22 The United States–​China “Joint Presidential Statement on Climate
Change” in November 2014 revealed China’s plan to reach the peak of carbon
dioxide emissions before 2030 and its effort to make that happen as early as
possible. China also plans to increase the proportion of non–​fossil-​fuel energy
in primary energy consumption to around 20 per cent by 2030.23 This marks
206 Kang Xiao
the first time China has publicly proposed reaching the peak of emissions. In
his speech at the opening ceremony of the Paris Climate Conference, President
Xi Jinping reaffirmed China’s “nationally determined contribution”: by 2030,
China will reduce carbon dioxide emissions per unit of GDP by 60–​65 per cent
over the 2005 levels and raise the share of non-​fossil fuels in primary energy
consumption to about 20 per cent.24 Nevertheless, the BRICS countries still
need to transform the unreasonable economic growth models, develop new
competitive advantages, eliminate all shortcomings and weaknesses in eco-
nomic growth, and shift to the growth path driven by technological innovation
and high-​end industrial mix. The timelines and effectiveness of such moves
dictate the stability and sustainability of economic growth in the BRICS coun-
tries.25 Therefore, in addition to their respective efforts, the BRICS countries
are in urgent need of strengthening climate cooperation and accelerating the
upgrading of the economic mix, especially of the energy mix, for a sustainable
rise in strength.
At present, the major advantage of the BRICS countries in strengthening
cooperation on climate change is that their R&D levels of low-​carbon tech-
nology is not as far behind the Western countries as their traditional tech-
nologies, or the BRICS might even enjoy some sort of leading edge with
low-​carbon technology. For example, China has made major innovations in
smart grid, an important field of clean energy. A distinctive Chinese smart-​
grid system is being built in light of the fact that China’s power grid is largely
dispersed. By far, the pilot phase has been completed, followed by a construc-
tion phase from 2011 to 2015, and a upgrading and finalization phase from
2016 to 2020. By 2020, a unified “robust smart grid” will be put in place, that
features state-​of-​the-​art technology and equipment.26 In April 2011, the State
Grid Corporation of China and the Brazilian company Eletrobras signed a
cooperation agreement in Beijing stipulating that China’s UHV DC trans-
mission technology would be leveraged to build the transmission project for
the Belo Monte Dam Hydropower Station in Brazil. According to the memo-
randum of understanding (MOU) on cooperation signed by the two com-
panies, they will also carry out extensive cooperation in the power sector in
Brazil and other areas of South America, including cooperation in the devel-
opment of large-​and medium-​sized hydropower stations, pumped storage
power stations, carbon capture and storage (CCS) coal-​fired power stations
and transmission projects; joint efforts to invest in and acquire transmission
projects; joint efforts to develop renewable energy projects, including wind,
solar, biomass and waste power plants; and joint efforts to train personnel
and conduct technology and talent exchanges in areas of shared interests,
such as the planning, design, construction, operation and maintenance of
power grids, in particular technologies of unconventional transmission, such
as ultra-​high voltage transmission, smart grid and related technologies, and
electric vehicles.27 The 2015 China–​Brazil Joint Statement on Climate Change
once again stated that the two countries will further pragmatic cooperation in
the fields of renewable energy, forests as carbon sinks, energy conservation,
 BRICS and cooperation on climate change 207
energy efficiency, adaptation and low-​carbon development in cities. That in
the field of solar energy, it is necessary to increase awareness of the solar
panel and solar cell industry, to explore business opportunities by condu-
cing exchanges and personnel training on policy, planning, technology and
standards, testing and certification, and to encourage Chinese solar energy
companies to invest in plants and projects in Brazil.28 At present, Brazil,
Russia, India, and other countries have taken ultra-​ high voltage (UHV)
as an important direction for energy and power development. In addition,
bioenergy technology, in which Brazil has a leading edge, will also be an
important area where China wishes to establish cooperation. In 2007, India,
Brazil, and South Africa announced that they would strengthen cooperation
in civil nuclear energy by providing technology, equipment, and materials to
one another in accordance with the relevant provisions of the International
Atomic Energy Agency. According to the empirical research of Li Zhiguo and
Du Xiu’e, after entering the twenty-​first century, the clean energy elasticity of
the BRICS countries, excluding South Africa, are all positive, and has seen a
significant increase compared with the previous development cycle, indicating
that the four countries have gradually strengthened the development of clean
energy.29 As a new member of the BRICS countries, South Africa has also
implemented a clean energy strategy in recent years. According to the updated
version of the Integrated Resource Plan (IRP) by the South African govern-
ment, more private enterprises are encouraged to participate in the develop-
ment of renewable and nuclear energy. This provides a great opportunity for
the transformation of coal enterprises. For example, Sasol has joined hands
with China Shenhua Group on coal liquefaction projects.30

4. BRICS cooperation on climate change featuring integrated

development of finance and energy
The integrated development of energy and finance can be traced back to the
1880s, and even closer integration of the two is more evident in the global
economy nowadays. On the one hand, energy commodities are constantly
interacting with various financial derivatives. On the other, a more obvious
characteristic of the financial properties of energy commodities is that most
energy commodities are denominated in US dollars, which means that any
fluctuations of the US dollar will lead to fluctuations in energy commodity
prices. This further strengthens the US dollar hegemony.

Since the US dollar was identified as the settlement currency of oil, it

has dominated the international oil market and has become the pri-
cing anchor for petroleum-​related financial products. The US dollars
generated from the export of large quantities of oil by the oil-​producing
countries and the surplus produced by the export of other products are
re-​invested in international financial markets in different ways, thereby
further strengthening the US monopoly in the global financial sector.31
208 Kang Xiao
Therefore, the US dollar hegemony is reflected not only in its financial
functions, but also in its influence in the real economy through affecting
energy commodity prices. The efforts of the BRICS countries to break the
US dollar monopoly can be made in both improving the level of internation-
alization of their respective currencies and freeing energy commodities from
US dollar denomination. For example, after the Ukrainian crisis, China
and Russia have initiated an attempt to settle bilateral trade with the rouble.
Another way is to invest in new energy forms. Although they will still be
denominated in US dollars, doing so will allow the developing countries to
control the commanding heights of new technologies and change the status
quo in which traditional energy sources are being priced by the developed
countries. A shining example is the BRICS countries’ effort to integrate cap-
ital with new energy technologies.
The key to global climate governance is transforming the energy mix,
developing the new energy industry, and improving the efficiency of trad-
itional energies. The new energy industry, as part of the real economy, needs
strong support from financial leverage.

Energy finance combines bricks-​and-​mortar energy with virtual finance

to directly fund the energy industry through the financial market. In this
way, the virtual economy can support the efficient development of the
real economy (such as energy futures and derivatives markets). In the
meantime, the development of the real economy can prevent the virtual
economy from creating economic bubbles and draining all the money
from the industries. In addition, financial allocation pricing, value preser-
vation and appreciation, risk avoidance, among other functions of energy
finance, are conducive to the efficient development of the energy industry
by reducing environmental pollution and reducing energy risks.32

Therefore, the focus of the BRICS cooperation on climate change should be

on integrating the finance and energy sectors through institutions such as the
BRICS Development Bank. The Fortaleza Declaration, reached at the Sixth
BRICS Leaders’ Summit in Brazil in 2014, announced the establishment of
the BRICS Development Bank, which is dedicated to infrastructure construc-
tion in the BRICS and other developing countries, and fund-​raising for sus-
tainable development projects. The Declaration points out:

We recognize that fossil energy remains the main source of energy and
reaffirm that renewable and clean energy, R&D of new technologies, and
energy efficiency improvement are important forces for driving sustain-
able development, creating new economic growth points, reducing energy
consumption, and improving the use efficiency of natural resources.
Given the connections between renewable and clean energy and sustain-
able development, we would like to reaffirm the importance of advancing
the international efforts to promote the development of renewable and
 BRICS and cooperation on climate change 209
clean energy and energy efficiency technologies, while taking into account
the policies, priorities, and usage of resources in different countries. We
stand for strengthening international cooperation to promote renew-
able and clean energy and to universalize energy access, which is of great
importance to improving the standard of living of our peoples.33

These statements fully demonstrate the strong desire of the BRICS coun-
tries to optimize the energy mix and transform the economic development
model as soon as possible. Renewable energy and clean energy have become
important areas of BRICS cooperation on climate change. The cooper-
ation mechanisms established at the BRICS Leaders’ Summits, for example,
the BRICS Development Bank, will also serve as new platforms for BRICS
cooperation on climate change.
The establishment of the BRICS Development Bank was perfectly in line
with the urgent needs of all parties. The global financial and climate crises have
forced the BRICS countries to closely integrate financial and low-​carbon eco-
nomic development in their pursuit of economic transformation and to cap-
italize on the financial leverage to stimulate the transformation of the energy
mix. From the perspective of the globalization of the low-​carbon economy, the
developing countries’ endeavour to enhance industrial technology levels and
energy efficiency is a primary means to prevent carbon tariffs from impeding
international free trade.34 However, the reality in global climate negotiations is
that developed countries are generally reluctant to fulfil their commitments of
financially supporting developing countries. Therefore, developing countries,
especially the BRICS countries, should boost low-​carbon economic develop-
ment through a joint effort to raise funds. Different from traditional energies,
new energies –​as a key part of the low-​carbon economy –​without exception
involve the use of advanced technologies. Although traditional energy devel-
opment relies heavily on capital investment, the scale is huge, and the focus
is on the exploitation of energy resources. As fossil energy sources such as oil
and coal are limited, countries with rich natural resources in the political map
of traditional energy often stand at a more advantageous position. However,
new energy sources are characterized by their infinity, including wind power,
solar power, tidal power, and nuclear power. The key is to have advanced
scientific and technological means to exploit them. Therefore, the owners
of resources no longer enjoy an advantage; instead, advanced technologies
become the focal point of competition. On the global political and economic
landscape of new energy, the dominant countries are those in which com-
panies with advanced new energy technologies are based. These companies
are more of smaller but knowledge-​intensive high-​tech companies like Tesla
than traditional energy giants. Their growth trajectory is similar to that of
Silicon Valley, where it is necessary to integrate the technological innovation
of young people with the venture capital of Wall Street for gradually hatching
new high-​tech energy companies that take the lead in the era of low-​carbon
economy.
210 Kang Xiao
Consistent with this line of reasoning, in addition to investing in specific
projects for increasing the capacity of renewable energy, such as hydropower
stations, the BRICS Development Bank should focus on supporting techno-
logical innovation projects concerning the low-​carbon economy in the five
countries, including new energy, new energy vehicle (NEV), energy saving
and environmental protection, energy efficiency improvement, clean coal,
coal liquefaction, and CCS technology. At present, the world rankings of
universities and scientific research institutions in the BRICS countries have
risen remarkably, indicating significantly enhanced R&D strength. Funds
are urgently needed to convert the promising scientific research findings
into productivity. That is where BRICS banks can jump in. At present,
the sci-​tech cooperation among the BRICS countries is mainly conducted
between two countries and multilateral cooperation is yet to be established.
Such cooperation has yielded some positive results but, overall, it is still
in the stage of extensive development, and a coordinated communication
mechanism for resource sharing is still lacking to create synergy. Despite
the fact that cooperation agreements have been signed, sci-​tech information
platforms and resource-​sharing mechanisms have not been put in place.35
Therefore, there is still much room for improvement in sci-​tech cooper-
ation among the BRICS countries. In this regard, the establishment of
the BRICS Development Bank has provided a new platform for sci-​tech
cooperation among the five countries and opened up new channels for cli-
mate cooperation.36 In the future, they may consider establishing venture
capital funds for small-​and medium-​sized technology enterprises in the
low-​carbon industry, setting up BRICS Development Bank scholarships at
relevant universities, and directly supporting research projects concerning
the low-​carbon economy at those institutes. Throughout the history of the
world economy, finance can only perform at its best when it serves the real
economy, especially industries that represent the most advanced product-
ivity in a particular era. As an early Western democracy, France gradually
lagged behind the United Kingdom and the United States in the Industrial
Revolution. An important reason aside from war is that, unlike the United
Kingdom and the United States, who invested much of their finances in
industrial production and technological innovation, France invested a large
amount of capital in the land. French historian George Dolby believes that
the French experienced a resurrection of ruralism during the Industrial
Revolution, that is, returning to the land when the values of the peasants
were praised, and factories, cities, and trusts were generally rebutted and
rejected, Marshal Pétain said, “The earth, it does not lie”.37 The techno-
logical advances made by France, if any, were mainly concentrated in the
textile and chemical industries. As France ran short of coal in the early
nineteenth century, the cost of coal was high and that of charcoal was more
acceptable. Therefore, French producers were not so keen to learn from
the United Kingdom the coking technology,38 which represented advanced
productivity at the time. One of the root causes of the 2008 financial crisis
 BRICS and cooperation on climate change 211
was that the United States relied too heavily on the financial economy while
putting much less weight on integrating the finance and manufacturing
sectors. To avoid similar mistakes, the BRICS countries should allow more
capital to be invested in the urgently needed R&D of low-​carbon technolo-
gies, thereby enriching the manifestations of energy finance in the context
of the financial crisis.
In order to give better play to the BRICS Development Bank, future
BRICS leaders’ summits may consider building more connections among the
meetings of the BRICS finance ministers, central bank governors and energy
ministers, as well as among the above three and the sci-​tech and educational
departments of the five countries. It is also important to stay open-​minded by
making full use of diversified resources, such as the government, enterprises,
media, universities, scientific research institutions, scholars, and private
organizations to decide where the BRICS Development Bank should invest.
This is to ensure that the money will be put into the most needed places to
improve the BRICS’ ability to cope with climate change and contribute to the
global governance of climate change.

5. Conclusion
The addition of South Africa, as a member of the “BASIC countries” of
climate change, in the BRICS indicates that cooperation on climate change
is an important part of BRICS cooperation. At present, the profound trans-
formation of the international landscape featuring the rise of the BRICS
countries as a group and the relative decline of Western countries constitutes
the context for the global governance of climate change, which is all about
the significant differences between the BRICS countries and developed
countries in terms of stage of development. Therefore, the negotiations
on a global climate convention, as an international public product, have
always been tough, to the extent that it is impossible to reach a consensus
on how to define binding emissions reduction targets for high-​emission
countries and on how to enforce the transfer of capital and technology
from developed countries to developing countries. Therefore, smaller-​scale
governance on climate change is needed to fill the gap. As an important
driving force for the transformation of the current international landscape,
the BRICS countries are also major emitters of greenhouse gases who have
exogenous and endogenous drives to reshape the future international energy
and climate order and achieve economic transformation. The technical and
financial advantages accumulated through economic development, as well
as the establishment of the BRICS Leadership Summit and the BRICS
Development Bank, provide them with the needed capabilities and enforce-
ment mechanisms to do so. Therefore, despite that the BRICS countries
have some differences on issues concerning climate change and energy, their
common interests are still greater than their differences. That is why an all-​
win situation is possible.
212 Kang Xiao
Notes
1 IPCC, Climate Change Synthesis Report 2014, www.ipcc.ch/​pdf/​assessment-​
report/​ar5/​syr/​SYR_​AR5_​SPM.pdf, pp. 8, accessed March 5, 2016.
2 Paris Agreement, Article 2, 4, 6, 9, http://​unfccc.int/​files/​home/​application/​pdf/​
paris_​agreement.pdf, accessed February 26, 2016.
3 Alexander Winter, Social Theory of International Politics, translated by Qin
Yaqing, Shanghai People’s Publishing House, 2000, p. 164.
4 Zheng Hangsheng, New Introduction to Sociology, China Renmin University
Press, 2003, p. 83.
5 Anthony Giddens, Sociology, translated by Zhao Xudong et al., Peking University
Press, 2003, p. 37.
6 Zhang Bin and Zhang Xiaofeng, “Interpretation of the Paris Agreement”, China
Energy News, December 28, 2015, pp. 7.
7 Hedley Bull, The Anarchical Society: A Study of Order in World Politics, translated
by Zhang Xiaoming, World Affairs Press, 2003, pp. 13–​15.
8 According to the World Bank, despite the downward pressure on the global
economy and the economic headwinds encountered by the BRICS countries, the
five countries, except South Africa, ranked among the top ten in the world in terms
of GDP in 2014. The sum of the five countries’ GDP in 2014 reached US$16.96
trillion, account for 25.64 per cent of the global economy, as compared to 16.1 per
cent in 2009. In terms of per capita national income, Russia (US$13,220) ranks as a
high-​income country, while Brazil, South Africa, and China have joined the ranks
of middle-​and high-​income countries at US$11,530, US$6,800 and US$7,400
respectively. The above data are calculated based on the data disclosed on the web-
site of the World Bank, http://​data.worldbank.org/​country, accessed February
22, 2016.
9 Decision-​ /​CP.20, Lima Call for Climate Action, Advance Unedited Version, p. 1.
10 Ibid.
11 Yu Hongyuan, “Analysis of the Achievements and Insufficiency of the Paris
Climate Conference”, Xinmin Evening News, December 17, 2015.
12 Anthony Giddens, The Politics of Climate Change, Cambridge: Polity Press, 2009,
p. 207.
13 Decision-​ /​CP.20, Lima Call for Climate Action, Advance Unedited Version, pp. 1.
14 Lin Yueqin, “BRICS Countries: Growth Issues and Transition of Growth
Model—​A Review of Foreign Academic Perspectives”, Social Sciences Abroad,
2013, No. 4, pp. 67–​69.
15 BP Statistical Review of World Energy 2015, www.bp.com/​content/​dam/​bp-​
country/​en_​us/​Publications/​2015SR/​Statistical%20Review%20of%20World%20
Energy%202015%20CN%20Final%2020150617.pdf, p. 33. accessed November
16, 2014.
16 Zhao Qingsi, “The BRICS Countries and Global Energy Governance: Roles,
Responsibilities and Paths”, Contemporary World and Socialism, No. 1, 2014,
pp. 146.
17 Website of the Brazilian Ministry of the Environment, www2.brasil.gov.br/​sobre/​
environment/​climate/​pollution, accessed January 7, 2015.
18 Liu Long, “Brazil Senior Official: The Paris Climate Conference Should Seek
Practical Plans for a Transition to the Low-​ carbon Economy”, http://​news.
xinhuanet.com/​world/​2015-​11/​04/​c_​1117038652.htm, accessed February 26, 2016.
 BRICS and cooperation on climate change 213
19 Website of the Ministry of Science and Technology of the People’s Republic of
China, “Russia Publishes Climate Doctrine of the Russian Federation by 2020”,
www.most.gov.cn/​gnwkjdt/​201105/​t20110525_​87055.htm, accessed January
7, 2015.
20 Website of the Ministry of Environment, Forest and Climate Change of India,
www.moef.nic.in/​content/​statement-​hon%E2%80%99ble-​minister-​high-​level-​
segment-​unfccc-​cop-​20-​december-​9-​2014, accessed January 7, 2015.
21 Department of Environmental Affairs, South Africa, National Climate Change
Response Green Paper 2010 (plain edition), pp. 5–​8.
22 National Development and Reform Commission of China, National Plan on
Climate Change 2014–​2020, pp. 5–​8.
23 US-​China Joint Presidential Statement on Climate Change, http://​news.xinhuanet.
com/​energy/​2014-​11/​13/​c_​127204771.htm, accessed January 7, 2015.
24 Xi Jinping, “Work Together to Build a Win-​ Win, Equitable and Balanced
Governance Mechanism on Climate Change”, People’s Daily, December 1,
2015, p. 2.
25 See Lin Yueqin, Zhou Wen, and Liu Wenge (ed.), Blue Paper on Emerging
Economies: BRICS Development Report (2013), Social Science Academic
Press, 2013.
26 Chen Kai, Chen Zhenfei, and Sun Meng, “China Goes All Out to Build a Smart
Grid”, People’s Daily (overseas edition), August 23, 2010, p. 1.
27 Wu Yuanyuan, “China Brings UHV Technology to Brazil”, China Energy News,
April 18, 2011, p. 2.
28 “Joint Statement on Climate Change between the Government of the People’s
Republic of China and the Government of the Federative Republic of Brazil”,
People’s Daily, May 21, 2015, p. 3.
29 Li Zhiguo and Du Xiu’e, “An Empirical Analysis of Clean Energy Utilization
and Energy Consumption Mix in the BRICS Countries”, Asia-​pacific Economic
Review, No. 3, 2012, p. 11.
30 Yuan Jirong, Yan Guangjiang, and Wei Dongze, “South Africa Accelerates the
Development of Clean Energy”, People’s Daily, June 29, 2011, p. 22.
31 Research Group of BOC Institute of International Finance, “China’s Strategy
to Leverage Energy as Financial Instrument in the Global Energy Landscape”,
Studies of International Finance, No. 4, 2012, pp. 38–​39.
32 Yu Li, Zhao Miyun, and Zhang Huifang, “The Interaction Effect of Energy
Finance and Environmental Restrictions”, Finance & Economics, 2015, No.
2, p. 28.
33 Fortaleza Declaration Concluded at the Sixth Meeting of the BRICS Leaders’
Summit, http://​news.xinhuanet.com/​world/​2014-​07/​17/​c1267620394.htm, accessed
November 15, 2014.
34 Lin Boqiang, “The Globalization of Low-​carbon Economy and China’s Strategic
Response”, Financial Development Review, No. 11, 2010, p. 37.
35 Ouyang Yao and Luo Huihua, Research on the Model and Platform of Sci-​Tech
Cooperation among the BRICS Countries, China Soft Science Magazine, No. 8,
2011, p. 10.
36 Chen Bo, “BRICS May Explore New Channels for Cooperation on Climate
Change”, China Petroleum News Center, http://​news.cnpc.com.cn/​system/​2014/​07/​
29/​001499747.shtml, accessed February 27, 2016.
214 Kang Xiao
37 George Dolby (ed.) The History of France: From Origin to Present (Vol. 2),
translated by Lu Yimin et al., The Commercial Press, 2010, p. 1042.
38 Tan Chongtai (ed.), A Comparative Study of the Early Stage of Economic
Development of Developed Countries and The Status Quo of Economic Development
of Developing Countries, Wuhan University Press, 2008, p. 81.
13 
The BRICS countries and global
cyberspace governance
Shen Yi

In March 2014, the foreign ministers of the BRICS countries attended the
Hague Nuclear Security Summit and issued a joint statement mentioning
the “common cyber threats”. They believed that it is necessary to handle the
problem under the framework of domestic law and international law.1 This
is the attitude of the foreign ministers of the BRICS in coping with cyber
threats, demonstrating the BRICS countries’ determination to cooperate
on cyber security and broader cyberspace governance. Such a clear atti-
tude will definitely have a profound impact on global cyberspace govern-
ance and will also make the research of relevant issues under the BRICS
cooperation framework a new research hotspot. In March 2016, the Internet
Corporation for Assigned Names and Numbers (ICANN) submitted a regu-
latory authority transfer program to the National Telecommunications and
Information Administration of the US Department of Commerce. No matter
whether or not the Department of Commerce and the US Congress approved
the program on time, the change of global cyberspace governance, which was
initiated in 2003, had taken a substantial step. However, its progress is still less
than expected. Seen from the whole process, including the amendment plan,
changes in the distribution of power brought about by the development of
global cyberspace gradually highlight the long-​standing competition for the
guiding principles in cyberspace governance, and the BRICS countries are
faced with strategic opportunities to expand cooperation.

1. Principles and features of global cyberspace governance

1.1 Competition for principles of global cyberspace governance

The development of global cyberspace has enabled people to be fully
connected while posing new challenges for national security. In April 2013,
hackers hacked the official account of the Associated Press and published
two pieces of fake news, professing that two explosions happened in the White
House and President Obama was injured. Within two minutes of the release
of the fake news, the Dow Jones Industrial Average fell 150 points, followed
by a drop in crude oil prices, an undersell of the US government’s ten-​year
216 Shen Yi
bond and a shift of capital to low-​risk investment projects. The entire turmoil
lasted five minutes, and the risk of hackers’ impact on the financial market
through the release of fake news was obvious.2 Meanwhile, incorporated
into the framework of the national security strategy by China and the US,
the world’s two major powers, cybersecurity has become an important issue
in security dialogue as well as an increasingly new source of crisis and con-
flict. It was one of the outcomes of the US Secretary of State Kerry’s visit to
China to start a dialogue between China and the United States on the estab-
lishment of a working group on cybersecurity.3 In addition, the new type of
terrorist organizations represented by Isis spreads extreme thoughts through
cyberspace, triggering “lone-​wolf ” terrorist attacks all over the world, while
major powers have started a complex game around the strategic dominance
of cyberspace and the new global cyberspace governance. Gradually regarded
as a new frontier of strategic games for big countries, global cyberspace has
promoted the transformation of the global cyberspace governance order
and become one of the most eye-​catching frontier areas in the current inter-
national system change.
Against such a backdrop and from the perspective of global governance,
global cyberspace governance has increasingly become an important issue for
the current global governance. When discussing such problems, we must con-
sider the current development stage of cyberspace and its special features.
The computer network technology represented by the Internet has created
a cyberspace where all kinds of actors are closely connected since the 1960s
and 1970s.4 With the development of technologies, the present world has
ushered in the era of mobile Internet. Compared with the earlier develop-
ment stages, the new changes currently are that the data in cyberspace has
converted and will convert into strategic source, which equals crude oil in
importance, like the blood of the industrial age, to all actors in the era of
Internet.5 From the perspective of international relations, it indicates the
emergence of a new factor of power –​an actor that can be the first to dom-
inate data storage and mining. Apart from the potential and unprecedented
massive fortune created by the computer network technology,6 an actor that
can be the first to dominate data storage and mining will gain new power in
the game of international politics, and thus huge strategic advantages. If a
country, even a sovereign state, is unable to deal with this effectively, it is likely
to lose the ability to continue the game because of the rapid change of power
and capabilities.
It is of top priority for different actors to compete for the dominant
principles of cyberspace governance in the current game of cyberspace.
Cyberspace is a typical non-​territorial space and competition for the dom-
inant principle has also been fiercely staged in other representative non-​
territorial spaces, including oceans, outer space, and the radio spectrum.
One principle is called “first-​come first-​served sovereignty”. Based on the
state-​centred theory, this principle underlines hard power with actual control-
ling ability as the main form of reflection. It is believed that the freedom of
 BRICS and global cyberspace governance 217
action of the state in such non-​territorial space is directly related to the ability
or strength of the state, and the share of use does depend on the corresponding
power. The countries adhering to this principle often value the “freedom of
movement” and believe that rules or other non-​power factors should be used
as little as possible to limit national actions or to set certain boundaries for
national actions.
Another principle is that of “common property of mankind”. This
principle’s emergence and rise exemplified the hope of the countries with
relatively weak hard power such as technology –​especially those developing
countries that gradually entered the international arena after World War II –​
to protect their legitimate rights and interests through multilateralism and
international mechanisms. Countries sticking to this principle believe that
all countries, including those that temporarily do not have the actual tech-
nical capacity to develop and utilize specific resources, should retain a certain
share of resources in order to enjoy the benefits from scarce resources that are
common assets of mankind.
Compared with the non-​territorial space such as ocean, outer space and
the radio spectrum, the peculiarity of cyberspace determines that the compe-
tition between the two principles –​“first-​come, first-​served sovereignty” and
“common property of mankind” –​and their possible outcomes, will bring out
a more far-​reaching influence.
In terms of utility, the tension between the publicity of the user’s well-​
being and the private property that brings additional benefits is significant.
Users of cyberspace emphasize the use of the network as a non-​profit product
to enhance the well-​being of users, and they value the practical utility of
cyber products and cyberspace behaviour most; in the context of the market
economy, what the resource owners of cyberspace first consider is how to
obtain more profits; in an international system where sovereign states are the
main body, sovereign states that have the advantages of cyber resources and
believe in the principle of “first-​come, first-​served sovereignty” can only pay
more attention to how to use cyberspace to enhance their own strength. For
these countries, usually developed countries, the “first-​come, first-​served sov-
ereignty” naturally matches the hypothesis of the self-​centred rational human,
and following this principle is almost an inevitable choice. On the contrary, if
they turn to the principle of “common property of mankind”, they may be
considered as “irrational”.
However, the peculiarity of cyberspace is that a certain coverage area
must be maintained. That is to say, cyberspace must be public to some extent
instead of serving as a private network under the control of a few or only one
government. Meanwhile, if all countries stick to the same principle of “first-​
come first-​served sovereignty”, cyberspace is likely to be trapped in anarchy
as described by Hobbes, namely a war wherein everyone is against everyone.
Cyberspace in anarchy is unlikely to provide benefits for users.
However, in the real world, the general status quo of cyberspace governance
is asymmetrically interdependent. The worship and preference for “first-​come
218 Shen Yi
first-​served sovereignty” by developed countries with overwhelming advantages,
especially the United States, leads to increasingly fierce competition.

1.2 Asymmetric interdependence: basic feature of global

cyberspace governance
The United States is relatively in the leading position of the practice and
research of global cyberspace governance. A representative result clearly
states that global cyberspace is in an active anarchy, and the United States
must try to maintain its leadership position and advantages and establish an
order dominated by itself.7 This is determined by the fact that the developed
countries represented by the United States, along with other European coun-
tries, take the central position in global cyberspace governance. To be specific,
the strength of the those developed countries is reflected in key technology
standards, applications, infrastructure, R&D and production of core hard-
ware, and commercialization capabilities –​to store, mine, and use data, and to
turn technological edges into enormous business advantages. The developing
countries represented by a large number of countries in Asia, Africa and
Latin America are in the marginal position of global cyberspace governance.
The constant improvement of information technology, and the large
increase in the number of network users, have gradually changed the daily
behaviour patterns of human beings. On the basis of the four classic Internet
applications in early times, a personalized information publishing platform
represented by blogs has emerged and the online community interactive
platforms have also emerged represented by Facebook, Twitter, renren.com,
and kaixin.com. Meanwhile, as online communities were combined with
mobile terminals such as mobile phones, the network has assumed an invis-
ible existence that can follow people’s personal movements and also facilitated
the publication of information by individuals. A software exchange platform
based on point-​to-​point output transmission was born. Users can not only
keep informed of the world news without leaving their homes, but also easily
break the limitations of national borders and communicate with users from
all over the world in a virtual digital space, exchanging ideas and sharing
information.
The specific statistical data shows that the distribution of network users
and resources is increasingly asymmetric. According to the statistics from the
International Telecommunication Union and other relevant institutions, as
of 2011 the number of online Internet users reached 2.3 billion; the Internet
penetration rate in developing countries was about 25 per cent; in developed
countries 70 per cent and that of Iceland, Netherlands, Norway, and Sweden
90 per cent; the global network’s total data transmission volume was 76,000
Gbits per second, which was approximately 34,000 bits per second per user.
At the same time, statistics show that the distribution of resources such as
global network bandwidth is extremely uneven. The per-​capita bandwidth
of Internet users in Europe is 25 times that of Internet users in Africa. In
 BRICS and global cyberspace governance 219
2011, there were 30 million new fixed-​broadband users in China, accounting
for about 50 per cent of the total number of new broadband users in the
world. The advancement of technologies has also resulted in a rapid increase
of mobile Internet users. As of 2011, the number of mobile broadband users
worldwide has exceeded one billion, and the demand for mobile broadband
services has increased by 40 per cent over the previous year. Most of the users
are from developing countries, but the high-​quality resources, services and
key technologies are mostly in developed countries, indicating an obvious
asymmetry.
Against such a backdrop, developed countries’ adherence to the principle
of “first-​come first-​served sovereignty” means that the resources already under
their control can be fully leveraged, bringing about the most political and eco-
nomic benefits for countries or companies. On the contrary, if the principle of
“common property of mankind” is implemented and promoted, they have to
give up tremendous short-​term benefits, which is obviously difficult.
Apart from the advantages shown in the statistics above, the United States
has tremendous and specific practical power of control in real governance,
which is mainly reflected in the following three aspects.
First, the National Telecommunications and Information Administration
(NTIA) of the US Department of Commerce has the authority to manage the
domain name system, the most important infrastructure for cyberspace. The
Global Internet Corporation for Assigned Names and Addresses (ICANN)
must obtain contracts from NTIA in order to manage the network domain
name under its management. Second, according to the contract, changes or
modifications (e.g., adding a new top-​level domain name) to the root zone
file of the global domain name server must be approved by NTIA. The
concession made by the United States is that ICANN must be committed
to setting limitations on the use of such power and not to bringing about
negative effects. Finally, NTIA can increase or decrease the authority of the
Internet Assigned Numbers Authority (IANA) when necessary. The NTIA
stipulated that “a file must be submitted to IANA as a proof of the consensus
made by all the interested parties and of its conduciveness to the global public
benefits when any attempt to add a new top-​level geographic domain is to be
made” when it extended the management contract of ICANN in 2012. The
rule triggered a fierce protest, and in November 2011 it was modified as “a
special document should be submitted to explain how this measure increases
opportunities, allows relevant stakeholders to gain more opportunities, and
contributes to the global public interest”, Meanwhile, the US government still
retains considerable privileges. First, all the participants who compete for the
contract must be totally owned or operated by the United States, or univer-
sities or colleges in the United States; all major operations and systems must
be within US territory; the US government reserves the right to inspect the
operation of various systems and systems within the contract.8
It must be pointed out that the management of domain names is only a
small part of global cyberspace governance. According to a report submitted
220 Shen Yi
by the United Nations Cyberspace Governance Working Group in 2005,
“capacity-​building” is what really matters and is a theme of global cyber-
space governance. It has also been the core concept of global cyberspace gov-
ernance since the World Summit of the Information Society in 2003. To the
developed countries, including the United States and European countries, the
multilateral interest-​related mode advocated by the United States is regarded
as the most effective way to realize “capacity-​building” and bridge the gap of
the “digital divide”.
Compared with the allocation of domain names, which has attracted
widespread attention, the dominance of developed countries and the weak
position of developing countries in core technologies and standards, which
truly dominate cyberspace governance, have brought more serious and hidden
challenges. The Internet Engineer Task Force, founded in 1985, is a represen-
tative example. As the most authoritative technology and standard organiza-
tion of the Internet in the world, the Internet Engineer Task Force is mainly
responsible for the R&D and formulation of the standard of Internet-​related
technologies. Nowadays, most of the international Internet technology
standards can find their origin in the Request for Comments (RFC).
As to the form, the Internet Engineer Task Force is an international non-​
government organization voluntarily participated in and managed by the
experts who have made contributions to the development of the Internet
technologies. It gathers network developers, operators and researchers who
are responsible for the evolution of the Internet framework and the stable
operation of the Internet and is open to whomever is interested in the Internet
industry. Anyone can register and attend the IETF conference, which is held
three times a year with over a thousand attendees.
The Internet Engineer Task Force consists of three parts: the Internet
Architecture Board (IAB), the Internet Engineering Steering Group (IESG)
and the working groups in eight areas. The working groups penetrate into the
Internet model, transmission, application and other areas and undertake to
formulate rules. The members of IAB are appointed by the attendees of IETF
conferences, supervising each working group’s work.
However, the predecessor of the Internet Engineer Task Force is the
Internet Activities Board established by the US government in 1986, which
was the successor to the Internet Configuration Control Board, a subsidiary
of the Defense Advanced Research Projects Agency (DARPA) responsible
for managing Internet activities. The evolution of these committees is closely
related to the gradual commercialization of the Internet, while it has never
escaped from effective control by the governments, technicians and companies
of the developed countries such as United States and European countries.
Even under the framework of the IETF, the development and govern-
ance of the Internet is still under the control of developed countries –​which
control is represented by the nomination committee and other institutional
arrangements under the open institutions. Take the IETF as an example.
The members of the nominating committee are divided into members with
 BRICS and global cyberspace governance 221
voting rights (ten) and members without voting rights (six). Of the ten voting
members from 2013 to 2014, six were directly from the US-​based network
technology companies; among the other four overseas members, one was
from Cisco’s Bangalore office, and one from NTT, Japan, and the other two
from network security companies from Poland. Among the six non-​voting
members, the chairman was the laboratory director of Verisign; the consultant
was the former chairman of the IETF in 2012 and 2013, from the American
technology company BBN, and four liaisons were from other agencies.
Such a loose, yet intricately organized, network guarantees the neutrality
and indicates the form of the network, while ensuring that a few technical
elites have practical control over the entire operating system with the help of
connection and club mechanism.

2. Opportunities for the BRICS countries and change of global

cyberspace governance

2.1 Serious challenges by the US’ aggressive strategy in cyberspace

after the PRISM incident
On 6 June 2013, the Washington Post published an article entitled “US
Intelligence Mining Data from Nine US Internet Companies in Broad Secret
Program”, revealing that US National Security has been gathering intelli-
gence under a program code-​named “PRISM” since 2007. In the daily intel-
ligence briefing the US president read every day in 2012, 1,447 references
were cited to US-​984XN, which was the SIGINT Activity Designator of the
action. Therefore, “PRISM” has been reported as the most important source
of intelligence for the National Security Agency. In the United States intelli-
gence community, “PRISM” is a non-​confidential action code used internally
by the government, while US-​984XN is a secret code officially used by the
intelligence community. According to regulations, signals intelligence activ-
ities refer to those of relatively independent signals intelligence-​gathering
sites, such as a fixed base or a ship.
Data shows that PRISM was implemented in 2007. As the Bush admin-
istration passed and signed the Protection of the United States Act and the
revised Foreign Intelligence Surveillance Act of 2008, the project was put
into use and has been under the management of the US Foreign Intelligence
Surveillance Court. The basic philosophy of the project was to collect rele-
vant information through extensive monitoring of network data.
Based on the existing information on the systems, PRISM can be regarded
as an example of how the United States practised the preferred principle of
“first-​come first-​served sovereignty” in the US cybersecurity strategy. Instead
of the moral high ground, the biggest advantage of the US government is the
overwhelming technologies, equipment, and application. It is difficult to get
rid of these companies and start from scratch despite the awareness of the
existence of the PRISM system. For the US government, with technologies
222 Shen Yi
and equipment in hand, all the data transmitted on the basis of these tech-
nologies, equipment and infrastructure would automatically become the sub-
ject of US sovereign jurisdiction. Be it real-​time monitoring, deep mining, or
other more aggressive uses, it is a normal measure by the US government to
“protect national security”.
From the perspective of national security strategy, the PRISM system
can be regarded as a most concentrated and most representative embodi-
ment of the offensive cybersecurity strategy advocated by the US. With its
overwhelming technology and strength, the United States has established the
largest, most comprehensive and most complicated cyberspace monitoring
system, encouraging and promoting the US’ internal strategic impulse, which
came into existence after the end of the Cold War, to seek overwhelming
hegemony in cyberspace to some extent.9
As to the latest developments, although the US Department of Commerce
issued a statement in which they considered transferring regulatory authority
over Internet name and address allocation agencies in March 2014, it clearly
declared a transfer path of “privatization” rather than “international-
ization”. To put it another way, the Department explicitly declared that it
would not consider transferring regulatory authority to a regulatory body
composed of one or several sovereign states. The basic plan for the transfer
was the policy position paper originally proposed by the US Department of
Commerce in 1998. In the final transition plan and the new amendments to
the ICANN Bylaws, the guiding ideology of transfer of privatization was
fully implemented –​the ICANN Board authority, which has demonstrated
significant independence and transparency, has been greatly weakened and
limited; the addition of the Community Empowerment Mechanism reinforces
the voice of the elites in the European and American network industry; the
influence of the Governmental Advisory Committee (GAC), which may
highlight the influence of other sovereign countries’ policies, has been further
weakened; ICANN itself has also been required to be subject to full jurisdic-
tion of the California Corporations Law, further pinning down the features of
ICANN as a non-​profit US organization subjective to US jurisdiction.
The abovementioned changes on one hand emphasize the US’ leading pos-
ition in the global cyberspace governance order and its overall strategic ability
to lead the formulation of rules, and on the other hand call for the emerging
countries, represented by the BRICS countries, to effectively integrate in the
reform of the global cyberspace governance urgently.

2.2 Rise of the BRICS countries provides important opportunities to

modify global cyberspace governance
From the perspective of user groups, the development of the global cyber-
space has spread from developed countries to developing ones. According
to the statistics of relevant research institutions such as the International
Telecommunication Union, as shown in Figure 13.1, the total number of
 BRICS and global cyberspace governance 223
3,000 100
90
2,500
80

Percentage per 100 people

70
2,000
60
Million

1,500 50
40
1,000
30
20
500
10
0 0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012*2013*

Internet users (million) Percentage of network users

(number of network users per 100 people)

Figure 13.1 Percentage of global Internet users from 2001 to 2013.

Source: Communication database of International Telecommunication Union.
Note: Figures with * are estimated.

Figure 13.2 Percentage of Internet users by region in 2013.

Source: Communication database of International Telecommunication Union.
Note: Figures with * are estimated.

global network users has exceeded 2.5 billion, accounting for nearly 40 per
cent of the global total.
Although the total amount is on increase, there are distinct differences
between regions. According to the data from the International
Telecommunication Union, as shown in Figure 13.2, the overall percentage
of Internet access in Europe and the United States has exceeded 60 per cent
while in Africa it is less than 10 per cent. The development of network in
224 Shen Yi

32% 32%

US

Western Europe
4%
19% China
13%
India

Other regions

Figure 13.3 Distribution of data generation in cyberspace in 2012.

Source: IDC’s Digital Universe Study, sponsored by EMC, December 2012.

the Middle East, Asia-​Pacific, Africa and other regions are below the world
average, especially that in Africa.
Apart from the number of users, there are also significant differences in the
actual use of the network, which can be easily seen from the total amount of
data generated by different regions in relevant surveys and reports. As shown
in Figure 13.3, 2 per cent of the 2837EB data generated by global cyberspace
in 2012 came from the US, 19 per cent from Western Europe, 13 per cent from
China, 4 per cent from India, and the remaining 32 per cent from other coun-
tries and regions in the world.
Compared with the US, Western Europe, Japan, Australia, New Zealand
and other mature markets, emerging markets will showcase unprecedented
creativity and vitality in 2012–​2020 and will finally occupy an overwhelming
position in terms of global cyberspace data provision (see Figure 13.4).
China and India, as members of the BRICS countries, possess obvious
advantages in the round of development.
The total amount of data provided by China will account for 21 per cent
of the world in 2020, with approximately 8.6 ZB of data.10 If all the data
is text and is printed, the pages are 30 times in the length from the Earth
to Pluto after they are connected. The total amount of data provided by
India will reach 8 per cent of the world in 2020 and the total amount of
China and India will account for 29 per cent of the global data in 2020.
Coupled with data from Russia, Brazil, and South Africa, the total amount
of data provided by the BRICS countries in global cyberspace in 2020 will
be tremendous.
 BRICS and global cyberspace governance 225
The rise of emerging markets
25,000

20,000

15,000

10,000

5,000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Emerging markets (EB) Mature markets (EB)*
*United States, Western Europe, Japan, Australia, New Zealand

Figure 13.4 Rise of emerging markets.

Source: IDC’s Digital Universe Study, sponsored by EMC, December 2012.
Note: Mature markets include the United States, Western Europe, Japan, Australia
and New Zealand.

Apart from data, the large population of the BRICS countries also
determines the fact that over 30 per cent of the users of global cyberspace
mainly come from these countries.
Besides India and China, other members of the BRICS also have much
potential in the development of the Internet.
Brazil is the fifth largest country in the world in terms of land area and
ranks sixth in population and seventh in the number of network users. As
of 2013, Brazil’s Internet penetration rate was close to 50 per cent of its
total population. As to hardware resources, Brazil has deployed 24 top-​
level geographic domain name mirror image servers in its native land,
which is the most important data hub and node in South America. As a key
member of the Organization of American States, Brazil is also a signatory
to the Comprehensive Inter-​American Cybersecurity Strategy. It pioneers
research on national cybersecurity strategy and global cyberspace govern-
ance and has close relations with other countries in South America, such as
Argentina. Since the PRISM scandal in 2013, Brazil has been active in voi-
cing criticism against the US’ implementation of cyber-​monitoring globally
by the abuse of technology capabilities, and cooperated with Germany at
the UN General Assembly to launch a discussion on the signing of a global
anti-​monitoring treaty.
226 Shen Yi
In terms of national cybersecurity, Russia has the strongest strategic cap-
ability among the BRICS countries and all emerging economies. In 2011,
Russia formulated a complete document on national cybersecurity and
released it on the website of Ministry of Defence of the Russian Federation. In
this document, Russia regards the control, prevention and resolution of cyber
disputes as three main strategic goals. A complete strategic arrangement and
practical capability amassed from the long-​time competition with the West
are the biggest resources that Russia has in cybersecurity, which can be also
shared by the BRICS countries. As of 2013, nearly half of the Russian popu-
lation used the Internet. In terms of technologies, though not comparable to
the United States, Russia boasts huge advantages in technologies and indus-
tries in the key application areas of cyber technologies such as cybersecurity,
virus prevention and intrusion detection and perception, and it has many
young talents for backup. It is the key to the future BRICS cooperation on
how to fully leverage these assets among the BRICS countries and emerging
countries and enable them to play an important role in global cyberspace
governance.
Africa is generally the least developed region in the world in terms of cyber-
space. On one hand, this reflects that the key infrastructure in cyberspace
is insufficient in the African continent; on the other hand, this means huge
potential and space for development. South Africa has witnessed relatively
good development, which is determined by its history. The relative advantages
in finance, economy and regulation construction grant South Africa huge
potential to become a core node of cyber infrastructure in Africa and an
international outlet for Saharan and Southern Africa countries. Accordingly,
South Africa possesses strategic advantages.
What is more, the collective rise of the BRICS countries is likely to serve as
an example or strong core for the vast emerging countries that work on their
own, especially those developing countries that are in weak positions in the
global governance order. Therefore, on the whole they can compete with the
developed countries that possess overwhelming technologies and abilities. It
is worth noting that current cyberspace is facing daunting challenges from the
US’ aggressive cybersecurity strategy. It might be one of the rare opportun-
ities for non-​Western countries to guarantee their own reasonable benefits in
cyberspace to effectively cooperate on cyberspace governance.

3. Strategy and policy coordination for the BRICS countries to

promote global cyberspace governance
The essence of the US’ cyberspace strategy lies in expanding its sovereign jur-
isdiction and reducing other countries’ ability to use sovereignty to resist the
advantages of the United States. Judging from the plan for the construction
of a new global cyberspace governance order, the basic feature of the US’
program is to avoid publicly recognizing the applicability to cyberspace of the
principle of sovereignty, to further strengthen and solidify the advantages that
 BRICS and global cyberspace governance 227
US companies, NGOs and individuals have already gained from the global
cyberspace governance architecture, and to maintain and expand the jurisdic-
tion of cyberspace critical facilities, core resources and basic behaviours at the
entity level, including administrative and judicial jurisdiction.

3.1 Options for the BRICS countries to face challenges

The emerging countries represented by the BRICS have three options theor-
etically to face the US’ hegemonic strategy.
The first is to unconditionally follow the United States. That is to say,
emerging countries will unconditionally acknowledge the US’ hegemonic
strategy and acknowledge the abuse of its technological advantages. In add-
ition, they will unconditionally trust the intentions of the US government;
they will believe that the US government will only use its technologies for
national security and anti-​terrorism as it has declared, rather than for unfair
competition in commercial areas. Such a strategic option might be what the
policymakers in Washington expect, but according to the investigation panel
founded by the European Parliament in 2001, the United States used to abuse
such abilities and it did not have much reliability.11
The second is to fight back hard and set an absolute standard for its own
security despite the huge cost, including the conflict like the Cold War in
cyberspace and setting up a network in parallel with the existing global cyber-
space (including infrastructure pipelines and physical isolation from existing
networks). This vision tended to surface after Snowden disclosed the exist-
ence of the PRISM project in a way that no one can deny and subjectively
interpret. Not considering that the huge financial cost is completely opposite
to the overall economic and social activities of the current world, and the
PRISM project alone is enough to be excluded from the list of options for
the BRICS countries. After all, the BRICS countries aim to become major
powers in the international regime.
The third is to think according to the philosophy of “governance for
security” and adhere to the principle of “common heritage of mankind”. The
BRICS countries should coordinate their strategies and jointly promote the
construction of the new order of global cyberspace, thus effectively facing the
US’ hegemonic strategy.

(II) Promote the construction of the new global cyberspace order

First of all, the new global cyberspace order can be regarded as the inheritance
and development of the “new world information and communication order”
movement. Among the BRICS countries, India and Brazil have considerable
positive strategic assets at hand. The movement of establishing a “new world
information and communication order” was jointly initiated by the South’s
developing countries in the 1960s and 1970s –​before the existence of global
cyberspace –​which was aimed at changing the inequality and imbalance of
228 Shen Yi
the world’s communication pattern. The movement resulted in failure because
of the end of the Cold War along with the lack of effective leaders.
If the BRICS countries can advocate and promote establishing and
perfecting a new global cyberspace order on the basis of the above movement,
they will hold a moral high ground in public opinion globally, gain greater
voice and offset the strategic pressure of “Internet freedom” advocated by the
United States. The game of the new cyberspace governance order between
the BRICS countries and the developed countries represented by the United
States is to a large extent a game of seizing the moral high ground of public
opinions.
Second, the new global cyberspace order can be a core concept to support
the strategic goal of cyberspace of BRICS countries. The development of
the BRICS countries cannot be separate from the information technology
industry, although the emerging countries cannot copy the old development
path of Western countries. Therefore, advocating the establishment of the
new global cyberspace order can be a core concept for the BRICS countries
to construct their own strategies on cyberspace. “Governance”, instead of
“competitive game”, will be the main measure to safeguard cybersecurity of
all countries, including the BRICS countries. From the perspective of prac-
tical outcomes, advocating and promoting the establishment and improve-
ment of the new global cyberspace order will help the BRICS countries to
unite the international strength of those who are dissatisfied with the old
order and will make it hard for Western countries to directly deny.
Third, advocating the establishment of a new order of information and
communication in global cyberspace provides new topics, platforms and
carriers for the BRICS countries to effectively solidify diplomatically stra-
tegic collaboration. The development of the BRICS countries, especially the
cooperation in diplomatic strategies, requires an appropriate topic that can
include the basic code of conduct valued by the emerging countries, such as
respect for sovereignty, equality and mutual benefits, diversity and inclusive-
ness. It not only reflects the national benefits of the emerging countries, but
also makes contributions to the world from their political wisdom.
The new global cyberspace order will cover three aspects, including the new
order of key resource-​sharing in global cyberspace, the new order of global
cyberspace and the new order of information communication in global cyber-
space. It will organize an ideal global cyberspace where most countries, espe-
cially those that are temporarily weak in technologies, hardware and software,
can benefit from three dimensions, namely software and hardware resources,
code of conduct and mode of governance.
Finally, the basic goals of the new global cyberspace order are security,
equality, openness, consultation and regulation. The core of the new order
is to guarantee and realize the BRICS countries’ security and other interests
in global cyberspace by ensuring its orderly operation through cooperation
under the philosophy of “governance for security”. The basic goals are as
follows. First, security: national security should be free from the impact of
 BRICS and global cyberspace governance 229
and challenges from cyberspace; the international community supports and
encourages countries to guarantee their own security by effectively super-
vising key infrastructure, key data and key services. Second, equality: all kinds
of actors, regardless of size and technologies, are equal and entitled to benefit
from the development of cyberspace. Third, openness: global cyberspace is
open to all legal users, and countries should not monopolize cyber technolo-
gies and resources for their own interests. Actors with advanced technologies,
applications and resources should proactively assist underdeveloped actors
to bridge the gap and help them cultivate and develop related industries or
abilities. Fourth, consultation: in the new order, actors with contradictions
and disputes should negotiate and consult with each other instead of using or
threatening to use military force to settle confrontations; multinationals with
advanced technologies should respect the rights and interests of developing
countries and avoid abusing their own technological advantages or taking
advantage of the support from other major countries to pursue dispute settle-
ment to their advantage. Fifth, regulation: the new order pursues the establish-
ment of a code of conduct that is conducive to the orderly flow of information
in global cyberspace. Whether human life can actually be improved is a main
yardstick for judging whether such information flows in an orderly manner.

4. Conclusion
To sum up, top-​level design, policy innovation and international collabor-
ation are required in the establishment of a new global cyberspace order for
the BRICS countries.
In terms of top-​level design, with “respect for cyber sovereignty” advocated
by China as the core principle, the BRICS countries should strengthen dis-
cussion and coordination in strategies. Starting from top-​level design, the
BRICS should promote the establishment of the new global cyberspace order
based on the principle of “respect for cyber sovereignty, key infrastructure
and key resources sharing based on sovereignty equality”. The BRICS coun-
tries should set up a special coordination mechanism in order to integrate
the bodies related to strategy formulation and implementation and represen-
tative actors in regular summits. They should also strengthen overall coord-
ination and try to finalize initiatives on cybersecurity strategies that reflect
the consensus of the BRICS countries, thus grasping the dialectical rela-
tionship between the BRICS countries and the new global cyberspace order
from a strategic perspective and clarifying the systematic discussion of global
cybersecurity governance in the BRICS countries.
In terms of policy innovation, the BRICS countries should promote the
innovation of industrial policies systematically and encourage their companies
to develop key equipment, technologies and applications in cyberspace. They
should also promote consultative policy innovation and encourage collab-
oration between colleges and research institutions, establish a government–​
industry-​–​research integrated consultation think–​tank or innovation platform
230 Shen Yi
centred around the new cyberspace order, and promote the development of
cyberspace technical standards and evaluation systems with proprietary rights
of the BRICS countries.
Regarding international collaboration, the BRICS countries should even-
tually speak in one voice on the issue of cybersecurity in the international
community. They should form, solidify and expand their strategic proposals,
establish systematic elucidation on the new cyberspace order that suits the
development trend of cyberspace, accommodates the core interests of the
BRICS countries and fully reflects the reasonable requests of developing coun-
tries. To be specific, the possible routes may be as follows: targeting the estab-
lishment of the new global cyberspace order, the BRICS countries will unify
the BRICS platform with the help of a Sino-​Russia strategic alliance. They
will first establish a tentative policy intention and explain their understanding
of the new cyberspace order under the name of the BRICS countries. Then
with the help of the BRICS platform, they will submit the new order to
UNESCO and the International Telecommunication Union for discussion
under the framework of the United Nations; advocate the establishment and
improvement of the new global cyberspace order to the world via the United
Nations; and, finally, push the United Nations to finalize related documents.
The ultimate goal of the effective collaboration of the BRICS countries in
global cyberspace governance is to make contributions to the development of
the world. They hope to ensure that all countries, especially the developing
countries that need technological abilities the most yet lack such abilities,
not only to guarantee their own security but also to benefit from the devel-
opment of information technology in an enabling international governance
environment.12 This will no doubt be one of the major contributions to the
international community by the emerging major countries and an important
index to test the new route of the collective rise of emerging major powers to
successfully overcome the tragedy of great-​power politics and open up a new
development model.

Notes
1 Chairperson’s Statement on the BRICS Foreign Ministers Meeting held on 24
March 2014 in The Hague, Netherlands, www.dirco.gov.za/​docs/​2014/​brics0324.
html, date of access: June 20, 2016.
2 Tim Bradshaw: “Bogus Terror Tweet Sparks Shares Blip”, Financial Times, April
24, 2013, www.ftchinese.com/​story/​001050111, date of access: June 20, 2016.
3 www.xinhuanet.com, “Ministry of Foreign Affairs: China Hopes to Have a
Constructive Dialogue with US on Cybersecurity”, http://​news.xinhuanet.com/​
world/​2013-​04/​24/​c_​115528802.htm, date of access: June 20, 2016.
4 Yochai Benkler, “From Consumers to Users: Shifting the Deeper Structures
of Regulation towards Sustainable Commons and User Access”, Federal
Communications Law Journal, Vol. 52, No.3, 2000, pp. 561–​579.
 BRICS and global cyberspace governance 231
5 Brad Brown, Michael Chui and James Manyika, “Are You Ready for the Era of
‘Big Data’ ”, McKinsey Quarterly, October 2011.
6 Morgan Stanley, “The Mobile Internet Report”, July 2009.
7 Michele Flournoy and Shawn Brimley, “The Contested Commons”, US Naval
Institute Proceedings, Vol. 135, No. 7, 2009.
8 Lennard G. Kruger, “Internet Governance and the Domain Name System: Issues
for Congress”, Specialist in Science and Technology Policy, No. 13, 2013.
9 Barry R. Posen and Andrew L. Ross, “Competing Visions for US Grand Strategy”,
International Security, Vol. 21, No. 3, Winter 1996/​1997, pp. 5–​53.
10 1ZB=1trillion GB.
11 European Parliament, Temporary Committee on the ECHELON Interception
System, and Gerhard Schmid, Report on the Existence of a Global System for
the Interception of Private and Commercial Communications (ECHELON
Interception System) 2001 /​2098 (INI): Motion for a Resolution, Explanatory
Statement, European Parliament, 2001.
12 “Yang Jiechi Proposes to Strengthen Cyber Information Security Collaboration
among BRICS Countries”, http://​news.xinhuanet.com/​world/​2013-​12/​07/​c_​
125821763.htm , date of access: June 20, 2016.
14 
The BRICS countries and the
construction of New Development Bank
Xu Xiujun

It is unprecedented in the history of the world economy for the major emer-
ging economies to jointly create a multilateral development financial institu-
tion across regions. The symbolic and practical significance of the NDB is
evidence that it not only marks the economic rise of the emerging economies
represented by the BRICS and its progress in the reform of the existing inter-
national financial architecture, but also marks that the BRICS cooperation has
transformed from the consultation by the leaders on macro issues concerning
the BRICS countries and other global and regional issues into the compre-
hensive practical cooperation in economic and financial aspects, entering the
substantial construction stage of the BRICS cooperation mechanism.

1. The origin and development of the New Development Bank

1.1 The origin of the New Development Bank

The NDB initiative originated from a report by Joseph Stiglitz, a Nobel econo-
mist, and Nicholas Stern, a professor at the London School of Economics. In
the report, they analysed authoritative data from international institutions
and found that emerging market countries have a large investment demand
and a large amount of mobilizable idle funds. The World Energy Outlook
2010, published by the International Energy Agency(IEA), points out that,
“in terms of the energy sector, US$33 trillion of investment will be needed
over the next 25 years, with 64 percent of the investment demand coming
from emerging and developing economies.”1 In order to make rational and
effective use of funds from the emerging market countries and meet their
growing investment demand, Stiglitz proposed that emerging and developing
economies should establish a financial intermediary system. Among them,
the most feasible plan was to set up a South–​South Development Bank led
by the emerging economies with the purpose of making full use of surplus
savings to meet their investment demand. Stiglitz’s proposal is also based on
the background that existing multilateral development institutions may influ-
ence the financing on infrastructure in the emerging economies but are still
of limited effect compared with the growing demand. By the end of 2010, the
 BRICS and the New Development Bank 233
outstanding loans of existing major development banks, such as the World
Bank, the Asian Development Bank, the Inter-​American Development Bank
and the African Development Bank, totalled merely US$305.4 billion, which
is far from enough to solve the problem of infrastructure financing in emer-
ging market countries. If with a 10 per cent growth rate of the loans balance,
the existing major multilateral development agencies can increase their devel-
opment loans by merely about US$30.5 billion per year.
Based on Stiglitz’s report, India proposed to jointly establish the NDB
with the other four BRICS countries, a bank that is led by the five BRICS
countries.2 The reasons mainly include the following four aspects: First, the
capital that flows to emerging and developing countries, including the offi-
cial development assistance, is not able to make up for the huge funding gap
associated with the investment of infrastructure and environmental pro-
tection. In addition, the global crisis and fiscal austerity in the developed
countries further weakened the developmental ability of financial invest-
ment of the developed countries, and the establishment of the develop-
ment bank led by the BRICS countries will be a practical step to bridge the
funding gap. Second, a considerable proportion of the savings of emerging
economies flow “upstream” to the developed countries by investing in their
government bonds and other high-​credit assets, therefore, it is a reasonable
way to solve this problem through utilizing the savings of emerging markets
to meet the financial demand of the BRICS and other developing coun-
tries. Third, since the South–​South Development Bank will be dominated
by emerging economies represented by the BRICS countries and will deter-
mine the allocation of funds, the funds will be led to the place where they
are mostly needed. Fourth, in the current global financial turmoil, the
establishment of the South–​South Development Bank will be an essential
symbol for emerging market economies to become self-​reliant, which is
very important in the current environment where the emerging economies
are increasingly playing a stable role in, and becoming the engine of, global
economic growth.
In order to facilitate other BRICS countries to discuss and study the estab-
lishment of the NDB, India has prepared preliminary plans for the goals,
sources of funds, operational activities, capital structure and schedule of the
development bank. According to the Indian proposal, the aim is to establish
a BRICS-​led development bank, one which would be funded and managed
primarily by the BRICS and other emerging economies to meet the specific
investment needs of the BRICS and those economies. Therefore, the devel-
opment bank initiated by the BRICS countries is not a departure from, or
challenge to, the existing international financial architecture, but an effective
complement to other existing multilateral institutions to meet the specific
investment demand of the BRICS and other developing countries. After all,
the establishment of the development bank will serve as an important bridge
between developing countries, and even between developing and developed
countries.
234 Xu Xiujun

1.2 Preparation for establishing NDB

On 29 March 2012, the fourth BRICS Leaders’ Meeting was held in New
Delhi. At the meeting, the BRICS leaders showed strong interest in the estab-
lishment of the cooperative development bank and expressed their common
position. In the Delhi Declaration issued after the meeting, they laid out the
purpose and goals of establishing the NDB. The declaration states that the five
national leaders “explored the possibility of establishing a new development
bank to finance infrastructure and sustainable development projects in the
BRICS and other developing countries and to complement existing multilat-
eral and regional financial institutions for global growth and development”.3
The Delhi Declaration also instructed the finance ministers to “review the pos-
sibility and feasibility of this initiative, establish a joint working group for fur-
ther study and report before the next summit”. In order to conduct a full study
of the feasibility of the development bank, the BRICS “Delhi Action Plan”
proposed to hold expert meetings to discuss the establishment of the bank.
After the BRICS summit, the five countries set up the NDB working
group to explore the possibility and feasibility of the bank. With its in-​depth
research, the working group proposed the key areas and issues to be discussed
on the establishment of the development bank. These questions can be divided
into seven aspects: banking function, membership and openness, governance
structure, capital structure, credit rating, think-​tank function and promoting
cooperation in other fields. Among them, the banking function refers to the
major areas of banking, such as hard and soft loans for infrastructure, cross-​
border projects, poverty reduction and development issues. The membership
composition of the bank is related to such issues as whether membership is
limited to the BRICS or extended to include the BRICS together with other
emerging market countries, developing countries, developed countries and
international financial institutions. The governance structure of the bank
includes the allocation of stock rights/​quotas, the selection of a president, the
location of headquarters and the senior management. The capital structure
includes matters related to the allocation of financial resources and suggestions
on the capital structure of the bank. Credit rating includes how to reduce the
risk to improve the credit rating of banks, reduce the borrowing cost, and
bring it close to the borrowing level of the existing Multilateral Development
Banks (MDBs). The think-​tank function includes how to provide a platform
for key research in the BRICS countries, emerging economies and developing
countries. Other areas of cooperation include promoting trade and investment
within the BRICS countries, emerging economies and developing countries.
In March 2013, the fifth BRICS summit issued the Durban Declaration,
in which the leaders of the five countries formally agreed to establish a new
development bank. The Durban Declaration states:

Developing countries face challenges of infrastructure development

due to insufficient long-term financing and foreign direct investment,
especially investment in capital stock. This constrains global aggregate
 BRICS and the New Development Bank 235
demand. BRICS cooperation towards more productive use of global
financial resources can make a positive contribution to addressing this
problem. In March 2012 we directed our Finance Ministers to examine
the feasibility and viability of setting up a New Development Bank for
mobilizing resources for infrastructure and sustainable development
projects in BRICS and other emerging economies and developing coun-
tries, to supplement the existing efforts of multilateral and regional finan-
cial institutions for global growth and development. Following the report
from our Finance Ministers, we are satisfied that the establishment of a
New Development Bank is feasible and viable. We have agreed to estab-
lish the New Development Bank. The initial contribution to the Bank
should be substantial and sufficient for the Bank to be effective in finan-
cing infrastructure.

On 15–​16 July 2014, the sixth BRICS summit was held in Brazil under the
theme of “Sustainable Solutions for Inclusive Growth”. Brazilian President
Dilma Rousseff, Russian President Vladimir Putin, Indian Prime Minister
Narendra Modi, Chinese President Xi Jinping and South African President
Jacob Zuma exchanged in-​depth views on the BRICS cooperation and other
international and regional issues of common interest, reaching a series of new
cooperation agreements. Among them, it is noteworthy that the NDB initia-
tive, which was a heated topic for the international community two years ago,
was finalized, and the five countries officially launched the preparation plan
for the bank. According to the plan, the NDB had an initial capital of US$50
billion, with each of the five members devoting US$10 billion. The NDB was
officially established in July 2015 and put into operation in 2016.

2. Strategic significance of the New Development Bank

2.1 Deepening the BRICS cooperation

In recent years, the BRICS countries have been constantly growing in terms
of economic and financial strength, and they should have a louder voice in
the field of international finance. However, it is difficult for the international
monetary system to make major adjustments in the short term, and the
developed countries that have dominated the international financial system
for a long time do not easily make concessions. Therefore, in order to improve
the current international monetary framework and accelerate reform of the
international monetary system, it is urgent for emerging economies, which are
in a weak position in the international system, to carry out substantive and
effective cooperation. The outbreak of the global financial crisis has revealed
many shortcomings of the international monetary and financial system and
thus it has become the common appeal of all countries to reform the inter-
national monetary and financial system and prevent international financial
risks. In this context, it is of particular significance for the BRICS countries
to strengthen financial cooperation in various forms. The discussion on the
236 Xu Xiujun
establishment of a new development bank is an important manifestation of
their efforts to promote financial cooperation with each other. There is no
doubt that the establishment of the NDB will become a milestone for the
BRICS financial cooperation, which is of great and realistic significance.
On the one hand, the establishment of the NDB can further promote
the solidarity and cooperation among the BRICS countries, enhancing the
status of the BRICS countries as a whole in global governance. As an inter-
national institution, the NDB can provide services globally. While effectively
complementing existing multilateral development banks, it can also further
influence the reform of existing multilateral development banks and even
change the passive situation of the BRICS countries in the reform of global gov-
ernance. Due to limited voting power in existing international organizations,
the BRICS countries do not have their own platform. After the establishment
of the NDB, the BRICS countries formed their own independent platform,
through which the BRICS countries can have a greater impact on issues such
as global infrastructure financing, development assistance, and reform of the
international financial system. Meanwhile, the BRICS can deepen its influ-
ence in developing countries by doing business with them.
On the other hand, the establishment of the NDB promotes trade and
investment between the BRICS countries. In the first decade of the twenty-​
first century, the BRICS have been playing an increasingly important role in
the global economy, with the BRICS proportion in global GDP rising from
8.3 per cent in 2005 to 17.7 per cent in 2010. In particular, the BRICS coun-
tries have become important sources of demand in the world. In addition to
the increase in worldwide exports, the proportion of the BRICS countries
in global imports has also been rising, accounting for 18.8 per cent by 2010.
If the NDB can increase its support for trade financing, companies in the
BRICS countries could be more effective in the global trade market.
In terms of their internal relations, although there is no adjustment of
trade policies such as tariffs, the BRICS countries have shown closer eco-
nomic and trade relations among each other with obvious characteristics of
trade transfer. Take Brazil for example in 2000, the proportion of its exports
to the BRICS countries accounted for only 3.68 per cent of its total exports,
but it increased to 20.11 per cent in 2010. During the same period, the propor-
tion of Brazil’s imports from the other BRICS countries also increased, from
4.10 per cent to 19.97 per cent. Not Brazil alone, the share of trade between
China, India, Russia and South Africa with the other BRICS countries has
doubled and redoubled. The reason is that although there are no trade pol-
icies such as tariff concession and access increase between the BRICS coun-
tries, the cooperation platform set up by the governments enables the field of
business and entrepreneurs of all countries to improve their understanding
of the business environment in other members, which enhances their confi-
dence in the markets of the BRICS countries, and thereby increases the eco-
nomic and trade exchanges between the BRICS countries. The establishment
of the NDB will build a new platform for entrepreneurs of the five countries,
 BRICS and the New Development Bank 237
enhance their confidence in the market of the member states and promote the
in-​depth development of trade and investment activities.
The status of the BRICS in the global economy has been rising, but its
strategic status still has lagged behind its economic status. The major reason
is the lack of tools that can dominate or influence global governance. The
establishment of the NDB can not only enhance the status of the BRICS
countries in global governance, but also further enhance the status of the
BRICS countries in the global economy, providing trade financing to pro-
mote commerce between the BRICS countries and lay a foundation for the
establishment of closer economic and trade relations and the deepening of
their pragmatic cooperation.

2.2 A positive role in the reform of international economic governance

Since the financial crisis, the reform of the global governance mechanism has
made some progress, and the status of emerging economies has been enhanced,
although there is still a long way to go. The two main reasons are as follows.

First, the reform of global multilateral economic institutions has been

progressing slowly. For one thing, in the fall of 2008, the World Bank
Group agreed to begin a two-​stage reform to increase the participation of
developing and transitional countries (DTC) in the World Bank, including
increasing the voting rights, shares and the number of members on the execu-
tive board of DTC countries, and responding to DTC countries’ views on
development. (1) Increasing the voting rights of DTC countries. Based on the
new equity formula, the voting rights of DTC countries increased from 42.6
per cent to 47.2 per cent in the International Bank for Reconstruction and
Development (IBRD) and from 40 per cent to 46 per cent in the International
Development Association (IDA). (2) Establishing an independent rights
offering principle. A share-​allocation method that is consistent with, but
different from, International Monetary Fund quotas was required, and new
IDA contributions were summoned to maintain the balance of voting power
between the developed and DTC members. (3) Regularly evaluating the share
structure of IBRD and IDA. The IBRD and IDA share structures should
be assessed every five years to ensure that these structures could reflect their
respective economic shares and contributions to the World Bank Group.
(4) Increasing the directors from DTC countries. Two additional directors
from sub-​Saharan Africa should be added while maintaining the number of
directors from other countries, with the executive directors from sub-​Saharan
Africa numbering three. (5) Amending the Constitution of the World Bank.
This is an attempt to change the rules on basic voting rights.

The proposal to increase those rights has been approved by the council and
member states. It can be seen that after this round of voting rights reform,
the voting rights of the BRICS countries have already increased from 11.26
238 Xu Xiujun
per cent to 13.10 per cent. In particular, the voting rights of China, Brazil
and India have all been greatly increased. But the reform of the World Bank
still has many drawbacks. One is that the BRICS countries still lack sufficient
voting rights in the bank. In 2010, the BRICS countries accounted for 17.69
per cent of global GDP. Meanwhile, the BRICS countries have a sounder
fiscal position than European and Americas countries. Second, it does not
change the United States’ “exclusive veto”. After the voting rights reform,
US voting power dropped by 0.51 per cent to 15.85 per cent, but it still has
enough voting rights to veto changes to the Constitution of the World Bank
(15 per cent). In other words, the United States still has exclusive “veto power”
over changes to the constitution. In addition to the World Bank, other inter-
national economic organizations, including the IMF, have also been slow to
reform, failing to reflect the rising status of the BRICS countries and the
changing global economic landscape.

Second, the reform of regional international economic organizations has not

started yet. Compared with the World Bank, there are also regional develop-
ment banks that are supposed to better represent the interests of emerging
markets and developing countries but are unfortunately slower to reform than
multilateral international development banks.
According to the data published by regional development banks, the
BRICS countries have rather limited voting rights in the Asian Development
Bank, the Inter-​American Development Bank and the African Development
Bank (see Table 14.1). In the Asian Development Bank, for example the
BRICS countries have only 12.2 per cent of the votes, less than that of Japan
alone (14.5 per cent). In the Inter-​American Development Bank, the United
States alone has 30 per cent of the vote, while the BRICS countries have only
10.8 per cent. In the African Development Bank, the BRICS countries also
have less voting power than the United States.
The promotion of cooperation among the BRICS countries in the field of
infrastructure financing through the establishment of the NDB is bound to
put pressure on existing multilateral development institutions and promote
the reform of the international financial system and global economic gov-
ernance dominated by the United States and other Western countries. As an

Table 14.1 Voting rights of the BRICS countries in regional multilateral development

institutions (Unit: %)

BRICS US Japan

The Asian Development Bank 12.2 5.0 14.5

The Inter-​American Development Bank 10.8 30.0 5.0
The African Development Bank 6.3 3.4 5.3

Source: Based on published data of multilateral development agencies.

Note: Data shown were collected before 2015.
 BRICS and the New Development Bank 239
international organization, the NDB does business over the world, serving as
a complement for the existing multilateral development banks and also influ-
encing the governance structure and business decisions of the existing multi-
lateral development institutions, so that it will gradually change the passive
situation of emerging markets and developing economies represented by the
BRICS countries in the reform of the international financial system. The
NDB, as the Russian economist Roman Andreev stated, is determined to be a
credible new alternative to the global financial system.

2.3 One of China’s major initiatives to actively participate in

international economic governance
Since the start of the twenty-​first century, China’s voice in international eco-
nomics has been greatly enhanced. Still, however, that voice is still not consistent
with China’s current economic aggregate. Therefore, some domestic and for-
eign scholars believe that China has not entered the core and in-​depth part of
the existing international economic system. Instead, it is only a “follower” of
Western-​led “international economic governance”. For example China has yet
to gain “market economy status” in the world. Although China’s voting rights in
the World Bank and IMF has been strengthened, China’s status in the govern-
ance and decision-​making bodies of these global institutions has not been sub-
stantially improved. On the issue of the RMB’s accession to the Special Drawing
Rights of the IMF, Western countries attach quite a few conditions to China.
The game between countries is not a zero-​sum game, nor is it a natural rivalry.
The development and prosperity of China is not to challenge the current world
system or international order, but to reach cooperation with other countries
within this framework. The existing international system has its drawbacks
as well as advantages. The purpose of China’s participation in international
economic governance is to overcome its shortcomings and promote the devel-
opment in a more just and equitable direction. The core is to ensure that all
developing countries, including China, have equal rights of development.
At the same time, China has taken an active part in international affairs and
shouldered its obligations and responsibilities to the best of its ability. China
is determined to play a constructive role in the international economic system,
share development opportunities and meet challenges with other countries,
and benefit other countries and regions through its development.
The NDB is one of the important measures taken by China to actively par-
ticipate in international economic governance and enhance its international
economic status. Like other BRICS countries, the establishment of the NDB
could enhance China’s role in global governance reform, facilitate the reform
of existing multilateral development banks, and boost China’s exports. In
addition, promoting the NDB can also help shape China’s leading role in
global governance and accelerate the domestic construction of an inter-
national financial centre. Specifically, the strategic significance of the NDB
for China includes the following four aspects.
240 Xu Xiujun
First, the NDB is an important measure for China to seek dominance in
global governance. Under the existing multilateral system, it is difficult for
China to take the lead. Even after the reform of international economic
organizations, China’s voting rights will still be restricted, placing barriers
against China taking the lead. After the establishment of the NDB, China can
share the dominance of the NDB with other BRICS countries and enhance
China’s voice in global governance by taking advantage of the influence of
this platform on developing countries.
Second, the NDB is an important measure for China to accelerate the con-
struction of an international financial centre. Overall, China has the strength
to become the headquarters of the NDB. With the headquarters in China, it
can accelerate the construction of an international financial centre at home
and improve the competitiveness of China’s financial industry.
Third, the NDB is an important measure for China to promote the finan-
cing of overseas project contractors. Among the BRICS countries, China has
the greatest competitiveness in overseas project contracting. In 2011, China
signed a total of US$142.3 billion of overseas project contracts, with a turn-
over of US$103.4 billion. China has a large market share in the Middle East,
Asia and Africa. With the change of the global project contracting mode,
more and more project contractors have to undertake the task of financing,
which leads to increasing pressure on Chinese enterprises to finance overseas
project contracting. In this regard, the NDB can provide corresponding finan-
cing to help Chinese engineering enterprises become bigger and stronger in
foreign countries.
Finally, participation in the NDB is an important measure of RMB inter-
nationalization. With the further improvement of RMB exchange-​rate forma-
tion mechanism and the completion of capital account reform, the exploration
phase of RMB internationalization may soon be over. The NDB can play a
good role in accelerating the internationalization of the RMB. For example
the NDB could provide RMB financing to the whole world, extending the
existing RMB trade settlement and RMB credit among the BRICS countries
to the whole world.

3. Functions of the New Development Bank

3.1 The functional positioning for infrastructure construction and

sustainable development
At present, the world’s major multilateral development institutions include
the World Bank, the European Bank for Reconstruction and Development,
the European Investment Bank, the Asian Development Bank, the Inter-​
American Development Bank, the African Development Bank and the
Andean Development Group. The aims and functions of the existing multilat-
eral development institutions mainly include the following four aspects. First,
reducing poverty and promoting development. The multilateral institutions
 BRICS and the New Development Bank 241
established after the World War II, including the World Bank, the Asian
Development Bank and the African Development Bank, consider this as a
traditional goal. The second is to promote the development of socially vulner-
able areas. The European Investment Bank, the Inter-​American Development
Bank and the European Investment Bank have this function as they mainly
serve small and medium-​sized enterprises and micro-​enterprises. The third
is to promote sustainable development. The European Investment Bank
is a typical example of a multilateral development institution that aims to
address climate change, environmental protection and sustainable develop-
ment. The fourth is to promote regional development and integration. While
the European Bank for Reconstruction and Development serves mainly the
transition of Eastern European countries, the Andean Development Group
provides integrated services in the region. Specifically, the main functions of
the World Bank are poverty reduction and development. The European Bank
for Reconstruction and Development aims to serve the transition of Central
and Eastern European countries. The European Investment Bank provides
support to small and medium-​ sized enterprises (SMEs), development of
underdeveloped regions, climate change, environmental protection and sus-
tainable development, knowledge economy, and Trans-​European Transport
Networks (TEN-​ T). The Asian Development Bank mainly aims at pov-
erty reduction and development in Asia. The Inter-​American Development
Bank serves mainly SMEs and private sector development (especially micro-​
enterprises). The African Development Bank focuses on poverty reduc-
tion, technical and financial assistance. The main objective of the Andean
Development Group is to promote regional integration (see Table 14.2).
The BRICS leaders reached basic consensus on the functions of the NDB
during the fourth BRICS summit in 2012 and further confirmed it at the fifth
BRICS summit in 2013. In the Delhi Declaration and the Durban Declaration,
the leaders made it clear that the new development bank aims to raise funds
for infrastructure and sustainable development projects in the BRICS coun-
tries, other emerging markets and developing countries, as a complement to
existing multilateral and regional financial institutions in the field of global
growth and development. Therefore, the purpose of the NDB is to serve the
BRICS countries, other emerging markets and developing countries. Its main
functions include two aspects, namely, promoting infrastructure construction
and sustainable development.
To this end, the NDB, as a cross-​regional financial institution with
development financing as its core business, should not only be oriented
towards the BRICS countries, but also support other developing countries.
It also serves as a bridge between developing and developed countries. In
the post-​financial crisis era, the world is facing the dilemma of insufficient
investment. The bank should not only provide development financing to
emerging and developing countries, but also actively promote investment
from emerging economies to developed countries, which will not only benefit
the development of emerging economies, but also promote the economic
242 Xu Xiujun
Table 14.2 Aims and functions of the world’s major multilateral development
institutions

Multilateral Aims and Major Functions Other Functions

Development
Institutions

World Bank Group Poverty reduction and Development assistance and

development
European Bank for Serve the transformation
Reconstruction of Central and Eastern
and Development European countries
European European financing institutions. Venture capital and
Investment Bank Key areas include: small
and medium-​sized
enterprises, development
of underdeveloped regions,
climate change, environmental
protection and sustainable
development, knowledge
economy and TEN-​T.
Asian Development Poverty reduction and
Bank development in Asia
Inter-​American SME development, private
Development sector development
Bank (especially micro-​enterprises)
African Research on poverty reduction, Development assistance and
Development technical and financial
Bank assistance
Andean Development Promoting regional
Group integration
soft loans are provided
by the International
Development Association
(IDA)
-​
assistance to small and
medium-​sized enterprises
are provided by the
European Investment
Fund (EIF)
Development aid and soft
loans are provided by the
Asian Development Fund
(ADF)
Soft loans and development
assistance are provided
by the Fund of Special
Operating (FSO)
soft loans are provided by
the African Development
Fund (ADF) and the
Nigerian Trust Fund
(NTF)
-​

Source: Based on the websites of organizations.

recovery of developed economies. In addition, as a new multilateral devel-

opment agency, the NDB should learn from the existing multilateral finan-
cial institutions to establish an operation mechanism with a streamlined
bureaucracy, high efficiency in decision-​making, and greater flexibility.
Moreover, innovation should be pursued on the investment and financing
mode to create a developmental financial pattern with the combination of
policy banks and commercial banks, as well as indirect financing and direct
financing, to contribute to the development of global finance.
 BRICS and the New Development Bank 243

3.2 Building a new investment and financing platform

In practical terms, the main purpose of the establishment of the NDB is to
meet the increasing investment and financing demand of the BRICS coun-
tries so as to promote rapid economic and social development. For India,
the economy has been growing at a sustained rate for nearly three decades,
being at a higher level despite the slowdown caused by the financial crisis.
In contrast to its rapid economic growth, the urban infrastructure and road
traffic remained underdeveloped in India. At the end of 2012, India’s total
population was nearly 1.22 billion, ranking second in the world, but its
urban population was only 30 per cent. Rapid economic growth has led to
the acceleration of urbanization. To meet the demand of urban infrastruc-
ture construction, the Indian government plans to spend 50 trillion Rupees
(US$1.2 trillion) on its infrastructure construction from 2012 to 2017. Still,
however, there is a big gap in domestic infrastructure investment. India is a
country with chronic current account deficit and insufficient savings. In 2012,
India’s current account accounted for -​5.1 per cent of GDP, while its domestic
investment and savings accounted for 34.9 per cent and 29.8 per cent of GDP
respectively. Domestic savings cannot meet the demand of domestic invest-
ment, so external capital inflows are required to support domestic investment
growth. Infrastructure investment, in particular, relies on financing conveni-
ence provided by international development agencies.
For South Africa, despite its relatively high level of urbanization, its rapid
economic growth has also generated a large demand for infrastructure invest-
ment. However, in 2012, South Africa’s savings accounted for 13.2 per cent of
GDP and investment accounted for 19.4 per cent of GDP. Since the domestic
savings cannot meet the demand of investment, there is a large demand for
external funds. In addition, an important issue for South Africa’s economic
development which should be addressed is the long-​term high unemployment
rate. According to the IMF statistics, South Africa’s unemployment rate was
25.2 per cent in 2012, the highest among the BRICS countries. The NDB was
expected to create jobs and alleviate the severe domestic employment situ-
ation in South Africa. At the BRICS Summit in New Delhi, Jacob Zuma,
South African President, said the NDB “will have great potential to help
create jobs in developing countries”.
In 2012, Brazil’s GDP growth rate dropped to 0.9 per cent, the lowest since
the economic recovery after the financial crisis, 1.8 per cent lower than the pre-
vious year. The sharp downturn has forced the government to launch a series
of stimulus packages and boost infrastructure investment. In 2010, Brazil
proposed a two-​stage “Accelerated Growth Plan” (2011–​2014), which included
about US$870 billion in infrastructure investment, accounting for 38.9 per
cent of Brazil’s GDP in 2010. Like India and South Africa, the proportion
of savings in the GDP of Brazil is less than that of the investment, running
a current account deficit and relying on external capital inflows for domestic
investment growth. With the development of urbanization, the demand for
244 Xu Xiujun
infrastructure investment has been increasing. The role of the BRICS NDB
in meeting Brazil’s investment demand is therefore clear. Overall, as Fernando
Pimentel, Brazil’s Minister of Industry and Trade said, the BRICS countries
have a common interest in setting up a cooperative development bank, which
meets the demand of today’s economies, and the NDB will be a global instru-
ment for the intense corporation of five economies.
Russia’s infrastructure investment demand mainly comes from the construc-
tion demand in the process of the economic transformation. In the recent years,
due to changes in the direction of oil exports, Russian demand for energy-​
related infrastructure, such as pipelines, has grown rapidly in recent years. But
unlike India, Brazil and South Africa, Russia has a savings surplus and a current
account surplus. In 2012, Russian savings and investment accounted for 28.5
per cent and 24.5 per cent of GDP respectively, and the current account balance
accounted for 4.0 per cent of GDP. It is generally believed that domestic invest-
ment can be realized through domestic financing and even domestic capital can
be used for external net investment. In fact, Russia’s savings and investment con-
version system needs further improvement and the domestic financing channels
for infrastructure investment are sometimes impeded, the new development
bank can provide financing facilities for Russia. In addition, the establishment
of the NDB will lead to “spill-​out effect” and promote in-​depth cooperation
among the BRICS countries in various fields. “If the BRICS countries can
establish this bank, it will be a sign for the BRICS countries to be more united,”
said Davakovic, the Presidential Assistant of Russia.
China has the largest demand for infrastructure investment among the
BRICS countries. By the end of 2012, China’s urban population accounted for
52.6 per cent of the total population, reaching over half the population. The
urbanization of China still has a long way to go, and the demand for infrastruc-
ture investment thereby will continue to grow in the long term. Historical data
since 1978 show that, the urban population will increase by 0.43 percentages
for 1 percentage of GDP growth in China. While for 1 percentage increase of
China’s urbanization rate, the investment rate rises by 0.275 percentages. At
the same time, China has large foreign exchange reserves, and the private sector
has a lot of idle funds. According to the People’s Bank of China, China’s for-
eign exchange reserves stood at US$3.33 trillion at the end of 2012. The huge
foreign exchange reserves have brought pressure on the RMB exchange rate
and limited the room for domestic monetary policy regulation. More import-
antly, the huge foreign exchange reserves are facing a great risk of maintaining
value. In addition, a large number of private idle funds should be reasonably
utilized. The establishment of the NDB will expand China’s external financing
channels and, on this basis, drive China’s financial industry to “go abroad”.

4. Conclusion
The BRICS countries set up a new development bank mainly for the following
four reasons. First, the capital flowing to emerging and developing countries,
 BRICS and the New Development Bank 245
including the official development assistance (ODA), is not able to make up
for the huge funding gap related to the investment needed in infrastructure
construction and environmental protection. In addition, the global crisis and
fiscal austerity in the developed countries further weakened the financing
capacity of the developed countries. The establishment of the development
bank led by the BRICS countries is a substantial step to bridge the funding
gap. Second, a considerable proportion of the savings of emerging economies
flowed in a reverse direction to developed countries by investing in govern-
ment bonds and other highly rated assets. Therefore, utilizing the savings
of emerging markets to meet the financial demand of the BRICS and other
developing countries is a reasonable way to solve this problem. Third, since
the South–​South Development Bank has been dominated by emerging econ-
omies represented by the BRICS countries, which determine the allocation of
funds, this helps direct funds to where they are mostly needed for more effi-
cient utilization. Fourth, the establishment of the South–​South Development
Bank will be an essential symbol for emerging market economies to become
self-​reliant, which is very important in the current environment where emer-
ging economies are playing an increasingly stable role and becoming the
engine of global economic growth.
The establishment of the BRICS NDB is an important step towards the
institutionalization of the BRICS countries. As the first institutionalized
organization of the BRICS countries, it has built a medium and long-​term
and developmental international financial platform for emerging economies
to promote the development of the BRICS countries, other emerging markets
and developing countries, as well as the world economy. However, the NDB
does not intend to compete with existing multilateral development institutions
such as the World Bank, nor does it attempt to challenge the existing inter-
national financial landscape. The NDB aims to raise funds for infrastructure
and sustainable development projects in the BRICS countries, other emer-
ging markets and developing countries as a complement to existing multi-
lateral and regional financial institutions in the field of global growth and
development, rather than challenging the existing multilateral development
institutions. Therefore, from the perspective of the NDB’s status, the view that
it aims to challenge and even replace the World Bank and change the existing
international financial structure is somewhat exaggerated.

Notes
1 International Energy Agency, World Energy Outlook 2010.
2 In the early time of the Indian Initiative, the proposed development bank was
named as the BRICS-​led South–​South Development Bank.
3 Delhi Declaration, Xinhuanet New Delhi, March 29, 2012.
15 
Cooperation among the BRICS
countries for developing emerging
industries
Lin Yueqin

At present, academia has demonstrated, from different perspectives and at

different levels, the connotation of emerging industries and their significance
to the socioeconomic development and prosperity of a country, especially their
revolutionary role in driving industrial upgrade and maintaining the devel-
opment momentum of emerging countries. In the meantime, academia also
pays attention to the strategies of emerging countries for developing emerging
industries, the fundamental ways of channelling developed countries’ tech-
nology and capital into fostering and developing emerging industries, and the
basic experience of developed economies in developing emerging industries.
As the BRICS countries continue to transform their economic growth models
and enhance cooperation for a collective rise, their choices in development
directions of emerging industries, and how to conduct cooperation in these
industries, will have a bearing on the effectiveness of their industrial restruc-
turing efforts, the transformation of their development models and their
successful economic rise as a group.

1. Strategies and policies for developing emerging industries

In 2008, when countries across the world vigorously launched strategic plans
for developing emerging industries to cope with the global financial crisis
and ensure competitiveness in the future, the BRICS countries also took the
opportunity to identify their new directions for future industrial develop-
ment, as a necessary preparation to accelerate domestic economic growth and
enhance international competitiveness after the crisis.

1.1 Brazil’s strategies and policies for developing emerging industries

In August 2009, as part of an effort to meet European and American standards
on emissions, the National Environmental Council of Brazil stipulated that
emissions of diesel vehicles be decreased by 33 per cent starting from 2013,
and those of gasoline and ethanol fuel vehicles sold in the domestic market be
decreased by an average of 33 per cent starting from 2014. Brazil has provided
substantial support to the strategic pillar industries, formulated clear public
policies for supporting large enterprises’ R&D and innovation efforts, and
 BRICS cooperation for emerging industries 247
actively pursued international cooperation to facilitate the development of
emerging industries. In May 2012, Brazil announced a new policy aimed at
revitalizing its auto industry. The policy sought to reduce the burden of the
auto industry through tax incentives, thereby stimulating consumption. The
key challenges to implementation included a high inflation rate and a shortage
of consumer credit.

1.2 Russia’s strategies and policies for developing emerging industries

The Long-​term Social and Economic development of the Russian Federation
until 2020, issued in February 2008, proposed to intensify Russia’s eco-
nomic restructuring efforts by focusing on promoting scientific and techno-
logical innovation and prioritizing the development of aerospace, aviation,
new materials, and new energy, among other industrial sectors, with the aim
to make Russia a moderately developed country by 2020. On 2 November
2009, the Ministry of Education and Science of the Russian Federation rati-
fied the Report on the Innovation Systems and Policies of Russia (approved by
the Russian federal government on 8 December of the same year). In March
2010, Russia established the Skolkovo Innovation Centre, also known as the
“Silicon Valley” in Russia, which was dedicated to supporting the develop-
ment of enterprises in the fields of communications technology, biomedicine,
space technology, nuclear energy and energy conservation. In September
2010, the Federal Assembly of Russia passed the Federal Law of the Russian
Federation on the Skolkovo Innovation Centre, which was included in the
National Economic Development and Innovative Economic Plan for 2013–​
2020, and formulated the Sub-​plans for Establishing and Developing the
Skolkovo Innovation Centre. On 7 July 2011, then Russian President Dmitry
Medvedev signed a presidential decree to identify eight priority development
areas of science and technology and 27 key technologies. On 1 November 2013,
then Russian President Vladimir Putin officially approved the “Strategies for
Development of Information Technology (IT) in the Russian Federation for
2014–​2020 and up to 2025”. Besides, the Russia 2030: Science and Technology
Foresight document issued in January 2014 identified the development
directions of information communications technology, biotechnology, medi-
cine and health, new materials and nanotechnology, rational use of the nat-
ural environment, transportation and space systems, energy efficiency and
energy conservation, among other future technologies.

1.3 India’s strategies and policies for developing emerging industries

In 2009, India put forward a target for promoting the use of new energy sources.
In order to drive the development of new technologies and emerging industries,
India renamed the former Ministry of Non-​Conventional Energy Sources as
Ministry of New and Renewable Energy, and stipulated that the proportion of
power generated from renewable energy be increased to 10 per cent of India’s
total electricity demand in 2012, and its proportion in the electricity mix reach
248 Lin Yueqin
4–​5 per cent. To stimulate enthusiasm for innovation and prevent brain drain,
India has introduced a number of measures, such as setting up Tata InnoVista,
a platform for recognizing and celebrating innovation and allowing scientists to
receive commissions commensurate with their contributions in R&D projects,
and to collect technological consulting fees from businesses.

1.4 China’s strategies and policies for developing emerging industries

In October 2010, the State Council of China issued the “Decision on Accelerating
the Fostering and Development of Strategic Emerging Industries”, which marks
the first programmatic document to promote the development of strategic emer-
ging industries in China. It sent a clear signal that China was going to strategic-
ally adjust its industrial structure. In March 2011, the Twelfth Five-​Year Plan for
National Economic and Social Development, which was reviewed and approved
at the Fourth Session of the Eleventh National People’s Congress, identified
fostering and developing strategic emerging industries as a major task in China’s
efforts to promote economic transformation and upgrading and enhance its core
competitiveness in the “Twelfth Five-​Year Plan” period. The plan emphasized
the “development of new strategic industries into leading and pillar industries
while continuing to strengthen and enlarge high-​tech industries”. In May 2016,
the Central Committee of the Communist Party of China and the State Council
issued the National Innovation-​driven Development Strategy Outline, which was
divided into six sections: strategic background, strategic requirements, strategic
deployment, strategic tasks, strategic safeguards, and organized implementation.
The outline proposed that China move to the forefront of innovative countries
by 2030, and it created a three-​step road map for achieving this strategic goal.

1.5 South Africa’s strategies and policies for developing emerging industries
In February 2010, the Ministry of Trade and Industry of South Africa
released the “2010/​ 2011–​2012/​
2013 Industrial Policy Action Plan”, pro-
posing to build a titanium and natural fibre composites industry to provide
titanium materials, aviation accessories and system integration services for
large aerospace designers and manufacturers, such as Airbus and Boeing.
According to the plan, South Africa would invest four billion rand to build a
commercialized 20,000-​ton titanium processing plant by 2013. The Titanium
Capacity Centre endorsed by the Department of Science and Technology
also conducted manpower training and technological R&D. In November
2010, the South African government released the “New Growth Path”, which
proposed to raise public and private spending on R&D from 0.93 per cent
in 2007 to 1.5 per cent in 2014 and 2 per cent in 2018; increase the number
of patents from 91 in 2008 to 200 in 2014; and increase the number of
professionals and technicians from the current 7 per 10,000 population to 11.
Second, the plan rapidly extended access to and use of ICT based on a con-
tinual and rapid reduction in broad-​band costs, resulting largely from rapidly
expanding undersea cables, and accelerated improvement in access to ICT
 BRICS cooperation for emerging industries 249
training as well as social development and public-​policy applications. Third,
to adapt and diffuse technologies in targeted sectors to support employment
creation and growth. Existing institutions must be strengthened and scaled
up to support (a) rural development, (b) small and micro enterprises and
cooperatives and (c) expanded broadband access across the economy. Fourth,
to maintain South Africa’s technological edge in knowledge-​intensive sectors.
In order to attract top international talent and improve its scientific research
level, South Africa has put forward the “Chief Scientist Program” to recruit
top-​notch scientific and technological talent worldwide.
From the above analysis, we can see that, first, the BRICS countries
are deeply aware of the global trend of innovation-​ driven development,
the shortcomings of their own efforts to promote that development, the
consequences of not taking action, as well as the inevitability and urgency of
shifting towards innovation-​driven development. Second, the BRICS coun-
tries have successively formulated and constantly improved their strategies
and policy frameworks for innovation-​ driven development. For example,
in 2006, China first released the “National Strategy for Innovation-​driven
Development” until 2020, and in May 2016 released the “National Outline
for Innovation-​driven Development” until 2035. In 2009, Russia released its
national strategy for innovation-​driven development. Third, the BRICS coun-
tries have put forward ambitious strategic goals for innovation-​driven devel-
opment, as well as the strategic steps, paths and support for achieving them.
Russia places special focus on the farsightedness and scientific feasibility of
its national plan on innovation-​driven development. Russia has mobilized
the government, enterprises, industries, academia, and research institutes to
engage in R&D in order to make the planning significantly more forward-​
looking, reasonable and feasible, and the insights more representative of the
wider public. The “Strategic Plan for Innovation-​driven Development” until
2035, which was initiated in 2012, was a product of the research efforts of
both governmental and private think-​tanks, in their endeavour to develop a
forward-​looking, rational and actionable plan based on comprehensive and
in-​depth discussions and brainstorming. Fourth, the BRICS countries vary
in terms of the attention they place on innovation-​driven development, the
preparedness and adequacy of their strategies and policy planning, and their
mobilization efforts. China, Russia and India are relatively more determined
and put more efforts in promoting innovation-​driven development.

2. Comparison among the BRICS countries in the development of

emerging industries

2.1 All BRICS countries attach great importance to the development

of emerging industries
The BRICS countries share some similarities and have certain differences
in the choices of emerging industries for prioritized development and the
250 Lin Yueqin
policy incentives they introduce, based on their own endowment resources
and existing conditions. However, in recent years, especially during the global
financial crisis, the BRICS countries have paid special attention to the cultiva-
tion and development of emerging industries as an engine to resist the impact
of the crisis and to expand domestic demand to drive sustained and steady
economic growth.

2.2 The BRICS countries are at different stages in the process of

developing emerging industries
India has made considerable progress in the development of emerging indus-
tries. Its information technology and pharmaceutical industries have been
developing rapidly to establish world-​class visibility and competitiveness. For
example, India’s software exports rank among the top in the world, accounting
for more than 20 per cent of India’s total exports. India accounts for 65 per
cent of the world’s offshore information services industry and 46 per cent
of the outsourcing industry, thus becoming the world’s largest software and
service outsourcing market. India’s pharmaceutical industry has also grown
rapidly, as reflected by the emergence of multinational pharmaceutical giants.
Brazil has made significant progress in industries such as bioenergy, trop-
ical bio-​agriculture, and civil aviation. The rapid development of the regional
jetliner manufacturing has led to significantly more exports and the inven-
tion by Embraer of the world’s first biofuel aircraft. In 2013, Brazil’s ethanol
exports reached 10 billion litres, making a great contribution to the develop-
ment of the global low-​carbon economy. Therefore, Brazil was credited as one
of the “countries with the best conditions for biofuel production” by the UN
Food and Agriculture Organization.
Russia’s development of emerging industries lags relatively behind.
Generally speaking, in the past ten years, the Russian economy had just
recovered from the prolonged recession after the collapse of the Soviet Union,
with minor achievements in the development of new industries based on high-​
tech and new technology. But it had been successful in stabilizing its traditional
pillar industry –​the energy industry, as reflected by the structural and techno-
logical integration and upgrade of the oil, gas, and metal sectors. Certain
government-​sponsored plans for developing high-​tech industries remained at
the preliminary stages and had not made any significant progress or, needless
to say, any obvious contributions to Russia’s economic growth. According
to a survey, although Russia has launched a number of high-​tech industrial
parks, and special economic zones, including the Skolkovo Innovation Centre,
they have not yet formed a large-​scale industrial chain and produced obvious
economic pull.
China’s emerging industries have produced remarkable results, now leading
the world with supercomputers, quantum communications satellites, the
Beidou satellite navigation system, high-​resolution remote sensing satellites,
5G, high-​speed rail, R&D of civil aviation regional airliners, online payment
 BRICS cooperation for emerging industries 251
systems, new energy vehicles, PV solar technology, among others. A number
of comprehensive high-​tech industrial bases, independent innovation demon-
stration zones and emerging industrial clusters have gradually taken shape.
By taking advantage of its rich biodiversity resources and high geograph-
ical latitude, South Africa is actively exploring new industries such as bio-​
pharmaceuticals and aerospace, and has made some progresses.

2.3 The results of the BRICS countries’ efforts to develop

emerging industries are unsatisfactory
Although the BRICS countries have delivered some results in keeping up with
global industrial development, accelerating technological innovation and
developing emerging industries, the progress is far from satisfactory, as the
world knowledge economy is developing rapidly, and the international market
demand is constantly upgrading. According to the World Economic Forum,
major emerging economies such as the BRICS countries rank lower than
major developed countries in terms of comprehensive innovation indexes and
falls farther behind in the four major indexes of international competitiveness.
According to the 2014 Global Innovation Index (GII), jointly published by the
World Intellectual Property Organization, Cornell University and INSEAD,
the five countries stand in the middle or lower in the overall ranking and mul-
tiple breakdown rankings among 143 economies worldwide. (see Table 15.1).
The gap among the BRICS countries in scientific and technological pro-
gress and the development of emerging industries is mainly reflected in the
following: China has been imitating or following other countries rather than
pursuing independent innovation. India fails to make any progress in auto-
mobile, new energy and smart manufacturing, despite an impressive perform-
ance in the development of information, software and outsourcing services.
Brazil has made few breakthroughs in emerging industries other than the

Table 15.1 Comparison among the BRICS countries in innovation indexes

Economy Innovation Innovation Innovation Innovation

index investment output efficiency

Score Ranking Score Ranking Score Ranking Score Ranking

China 46.57 29 45.79 45 47.35 16 1.03 2

India 33.70 76 36.97 93 30.42 65 0.82 31
Brazil 36.29 61 41.74 63 30.84 64 0.74 71
South Africa 38.25 53 45.60 47 30.90 63 0.68 93
Russia 39.14 49 43.77 56 34.50 45 0.79 49
Switzerland 64.7 1 66.44 7 63.11 1 0.95 6
United States 60.09 6 67.92 4 52.27 7 0.77 57

Source: World Intellectual Property Organization, Cornell University and INSEAD: Global
Innovation Index 2014, July 18, 2014.
252 Lin Yueqin
manufacture of ethanol and regional airliners. Russia has mainly sought to
stabilize and expand its industries by rebuilding energy and other strategic
industries and has not been able to accelerate the cultivation of emerging
industries and promoting the diversified and innovation-​driven development
of the economic structure. Overall, the emerging industries in the BRICS
countries are fragile and immature.

2.4 The BRICS countries are not competent enough in creating a business
environment favourable for technological innovation in emerging industries
So far, the BRICS countries have yet to develop their own unique paths to
success in technological innovation and management in emerging industries
before they can figure out how to strike a balance between government guidance
and market regulation, and how to deal with the relationship between general
and emerging industries. Certain countries have over-​emphasized government
intervention and guidance, but neglected the leading role of the market in
new-​product development, market demand and resources allocation. The
government remains the main body of R&D investment and plays a decisive
role in deploying national R&D funds and adjusting the direction of R&D.
For example, in India, only 28 per cent of total R&D investment has been
from enterprises, and above two-​thirds is from the government. There is insuf-
ficient motivation for innovation in monopolized industries with high admin-
istrative barriers and, in the meantime, SMEs are unwilling to innovate due to
high risks and taxes, and to difficulties in financing. Russia has yet to develop
a mature innovation-​driven system that features an organic integration of
enterprises, the academia and research institutes. In addition, Russia has a
commercial and investment environment that lacks incentives for innovation
due to insufficient competition in the market. China’s investment in techno-
logical R&D has been growing rapidly and exceeded the European Union by
2014. However, the commercialization of research findings and the efficiency
of outputs have not been satisfactory. The key reasons lie in the information
silo caused by insufficient coordination among different departments and by
inadequate incentives for government procurement and market application.

3. The basic directions for strengthening cooperation in emerging

industries

3.1 Pursuing sci-​tech innovation and cooperation in high-​tech industries

First, each of the BRICS countries has its own advantages in the develop-
ment of emerging industries, and they can complement one another through
cooperation. For example, Russia is a world leader in aerospace, biotech-
nology, nuclear energy and nanomaterials. India has strong technological
strength in information, biomedicine, precision manufacturing, nuclear energy
applications and information. Brazil has a competitive edge in biomedicine,
 BRICS cooperation for emerging industries 253
green energy, advanced agriculture, aviation and automobile manufacturing.
South Africa enjoys technological advantages in ore mining and smelting,
nuclear energy and conversion of coal into oil, agriculture and biotech-
nology and electricity. China is internationally competitive in advanced pro-
cessing and manufacturing, new materials, new energy sources, aerospace and
information.
Second, the BRICS countries need to break through the technological
barriers set by Western countries. In addition to continuing technological
cooperation with developed countries, the BRICS countries must also strive
to develop equal cooperation with one another in an effort to break the
technological blockade set by developed countries. The sci-​tech development
of the BRICS countries and their cooperation in emerging industries are con-
ducive to their understanding of new achievements in the technology world,
and to enhancing their capabilities in technological innovation and industrial
development.

3.2 Taking advantage of the existing foundation for cooperation

The cooperation between China and Russia in high-​tech industry is showing
robust momentum. The cooperation between the two countries is mostly
government-​led and sometimes private organization-​led. The Memorandum
of Understanding between China and Russia on Cooperation in the Field of
Innovation-​driven Development reached in November 2000, as well as mul-
tiple agreements on cooperation in advanced technologies and major invest-
ment projects reached under the framework of prime ministers’ meetings,
concerned government-​level cooperation. For example, cooperation in nuclear
power, aerospace, military, marine deep-​diving technology, nanotechnology,
and refining, were generally government-​led. There was also some enterprise-​
level cooperation, for example, some Chinese automobile enterprises invested
in projects that concerned cooperation on the assembly and production
of automobiles in Russia; some Chinese companies participated in R&D
projects at Russia’s special economic zones. In November 2007, at the twelfth
meeting between the Chinese and Russian prime ministers, the two countries
signed the “Memorandum of Understanding between the Ministry of Science
and Technology of the People’s Republic of China and the Federal Agency
for Science and Innovation of the Russian Federation on Cooperation in the
Prioritized Fields of Scientific and Technological Development”, in which
the two parties agreed to carry out substantive cooperation on large-​scale
projects in certain high-​tech fields. During Chinese Premier Li Keqiang’s visit
to Russia in October 2014, the two countries signed nearly forty agreements
on cooperation, including in the high-​tech fields of aerospace, high-​speed rail
locomotives, nuclear power, rocket engines, electronic components, satellite
navigation, Earth observation, lunar R&D and deep space exploration, long-​
range wide-​body aircraft, and heavy-​duty helicopters. In June 2015, the con-
tract on the planning and design of Russia’s first high-​speed railway between
254 Lin Yueqin
Moscow and Kazan, with a total distance of 770 km, was officially signed.
China Railway Erju Engineering participated in the bidding of the project.
China and India are cooperating to develop green industries. In September
2006, the ministries of science and technology of China and India signed
the “Memorandum of Understanding on Scientific and Technological
Cooperation” in Beijing and established the Ministerial Steering Committee
for Scientific and Technological Cooperation Between China and India. In
2006, the two parties issued a joint declaration, pledging to promote cooper-
ation in the fields of science and technology, including earthquake engin-
eering, climate change and weather forecasting, advanced materials-​based
nanotechnology, and bio-​nano-​based biotechnology and pharmaceuticals.
In 2010, the two countries signed the “Memorandum of Understanding on
Cooperation in Green Technologies Between China and India”. In May 2012,
the two countries jointly launched a research project on low carbon develop-
ment, led by China’s National Development and Reform Commission and
India’s Energy and Resources Institute (TERI). In November 2012, the two
countries reached a consensus on the cooperation in clean technology devel-
opment and the search for solutions to environmental problems as part of
an effort to usher in a greener future. In March 2014, China, India and the
United Nations Development Programme jointly published the “Low Carbon
Development in China and India: Issues and Challenges” report, which identi-
fied a number of key sectors and areas for technological cooperation between
China and India, including clean coal and power generation technologies,
energy-​saving technologies for industries, construction and transportation,
utilization of wind and solar energy, and carbon capture technologies.
China and Brazil are vigorously developing technologies and industries
concerning new energy sources. In 2009, China and Brazil signed the “Work
Plan for Cooperation in Scientific and Technological Innovation Between the
Ministry of Science and Technology of China and the Ministry of Science,
Technology, Innovation and Communication of Brazil”. In the past ten years,
China and Brazil jointly developed and launched a number of Earth resources
satellites. In January 2003, Harbin Anbowei Airplane Industry was established,
with investment from several Chinese and Brazilian companies, and aimed to
assemble and produce the world-​leading ERJ145 regional airliners. In 2010,
the two parties announced the establishment of the China-​Brazil Centre
for Climate Change and Energy Technology Innovation. China and Brazil
signed a number of agreements on scientific and technological cooperation,
including the “Agreement on Scientific and Technological Cooperation
in the Peaceful Use of Outer Space”. In 2012, the China Nanotechnology
Research Centre and the Brazilian Nanotechnology National Laboratory
jointly announced the launch of a nanotechnology cooperation program for
the development of nanotechnology application in agriculture and meteor-
ology, as well as long-​term research on the environment, energy conserva-
tion and emissions reduction, and new materials. In 2012, the China-​Brazil
Joint Laboratory of Agricultural Sciences was unveiled in Brazil. In 2013,
 BRICS cooperation for emerging industries 255
Lenovo Group announced an investment of US$100 million for establishing
an R&D centre in the celebrated science park of the University of Campinas
in Brazil. In 2014, Baidu released its Portuguese search engine. Huawei’s
cloud computing technology and equipment were applied at the data centre
of National Institute of Amazonian Research and the data sharing centre of
Brazil’s National Education and Research Network. Qihoo 360, in cooper-
ation with PSafe Technology, provided the core technology of a new gener-
ation of Internet security products. In June 2015, the Ministry of Science and
Technology of China and the Ministry of Science, Technology, Innovation
and Communication of Brazil signed a memorandum of understanding on
cooperation in science and technology parks.
China and South Africa are seeking cooperation in renewable energy
and other fields. In October 2013, the Fifth Meeting of the China–​South
Africa Joint Committee on S&T Cooperation and the Fifth Meeting of
the Scientific and Technological Subcommittee of the China–​South Africa
Bilateral Committee agreed on the seventh batch of research projects to
be jointly developed by China and South Africa. In June 2015, China and
South Africa signed the Action Plan for Cooperation between the Ministry
of Industry and Information Technology of China and the Department of
Telecommunications and Postal Services of South Africa in Information and
Communications Technologies in Pretoria.
Cooperation between Russia and India leans heavily on space and mili-
tary technologies. In December 1994, Russia and India signed an agreement
on cooperation in economics, trade, space technologies, and military tech-
nologies as part of an effort to strengthen cooperation in nuclear and space
technologies. Recent years have seen intensified cooperation in military tech-
nologies between the two countries, which covers a lot of fields.
Russia and Brazil are cooperating in space, photoelectricity and biology
technologies. In 1997, the two countries issued a joint communique to
announce the establishment of the Russian-​ Brazilian Commission of
High Level of Cooperation (CAN). The Russia-​Brazil Intergovernmental
Committee on Trade, Economic, Scientific and Technological Cooperation
(CIG) under CAN has been carrying out its missions through six working
groups, respectively concerning cooperation in economics and trade, science
and technology, energy, civil space technology, strategic technology and agri-
culture. Technological cooperation between Russia and Brazil has made sig-
nificant achievements in many fields, including optoelectronics, biotechnology
and laser technology.
Russia and South Africa are cooperating in space technologies. In 2006,
the two countries signed an agreement on cooperation in space technolo-
gies. At present, the cooperation between the two countries covers space
research, detectors, Earth surveillance from outer space and related informa-
tion technology and services, materials science, space medicine and biology,
communications and related technologies and services. The two countries
also maintain cooperation in the global space technology and service market,
256 Lin Yueqin
in the forms of sharing information, testing technology, managing models
of technological cooperation among the BRICS countries and research
and testing data for platform building, training personnel, and exchanging
scientists and professionals.
Cooperation between India and Brazil mainly focuses in the electronic
information industry. In November 2000, the Ministry of Science, Technology,
Innovation and Communication of Brazil and the Ministry of Electronics and
Information Technology of India signed a memorandum of understanding.
In 2001, the two sides set up a Brazil-​India thematic research group with the
primary task to explore the possibility of cooperation in research, design and
development of advanced information technology. It was also designed to
explore third-​country markets, conduct electronic trade, and seek cooper-
ation in electronic management, information security, computer-​based crime
monitoring, bank automation, and human resources development through
educational means, with the focus on providing technologies and services for
each other in the information industry.
India, Brazil and South Africa are actively promoting trilateral sci-
entific and technological cooperation. In 2003, India, Brazil, and South
Africa launched the IBSA Dialogue Forum, which was aimed to strengthen
exchanges and cooperation among the three countries. Scientific and techno-
logical cooperation was identified by IBSA as the main area of cooperation,
which primarily covered biotechnology, alternative energy, outer space, avi-
ation, information technology and agriculture. In addition, the three coun-
tries have identified the areas of cooperation led by each country: malaria
and oceanography by Brazil, tuberculosis and biotechnology by South Africa,
AIDS and nanotechnology by India.
Overall, there is little multilateral cooperation, if any, among the BRICS
countries in terms of investment in high-​tech and new industries. According to
the report issued by the United Nations Conference on Trade and Development
in March 2013, although the size of BRICS’ outward investment increased
from 1 per cent in 2002 to 10 per cent in 2012, the five countries were not
one another’s major investors. The limited amount of investment was mainly
concentrated in mining, agriculture, and middle-​and low-​end industries, and
there were few successes of cooperation in high-​tech industries. For example,
China’s direct investment in Brazil grew rapidly after 2008, but 60 per cent
was channelled into the energy and mining sectors. This is not conducive to
improving the quality of cooperation among the BRICS countries, but rather
may lead to vicious competition that undermines one another’s potential.

(III) Removing the many barriers to cooperation

The development of new industries stimulates not only domestic efforts to
develop new technologies, introduce support policies, and carry out marketing
but also international cooperation, including industrial coordination, capacity
cooperation, investment, and market sharing. Strengthening cooperation
 BRICS cooperation for emerging industries 257
among the BRICS countries is an important premise for developing emer-
ging industries. But there are still many difficulties in deepening cooperation,
which are reflected in the following aspects.
First, it is difficult to coordinate the BRICS countries’ strategies of
industrial development. The BRICS countries have yet to develop strategic
consensuses and top-​level designs for the cooperative development of emer-
ging industries. The existing BRICS cooperative mechanisms have not yet
included cooperation planning and incentives concerning the development of
high-​tech industries. Therefore, coordinated development of emerging indus-
tries among the five countries has encounters a bottleneck due to lack of
planning and consultation.
Second, there is a bottleneck for direct investment. The efforts to nurture
and develop emerging industries require a lot of investment, including for-
eign investment. The BRICS countries are facing the problem of insufficient
investment when promoting the development of emerging industries. In the
past, the main way out was to attract investment from Western developed
countries. But for now, and in the future, it is best that the five countries focus
more on attracting direct investment from one another. Investment in emer-
ging industries is risky, and the return is largely uncertain. In addition, the
BRICS countries are experiencing an economic downturn (India excluded)
and facing high pressure of capital outflow. Therefore, it is obviously diffi-
cult to enlarge investment in one another. Moreover, certain BRICS coun-
tries cannot provide a favourable environment for direct investment due
to problems, such as high risk of exchange rate fluctuation, uncertainty in
market demand, imperfect financing and legal systems for labour protection,
double taxation avoidance and investment protection, and unstable social
order. For example, the investment and marketing activities of Chinese auto-
mobile companies in Russia have been facing difficulties due to the serious
devaluation of the Russian rouble in recent years and the sharp decline in
market demand.
Third, it is difficult to cooperate for technological development. The
BRICS countries used to focus their attention on the technologies of Western
countries and therefore formed a serious dependence on them. However,
the Western countries, for their own benefit, often maintained high tech-
nical barriers to technology transfer and cooperation so as to undermine the
technological potential of their competitors. In particular, they have exercised
serious precautions and even blockades on transition economies such as
China and Russia. Strengthening cooperation in technological R&D and pro-
motion within the BRICS countries is a problem that must be addressed head-​
on in order to make new industries flourish. But it is difficult to find ways to
effective cooperation on technological development among the BRICS coun-
tries. There are several reasons. First, the low overall technological level of
the BRICS countries determines that there is limited demand and space for
cooperation. Second, there is insufficient confidence for technical cooper-
ation. Last, joint efforts for technological development and application will
258 Lin Yueqin
cause enormous difficulties in intellectual property protection, as exemplified
by the technological cooperation between China and Russia.
Fourth, there are obstacles to improving the market access policies. Market
demand and consumption are the catalysts on the way towards maturity of
emerging industries. The inability to commercialize technological findings
through market application will render the development of new industries
pointless. The development of emerging industries will naturally lead to the
need for product promotion and support policies and incentives for new
products and industries, thus requiring the countries concerned to open
their markets. Therefore, the demand side has a bearing on the commer-
cialization of new achievements and product sales. In addition to following
the market supply-​and-​demand relationship, there is a need for the gov-
ernment to introduce policies to promote technological invention and com-
mercialization, including the need to increase government procurement. In
this sense, international market access is key to cultivating new products
and new markets for joint prosperity of emerging industries. However, the
establishment of a free-​trade mechanism has not yet been put on the agenda
of the BRICS countries because high tariffs and market-​access thresholds,
anti-​dumping and anti-​insurance investigations are threatening the develop-
ment and cooperation among high-​tech enterprises.
Fifth, it is increasingly challenging to cultivate, support and help the
growth of influential businesses, entrepreneurs, and brands. By far, the
BRICS countries have produced few global Top-​100 products. Nor are there
many BRICS enterprises among the Top 500. There are even fewer innovative
entrepreneurs, enterprises, products, brands and industries ranked as world-​
leading. The key reason is that there is not fertile ground for cultivating the
key elements driving the growth of emerging industries. The incentives and
protection measures for these industries are also lacking. The mechanisms
for resources allocation, market competition and innovation-​value recogni-
tion are not yet mature enough to ensure entrepreneurs can stand out, new
companies can develop rapidly, high-​tech brands can grow organically, and
new industries can prosper.

4. Conclusion
This chapter generates the following conclusions and inspirations through
preliminary comparison among the BRICS countries in their strategic
choice of emerging industries, their policies for supporting these industries,
and achievements made thereafter, on the basis of summarizing the existing
research results of emerging industries in emerging economies.
First, the BRICS countries are all aware that nurturing and developing
emerging industries is key to optimizing their economic structure, nurturing
new growth points, strengthening new growth drivers, and achieving sustained
and rapid economic growth. That is why they have successively developed
 BRICS cooperation for emerging industries 259
plans for revitalizing emerging industries and introduced a series of incentive
policies.
Second, the BRICS countries need to learn from one another in the nurt-
uring and development of emerging industries and cooperate in the develop-
ment of high-​tech industries. For example, they need to join hands to invest
and seek technological breakthroughs in certain emerging industries that
concern the future national economy and people’s livelihood and carry out
marketing efforts. Only through shared development will they be able to avoid
falling behind developed countries in the new round of industrial develop-
ment driven by innovation.
Third, the BRICS countries can learn from one another’s successes in
developing emerging industries. For example, China excels in pooling national
resources and developing effective plans to guide the development of emer-
ging industries. India is proficient at promoting the development of emerging
industries in a market-​oriented manner. In March 2009, the government of
India approved a proposal submitted by the Department of Scientific and
Industrial Research on encouraging the development and commercialization
of inventions and innovations, which included: allowing researchers to have
equal shares in technology-​based enterprises; establishing knowledge bases
as equal assets; encouraging scientific institutions to establish incubators;
and facilitating the flow of researchers between enterprises and research
institutes. This market-​oriented approach to incentivizing the development
of high technologies provides a valuable lesson for other BRICS countries.
Russia has resolutely and decisively promoted innovation in the government
and made great achievements through efforts to improve its business envir-
onment. Through innovation in governance, Russia has rapidly increased its
international ranking of international business environment index from 120th
in 2012 to 28th in 2019, according to the report Doing Business 2020 issued by
the World Bank Group.
Fourth, cooperation in emerging industries will allow the BRICS countries
to achieve strategy coordination and policy interaction; improve institutional
mechanisms, environment, and innovative technologies; foster and open
markets; and encourage and cultivate a number of internationally influen-
tial enterprises, products, brands, technologies and industries, thus achieving
common prosperity and collective development.
In short, the nurturing and development of emerging industries is a multi-
plier for the BRICS countries to adjust their industrial structure, transform
their development models, and achieve sustained development. It is also a
new field for BRICS countries to strengthen cooperation and a mirror for
them to check where they are standing compared to one another. By learning
from one another’s experience in the development of emerging industries
and strengthening the cooperation in developing these industries, they are
more likely to achieve economic prosperity and improve the overall level and
quality of cooperation.
260

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Index
African Continental Free Trade Area
(AfCFTA) 155–​156, 158
African Development Bank 144, 233,
238, 240–​241
Andean Development Group 240–​241
Andean Group 144, 150
ASEAN Free Trade Area 144, 153, 154
Asia-​Pacific Economic Cooperation
(APEC) 11, 144, 152, 153
Asian Development Bank 233, 238,
240–​241
Asian Infrastructure Investment Bank
72, 137, 145, 147
Basel Committee on Banking
Supervision 143
BASIC 23, 92, 111, 211
BIT 2012 model 175, 176
Brazil: benefits of BRICS to 80–​81;
climate change 204–​205, 206–​207;
cyber governance 225; emerging
industries 246–​247, 250; energy 185;
free trade policies 79, 149–​151; great
power ambitions 94; infrastructure
investment 243–​244; South American
regional leadership 10, 81, 149;
state-​controlled multinationals
171–​172; US ties 80
Bretton Woods 25
BRICS in international order: bridge
between developing and developed
countries 38–​39, 120; constructive v.
alternative 13–​15, 37, 39, 73–​74,
97–​98, 134, 245; cross-​regional
platform 38, 120, 126, 133;
underrepresented in global governance
31–​32, 52–​54, 56–​57, 58, 59, 60, 70,
71, 91, 93, 98, 117; Western efforts to
constrain 10, 30, 33, 72–​74, 79, 83, 84
BRICS studies: country-​specific 5–​6;
current contentions 8–​15; fields of
study 7; interdisciplinarity 1, 8, 15;
optimists and pessimists 5, 9–​10,
21, 84, 133–​135; paths of study 7–​8;
political economics 6; pure economics
6; trans-​regional 6
Business Council 131
Caribbean Development Bank 144
Central American Free Trade Area 144
China: benefits of BRICS to 75–​76,
110–​112; climate change 205–​207;
diplomatic goals 75–​76, 104; emerging
industries 248, 250–​251; energy
182–​183; financial governance
leadership 140–​147; free trade policies
153–​155; great power ambitions
93, 76, 104, 109, 114; infrastructure
investment 244; pivotal in inter-​
BRICS trade 75, 157; rivalry with
India 94, 106, 135; rivalry with Russia
94; role in founding BRIC 104–​110
climate change global governance:
agriculture 197–​198; BRICS low-​
carbon development 203, 206–​207,
209–​211; BRICS pressure on
developed countries 111, 201, 202,
203; developed country hegemony
29, 200–​202; development stage gap
196–​200; finance–​energy integration
207–​211; non-​state actors 202–​203;
status quo 196–​200
Commonwealth of Independent States
(CIS) 151, 158
competition within BRICS 43, 74, 83,
90, 138; geopolitical 11, 93–​94, 93–​96,
97, 157–​158; investment 96; resources
95–​96, 157–​158; trade 55, 95, 157–​158

Comprehensive Inter-​American
Cybersecurity Strategy 225
Contingent Reserve Arrangement 3, 12,
13–​14, 57, 73, 78, 82, 88, 90, 105,
108–​109, 111–​112, 122, 131, 134, 137,
141, 145–​146, 147
cooperation among BRICS 3–​5;
complementarity 55–​56, 83, 125,
156–​157, 159; economic vs. political
10–​11, 83; formal vs. informal 11–​12;
geopolitical 97; homogeneity and 43,
51, 59, 60, 61, 62; institutionalization
of 23–​25, 107, 111, 129; mechanisms
of 22–​23, 36–​37, 57–​58, 88, 96–​97,
105, 128; risk mitigation 31, 52, 53;
Western scepticism 68, 70, 73, 135
cooperation theory: altruism vs. egotism
44; decentralized 45; development-​
based 45–​46; exogenous vs.
endogenous 43, 47–​48; functional vs.
normative 46–​47, 48; future impact
43, 45, 46, 47, 48–​50; homogeneity 45,
47, 51; payoff structure 43, 45, 46, 47,
48–​51; rational choice 45; trust 45, 47
cultural exchange 92, 146
cyberspace governance: asymmetric
interdependence 217–​221; BRICS
promotion of new order 127–​128,
227–​230; BRICS resistance to US
227; common property of mankind
principle 217, 219, 227; first-​come
first-​served sovereignty 216–​217, 219,
221; opportunities for BRICS
222–​226; US dominance 218, 219,
221–​222, 226–​227
deliberative democracy within BRICS
105, 106, 109, 110, 112, 124, 141
democratization of international order
26, 60, 134–​135
developing countries’ solidarity 38, 60,
70, 89, 90, 92, 97, 106, 112, 120, 123,
125, 126, 133, 137, 139, 141,
145, 156
direct investment: bilateral 164–​165;
constraints on BRICS countries
174–​177; governance problems
172–​174; M&A 166–​168, 173, 174,
175; multinationals 168–​172, 174, 175,
177; ODI 165; state-​owned enterprises
166–​172, 173, 174, 175, 176; strategic
goals for BRICS 177–​178
Durban Declaration 234–​235
Index 277
economic growth of BRICS 2, 31, 52,
89, 112, 117–​118, 164, 181; climate
change and 203–​204; crucial to
cooperation 71, 128–​129; divergence
2–​3, 8, 9, 68, 71, 75, 83–​84
emerging industries: barriers to BRICS
cooperation 256–​258; bilateral
BRICS cooperation 253–​256; creating
business environment 252; fragility in
BRICS countries 251–​252; promoted
by BRICS countries 246–​251; Western
technological blockade 253, 257
energy cooperation: BRICS potential
181, 185–​186; complementary
development 191–​192; game analysis
187–​190; mechanisms 193; new energy
193–​194; status quo 186–​187,
189–​190; strategic security 190–​191
Eurasian Customs Union 151
Eurasian Economic Union 9, 13, 126
European Bank for Reconstruction and
Development 240–​241
European Investment Bank 240–​241
European Union: Brazil relations 80,
150; climate change 201–​202; efforts
to constrain BRICS 10, 30, 33; highly
coordinated 55; India relations 153;
R&D 252; rule-​making dominance
174, 175–​177, 178; Russia relations
151, 152
Financial Stability Board 143
Framework Agreement on Financial
Cooperation within the BRICS
Interbank Cooperation Mechanism
130, 160–​161
free trade zones: BRICS common
interests 149, 156–​157, 159; BRICS
conflicts of interest 157–​159, 159–​160;
BRICS mechanisms 160–​161
G4 78, 94
G5 23
G7 77, 83, 111, 119
G8 88
G20 11, 23, 25, 39, 46, 57, 60, 77, 78, 82,
90, 107, 110–​111, 118–​119, 121, 130,
133, 136, 140, 141, 145, 181, 183, 193
G77 23
global development 90, 91–​92, 93,
94, 112
global financial crisis (2008) 22, 29, 31,
32, 51–​52, 55, 56, 60, 88, 91, 106, 107,
278 Index
120, 125, 134, 149, 163, 165, 166, 177,
204, 210–​211, 233, 235, 237, 241, 243,
246, 250
global financial governance: challenges
for BRICS 137–​139; Chinese
leadership 140–​147; current
inadequacies 132–​133, 134; definition
of 132; goals for BRICS 139–​140,
143–​144; influence of BRICS 90–​91,
136–​137
Governance and Quota Reform Plan 131
Gujral Doctrine 152
Gulf Common Market 144
Hu Jintao 36, 106
inclusive interests 34–​37, 40
India: benefits of BRICS to 78–​79;
climate change 205; emerging
industries 247–​248, 250; energy 184;
free trade policies 152–​153; great
power ambitions 94, 152; growth
potential 77; infrastructure investment
243; rivalry with China 78–​79, 106,
135; US ties 9–​10, 79
Inter-​American Development Bank 233,
238, 240–​241
International Atomic Energy Agency
23, 207
International Development
Association 23
International Monetary Fund (IMF) 11,
23, 131, 133, 141, 146, 174; BRICS
underrepresentation 53, 134; non-​
neutrality of 58, 70; reform of 3, 14,
52, 61, 72, 80, 88–​89, 90, 111, 118,
121–​122, 123, 136, 145, 238
Internet Activities Board 220
Internet Assigned Numbers Authority
(IANA) 219
Internet Corporation for Assigned
Names and Numbers (ICANN) 215,
219, 222
Internet Engineer Task Force (IETF)
220–​221
League of Arab States 144
legitimacy crisis of international order
117, 118, 119
Li Keqiang 253
Medvedev, Dmitry 96, 247
membership of BRICS: beginnings 1,
5, 20, 24; “BRICS plus” 13, 36, 40,
126; open vs. exclusive 12–​13, 35–​36,
54–​55, 126–​127, 135, 139, 144, 145;
South Africa’s admission 12, 20, 25,
36, 54–​55, 88, 108
Mercosur see Southern
Common Market
MINT 54
Modi, Narendra 187
multinational companies 143, 146, 163,
168–​172, 174, 175, 177, 202–​203, 229
multipolarization 60, 69, 70, 106,
133, 139
National Telecommunications and
Information Administration
(NTIA) 219
New Development Bank (NDB):
combating climate change 196,
208–​222; deepening BRICS
cooperation 3, 12, 55, 56, 57, 59, 77,
88, 105, 108–​109, 112, 137, 235–​236;
enhancing China’s power 78, 82, 110,
239–​240; establishment of 124,
130–​131, 234–​235; origin of 232–​233;
promoting inter-​BRICS trade 236–​237;
reforming global governance 13–​14,
58, 73, 90, 112, 134, 145–​146,
238–​239; supporting development 122,
241–​244
non-​neutrality of international order 8,
25–​29, 30, 31–​32, 38, 39, 53, 58
nuclear non-​proliferation 90, 92
O’Neill, Jim 1, 6, 54, 87, 119, 163
Organization for Economic Co-​
operation and Development
(OECD) 176
outer space governance 128
Paris Agreement 197, 199, 201, 202, 205
practice theory 100–​102, 103, 104, 105,
113–​114
PRISM 221–​222, 227
protectionism 36, 88, 92, 95, 125, 136,
149, 156, 158, 172–​173, 176, 177
Putin, Vladimir 83, 93–​94, 168, 171, 247
Russia: benefits of BRICS to 76–​77;
climate change 205; cyber security
226; economic weaknesses 76;
emerging industries 247, 250;
energy 183–​184; free trade policies
151–​152; geopolitical strengths 76,
93; great power ambitions 93–​94;

infrastructure investment 244; state-​
controlled multinationals 168–​171; US
relations 151
Shanghai Cooperation Organization 13,
126, 154
Silk Road Fund 147
Skolkovo Innovation Centre 96, 247, 250
South Africa: benefits of BRICS to 82;
climate change 205, 207; cyberspace
226; emerging industries 248–​249,
251; energy 185; free trade policies
155–​156; infrastructure investment
243; regional leadership 155–​156;
representing Africa in BRICS 81–​82
South African Customs Union 155
South Asian Association for Regional
Cooperation 152
Southern Common Market (Mercosur)
144, 150–​151, 158, 159
“spillover” theory 97
state-​owned enterprises 163, 166–​168,
174, 175, 176
Statement of the European Union and
the United States on Shared Principles
for International Investment 176
Strategy for BRICS Economic
Partnership 125
structural realism 86–​87, 89, 90,
93, 96, 98
terrorism 24, 46, 90, 92, 216
Think Tank Council 131
Trade in Services Agreement (TISA)
175, 178
Trans-​Pacific Partnership (TPP)
Agreement 5, 76, 95, 136, 149,
175, 178
Transatlantic Trade and Investment
Partnership (TTIP) 5, 76, 95, 149,
175, 178
Ukraine crisis 76, 77, 81, 93–​94, 139,
194, 208
Index 279
United Nations: BRICS commitment
to 23, 60, 140; Conference on Trade
and Development 164; Cyberspace
Governance Working Group 220;
Food and Agriculture Organization
250; Framework Convention on
Climate Change 92, 196; General
Assembly 88, 106, 226; global
development agenda 90, 91, 94; IPCC
197; non-​neutrality of 11, 25; Security
Council 76, 78, 79, 80, 123
United States: climate change 201;
decline of 21–​22; efforts to constrain
BRICS 10, 30, 72, 79; free trade
agreements 157; India relations 10;
international hegemony 21, 29, 31,
32, 69, 77, 95, 111, 173–​177, 178,
207–​208, 218, 219, 221–​222, 226–​227,
238; Russia relations 151; third-​
generation trade and investment
norms 163, 174–​177
West African Economic Community 144
Western/​US global hegemony 21, 29,
31, 32, 53, 60, 69–​70, 71, 101, 103,
118–​119, 121, 123, 134, 137–​138, 143,
173–​177, 178, 218, 219, 221–​222,
226–​227, 235, 238
World Bank 23, 70, 141, 146, 240–​241,
245; BRICS underrepresentation 53,
134; failure of 133, 233; non-​neutrality
of 11, 58; reform of 3, 14, 52, 72, 80,
118, 121–​122, 123, 136, 145,
237–​238
World Health Organization 23
World Social Forum 146
World Trade Organization (WTO) 11,
23, 70, 80, 95, 118–​119, 122, 123, 130,
133, 136, 141, 150, 158, 173, 174, 175
Xi Jinping 10, 36, 88, 89, 90, 92, 124,
140–​141, 187, 206
Zuma, Jacob 243