BRICS turns inward for trade growth
Updated: 2013-02-19 21:13
By Li Jiabao (chinadaily.com.cn)
Sluggish global growth and weak demand among the world's advanced economies has turned BRICS members toward each other, as well as a broad range of emerging markets, for commercial nutrition, Standard Bank Group said in a report e-mailed to China Daily on Tuesday.
The report, written by the group's research analysts Jeremy Stevens and Simon Freemantle, said that since 2001 intra-BRICS trade has grown faster than BRICS trade with any other group in the world.
Despite sluggish global growth, the BRICS have been relatively successful in avoiding sharp moderations in export growth. In real terms, exports from the BRICS surged by 16 percent in 2010, and 4.4 percent in 2012. BRICS-world trade amounted to an estimated $5.6 trillion in 2012, making up nearly 16 percent of total global trade, up from 10 percent in 2008.
The BRICS have turned to emerging markets to offset weak demand in advanced economies. In 2012, more than half of all exports from China, India and Brazil, and 48 percent from South Africa, were destined for emerging markets. In 2012, trade between the five member economies amounted to an estimated $310 billion, up more than 11-fold from $28 billion in 2002.
Today, intra-BRICS trade accounts for almost one-fifth of BRICS total trade with emerging markets, up from just 13 percent in 2008. In contrast, the BRICS actually traded less with the EU last year than they did in 2008, the report said.
Intra-BRICS convergence is being led by China, which acts as a counterparty in 85 percent of intra-BRICS trade flows. For each of the BRICS, China ranks as a top-three export destination. Context is critical in weighing these dynamics: last year, China passed the United States to become the world's largest trader, and China accounts for 55 percent of total BRICS GDP.
China has prioritized selling to emerging markets—especially BRICS. Seven of China's 10 largest export destinations are emerging markets. China has become each BRICS' dominant source of goods, with the exception of Brazil, where China ranks second behind the US.
China is managing to maintain its export competitiveness in the BRICS. Each of the BRICS has experienced relatively rapid wage growth in recent years, which has kept competitive advantages in check. Second, the productivity of labor in China has increased faster than its BRICS peers. Third, with the exception of South Africa's rand — each of the Five Rs (the rand, real, renminbi, ruble and rupee) have appreciated, and the renminbi has remained relatively competitive. Fourth, China's export competitiveness is supported by state-led investments in logistics and infrastructure.
The BRICS trade more with Africa than they do among themselves. The BRICS total trade with Africa reached $340 billion in 2012, representing more than a 10-fold increase over the course of a decade. Since 2007, during a period of relatively slow trade growth (for Africa, the BRICS and globally), BRICS-Africa trade has more than doubled.
It is projected that BRICS-Africa trade will eclipse $500 billion by 2015, roughly 60 percent of which will consist of China-Africa trade, the report said.