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October 18, 2016

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‘BRICS of gold’ economies still glittering

FIGURES show the BRICS countries — Brazil, Russia, India, China and South Africa — will continue their momentum of growth and the group will remain a powerful engine of the world economy.

As a lingering slowdown and even depression started to haunt some of the BRICS economies, some Western media say the “BRICS of gold are seeing a fading shine.”

But the actions and comments from the BRICS countries have beaten off such sayings. Sunday’s address by Chinese President Xi Jinping will definitely help build the group’s confidence.

The bloc will strive for strong, sustainable, balanced and inclusive global growth through structural reforms, growth patterns innovation, and building an open economy, Xi told the annual summit of BRICS leaders in the western Indian state of Goa.

Growth is the touchstone of the BRICS economies. Despite a plunge in commodity prices and a sluggish economic global recovery, in China and India last year was 6.9 percent and 7.6 percent respectively, according to the International Monetary Fund.

In contrast, the global average was 3.2 percent.

Although the situation in Russia, Brazil and South Africa, which depend heavily on resources, is not as good as that in China and India, there is no need to fuss over the slowdown as it only mirrors a gloomy global landscape.

Every economy has its twists and turns, and a forever straight climb is impossible.

Furthermore, the five BRICS countries share some common advantages: richness in natural and human resources, vast domestic markets and huge potential in development with bright prospects thanks to policy coordination.

Because of this, experts believe the growth nature of the BRICS countries and its rising momentum will not be swayed.

In its World Economic Outlook for the year 2017, the IMF predicted 6.2 percent growth for China and 7.6 percent in India. Russia and Brazil will get out of the mire of economic recession and achieve growth of 1.1 percent and a 0.5 percent respectively. South Africa is expected to lift this year’s 0.1 percent growth to 0.8 percent next year.

The IMF also expected the emerging economies to contribute 75 percent of world growth in 2016 and 2017 — still the most important engine for the global economy.

The BRICS nations, with more than 40 percent of the world’s population and almost one third of its land area account for 20 percent of global GDP. And they have been taking an increasingly important part in the world economy.

Xi said in his address that the five BRICS countries, according to IMF, contributed to more than half of the global growth in the last decade. Ten years ago, the total economic volume of the BRICS countries accounted for 12 percent of the world economy. The number has grown to 23 percent.

A decade ago, these countries’ total trade volume was 11 percent of world trade and 7 percent of foreign investment. That has now increased to 16 percent and 12 percent respectively.

BRICS has witnessed a decade of successful cooperation since its birth a decade ago. It has developed into an influential platform for emerging economies.

Schemes including the New Development Bank, launched in 2014, display coordinated efforts of the group to reform the global economic governance. The bank, formally opened in July last year in Shanghai, has witnessed remarkable progress.

Three months after it launched, the NDB announced it issued its first bonds worldwide to raise funds for clean-energy projects in member states. The five-year green bonds, denominated in the yuan, are worth 3 billion yuan (US$445 million).

And ties within the BRICS have boomed since its first summit in 2009.

Statistics from China’s Ministry of Commerce show that in the seven years to 2014, trade volume between the BRICS countries grew an annual 17 percent, far more than annual growth of global trade in the same period.

The shared interests also expanded after China proposed the Road and Belt Initiative in 2013.

“China is a staunch supporter and participant of the BRICS mechanism, and takes the BRICS cooperation as one of its diplomatic priorities,” Xi said. “We believe the BRICS cooperation will forcefully promote world peace, stability and prosperity.”

As an old Chinese saying goes: “Pure gold does not fear furnace.”

The BRICS of gold will still continue to glitter.


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