BRICS Summit - key themes and challenges
Goolam Ballim | Jeremy Stevens | Simon Freemantle
BRICS expansion and RMB internationalisation will be central considerations
- The 15th BRICS summit will take place in Johannesburg, South Africa, from 22 - 24 August 2023. As things stand, four of the five BRICS heads of state will attend the gathering. The exception is Russian President Putin, who agreed not to attend in person because of the ICC arrest warrant issued against him; the South African government is legally obligated to comply with that warrant given its ratification in domestic law of the ICC’s Rome Statute. President Putin’s non-attendance (at least physically) has reduced the intensity of the global focus on the summit, and certainly diminished some of its pressing risks for SA authorities. That said, the summit still offers the potential for some substantive agreements, and the symbolic broadening of collaboration within the Global South that is a critical component of the multipolar environment that is gradually replacing US-led unipolarity in global affairs (we commented on this shift in some detail here).
- In this note, we discuss the summit’s geopolitical relevance, as well as what we expect to be its two apex themes – BRICS expansion, and the potential deepening of trade and investment in BRICS currencies, particularly the renminbi. Of these themes, we dwell extensively on China’s ongoing push to internationalize the RMB, a pursuit that Beijing believes can be aided by the BRICS grouping.
- A rise in relevance given broader geopolitical shifts. To be sure, the current geopolitical context, epitomized in the main by the war in Ukraine and rising US-China tensions, imbues the BRICS as a group with greater potential relevance. Indeed, as argued here, the BRICS has the potential to evolve to become “a counterpart to the G7 in world affairs, resulting in a profound impact on international relations”. As we emphasise in this note, for Beijing specifically the summit (and the BRICS grouping as a whole) holds clear meaning within the context of China’s New Era (which we discussed here).
- BRICS expansion. There is a spirited push, mostly by China, for the BRICS group to be expanded at the upcoming summit. In all, around 40 countries (including Saudi Arabia, the UAE, Mexico, and Iran) have applied for, or expressed an interest, in joining the BRICS. Such expansion however faces resistance from some BRICS members, particularly India and Brazil, who fear the dilution of their influence and an increase in China’s capacity to use an expanded BRICS to elevate its global clout. We expect the framework, or criteria, for BRICS expansion to be discussed, and potentially agreed on, at the upcoming summit – but not for new members to be officially welcomed into the group.
- Expanding intra-BRICS local currency settlement. In our view, the conversation around the creation of a BRICS currency is a sidenote to the real topic, which is the expanded use of the Chinese RMB in BRICS commercial exchanges. As we discuss in detail in this report, China is keen to push for change in the international monetary system and eager to expand the geographical reach of the RMB. This objective is uncontested amongst the BRICS. We expect to see concrete policies emerging from the summit, creating mechanisms and avenues for greater use of RMB in transactions and promoting direct trading between RMB and BRICS currencies.
- China’s towering role in the BRICS remains a strength, and a risk. Except for the surge in India’s crude and coal imports from Russia, which pushed India’s imports up from USD8.6bn in 2021, to USD41bn in 2022, trade with China accounts for the vast majority (75%) of intra-BRICS trade. China is the largest bilateral trade partner for three BRICS members: SA, Brazil, and Russia. Indeed, China’s participation in BRICS imbues the group with much of its broader influence, and potential. And yet, for the group to be a legitimate and collaborative reflection of the interests of the Global South (and of each of its members) it must push against the agenda being singularly established by Beijing. How this tension is navigated will not only be a defining feature of the upcoming summit, but the group’s future relevance and capacity for cohesion more broadly. At least, and as expressed in prior BRICS engagements, as well as in other bilateral forums such as FOCAC, China appears equally alive to this challenge, and willing to make appropriate concessions to manage it.