Member nations have similar concerns on major global issues

BEIJING - The BRICS bloc, comprising Brazil, Russia, India, China and South Africa, should deepen cooperation and have a greater say in the reform of the international monetary and financial system to counter the instability of major currencies, officials and analysts said.

"The BRICS countries have similar concerns or stances on important issues such as the global economy, international finance and development," Wu Hailong, China's assistant foreign minister, said at a news conference this month.

Wu said China hopes all parties can strengthen coordination and mutual cooperation on matters including the reform of the international monetary system (IMS).

President Hu Jintao, Russian President Dmitry Medvedev, Indian Prime Minister Manmohan Singh, Brazilian President Dilma Rousseff, and South African President Jacob Zuma will attend the summit in Sanya, Hainan province, on Thursday. South Africa joined BRICS in December.

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Less than two weeks ago, a one-day seminar on IMS that aimed to pave the way for November's G20 Summit was held in Nanjing on March 31. Participants agreed to broaden the Special Drawing Right basket (SDR) by including the currencies of some emerging markets such as China, without discussing a timetable.

Lu Zhengwei, chief economist with the Industrial Bank Co Ltd, said the large economic disparity and political distrust between BRICS members limits their ability for a coordinated approach to IMS.

"Brazil and India have joined the Western camp to impose greater pressure on the yuan's exchange rate, while the broadening of SDR currencies and cutting holdings of US treasury debts is much more related to China than the other four countries because it has an unparalleled amount of foreign exchange reserves."

He said that this time, a possible point of consensus among the five countries could lie in urging that the exchange rate of major currencies, especially the US dollar, maintain stability.

"In addition to confining the currency exchange rate, the BRICS members are also very likely to reach consensus on checking hot money, for example, setting up a unified safety net against international speculative capital inflows and further opening up their domestic financial markets to other member countries," Lu said.

BRICS countries face the common shock of international hot money due to their higher rate of return on investment, said Zheng Xinli, vice-president of the China Center for International Economic Exchanges (CCIEE).

"We cannot let foreign capital come and go as it pleases. Instead, we should make it stay to avoid short-term impact on our economies. That's a mutual task."

The five member countries need to speak with one voice, to increase their influence in the reform of the international financial system, Zheng said.

"The root of the financial crisis was that major developed economies abused their national credit and over-issued their currencies, which led to a spate of financial products. So, as victims of this crisis, the five countries should strengthen their cooperation in promoting the system's reform and, especially, to increase their say in the issuance behavior of major reserve currencies," he said.

Zheng also said the five countries should coordinate their stances on international affairs, and extend the coordinating mechanism.

Jiang Shixue, deputy head of the Institute of Latin American Studies at the Chinese Academy of Social Sciences, was quoted by Inter Press Service as saying that BRICS needs to focus on addressing legitimate issues such as reforming international financial institutions, in order to avoid becoming solely a mouthpiece for member nations.

BRICS member nations accounted for 18 percent of global GDP in 2010, and trade volume between the countries has increased with an average growth rate of 28 percent in the past 10 years. In 2010, the total trade volume among the member countries reached $230 billion.

According to the latest research from CCIEE, the BRICS countries are expected to account for almost half of the world's output by 2030. Their combined output will rise from 17 percent of global GDP in 2010 to 47 percent in next 20 years.