The BRICS, towards a new multipolar or Sino-American world order?

The BRICS countries want a multipolar world order. But this ideal could be compromised if Beijing decides to share world leadership with Washington.

In its opening speech of the ambassadors' conference in August 2019, the French President, Emmanuel Macron, mentioned that “we are undoubtedly experiencing the end of Western hegemony over the world. »

A Western hegemony which, according to him, was probably French in the XVIII^e century, inspired by the Enlightenment, probably British in the XNUMXth^e century thanks to the industrial revolution, then American in the XX^e century following the two world wars.

But with the emergence of the BRICS countries, an acronym for Brazil, Russia, India, China and South Africa, we are witnessing one of the most significant changes in international relations since the industrial revolution. Originally created in 2009 as BRIC, an “S” was added in 2011 with the accession of South Africa.

The declared will of the BRICS countries is to transform the “Western-centric” structure of the current world economic order towards a polycentric or multipolar international system.

Are they getting there?

Senior fellow at the FERDI and ACET Africa, and associate researcher at CREATE at Université Laval, I am interested in international economics and development issues.

Fast growing countries

With a total population of more than 2022 billion people in 3,2, more than four times that of the seven G7 countries (approximately 773 million inhabitants), the BRICS group constitutes a vast economic market.

Their place in the world economy has continued to grow in recent decades, to the detriment of that of the G7. Thus, the share of the total gross domestic product (GDP) of the BRICS in the world GDP, calculated in purchasing power parity (PPP), exceeded that of the G7 (31,02% against 30,95%) and the trend does not seem to reverse.

GDP in PPP is the appropriate indicator to compare countries, because it takes into account the fact that the same amount of money does not represent the same wealth in different countries. It therefore eliminates the differential in purchasing power linked to national currencies, which makes it possible to compare apples with apples.

This result of the BRICS countries is particularly due to the sustained economic growth of the group's two Asian leaders, China and India, whose individual shares in world GDP (PPP) rose respectively from 3,29% and 3,78. 1990% in 18,64 to 7,23% and 2022% in 7. Over the same period, we are witnessing a marked decline in the contribution of the two G20,38 leaders to the world economy, with the United States falling from 15,51 % to 8,56% and Japan, from 3,79% to XNUMX%. The latest IMF economic growth forecasts for the China and India in 2023 are 5,2% and 5,9% respectively, compared to 1,6% for the United States and 1,3% for Japan.

However, United States remains the leading economic power, with a GDP of $25 trillion in 2022, just over a quarter of the global economy. China is close behind, with a GDP of $18,3 trillion, nearly 20% of the total.

Moreover, the BRICS countries have a much more moderate level of debt as a percentage of GDP and a ratio of public debt per capita compared to those of the G7 countries. In 2022, the average amount of public debt per capita was around $72 in G303 countries, compared to around $7 in BRICS countries.

US dollar challenged

In recent years, many countries and their multinationals, using the US dollar extensively in international transactions, have faced theextraterritoriality of American law.

Indeed, the United States is increasingly using the dollar as a “weapon” of diplomacy according to Washington's foreign policy. Thus, the United States has generally been able to compel the other States to respect a law passed in 2017 in the American Congress "Countering America's Adversaries Through Sanctions Act", which reinforces the already existing sanctions against Iran, North Korea and Russia.

This "blackmail" of the dollar exasperates countries, especially those of the BRICS, and encourages them to implement alternatives to ensure their commercial transactions outside of Washington's control. So far, despite fluctuations in exchange rates, the US dollar's standing against other reserve currencies has remained fairly stable, according to the IMF.

However, again according to the IMF, the US dollar's share of official global central bank holdings fell from 71% in 1999 to 59% in May 2021, its lowest level in 25 years, in favor of other currencies such as the euro, the ruble, the yuan (or Renminbi) or even gold. In December 2022, the greenback lost another percentage point to 58% in the official holdings of global central banks.

The yuan, the next BRICS common currency?

La New Development Bank (NBD) of the BRICS group, based in Shanghai, and inaugurated in 2015, aims to end the hegemony of the American currency in their international transactions.

Its mission is to finance infrastructure and sustainable development in emerging markets and developing countries. It aims to be an alternative to the Bretton Woods system (IMF and World Bank), more oriented towards developing countries. The will of the founding members of the NBD is to create a common currency.

Since the invasion of Ukraine by Russia, several hundred billion dollars assets of the Russian central bank have been frozen by the United States and its Western allies. This unprecedented sanction against Moscow sends a strong signal to certain leaders (who would be tempted to behave badly) about the West's possibilities for action.

This has brought an argument to the BRICS countries in their diplomacy against the current economic order. Since then, several countries have decided to trade in currencies other than the US dollar, mainly the yuan.

In this context, the Brazilian President Luiz Inacio Lula da Silva's visit to China on April 14 did not go unnoticed. He said he was ready to increase his trade with China, now carried out in yuan.

In addition to Brazil, China has also entered into trade agreements with Venezuela, Iran, India and Russia, allowing it to use the yuan (instead of the dollar) in its transactions with these countries. President Xi Jinping also participated in a summit with the six countries of the Gulf Cooperation Council (GCC) in December., namely Saudi Arabia, Kuwait, United Arab Emirates, Bahrain, Qatar and Oman. China wants an agreement with the GCC countries to settle its oil and gas imports in yuan. This would further weaken the US dollar.

The project of the BRICS countries was born out of frustrations and exasperations with the imposition of a very Western-centric international order of the world. In their joint declaration of June 16, 2009, the BRICS leaders want "a more democratic and just multipolar world order based on the application of international law, equality, mutual respect, cooperation, coordinated action and collective decision-making by all states”.

This unifying ideal of the BRICS could be undermined by potential ambitions of Beijing to share world leadership with Washington. India and Russia will not support a two-headed Sino-American domination of the world.

Zakaria Sorghum, Senior fellow at FERDI & ACET-Africa, and Research associate at CREATE, Laval University

This article is republished from The Conversation under Creative Commons license. Read theoriginal article.