BRICS Summit: Doklam Effects Raise Modi’s Stature – Analysis


Despite sending a signal to India’s PM Narendra Modi before the BRICS summit by China that any reference to Pakistan sheltering terrorism would jeopardize the summit, terrorism heightened in the summit. The Joint Declaration of of the five nations at the BRICS Forum at its 9th Summit in Xiamen city in China declared Pakistan based outfits – Jaish-e-Mohammed (JeM) and Lasdhkar-e-Toiba ( LeT) — as fearful terrorist groups and called for removing terrorism from their soils. China was the Chairperson of the summit.

This reflects a major elevation in Modi’s stature to walk taller in the summit after the Doklam stand-off dissipated. “Modi went to China with (an) enhanced stature and stronger leadership credentials than Xi Jinping,” according to Professor Mohan Malik of Asia Pacific Centre Security Studies.

This was the first time that an Asian leader has taken on the might of China. Supporting the move, the Chinese powerful media Global Times was assertive for the success BRICS, saying “ BRICS are expected to reach beyond difference in political systems and ideologies.”

After failing to perk up the globalization mood at World Economic Forum at Davos last January, China reignited the tone of globalization in 9th BRICS summit. In both the summits, China was the Chairperson. Chinese President Xi Jinping called for uptick in the globalization at the BRICS summit and rejected protectionism for the better health of the global economy. He said that , “only openness delivers progress and inclusiveness sustain such progress.”

In Davos, American President Donald Trump’s pulling out of the WEF summit and notifying the US exit from TPP gave shivers to globalization. Eventually, the Davos summit — the world’s biggest economic forum – ended on a low note, shredding hope on the Chinese model of globalization through OBOR ( One Belt One Road).

BRICS – the acronym of five countries (Brazil, Russia, India , China and South Africa) – is the forum for independent international organization to encourage commercial, political and cultural cooperation between the member countries. Even though the aim of BRICS is to push forward economic engagement among the member countries by financial substantiality and infrastructural development, the 8th Summit at Goa heightened with political engagement.

India is unlikely to undo protectionism at the behest of China’s call for globalization. Protectionism continues to be one of the main pillars for Make in India success. High Custom tariff and import substitution will be the roller coaster to China style of globalization.

China is the biggest beneficiary of globalization. This is the prime reason that China has been advocating globalization. Protectionism will restrict Chinese growth. According to the Beijing custom official Huang Songpin, “The trend of anti-globalization is becoming increasingly evident, and China is the biggest victim of the trend .”

Given the protectionism intensifying in Trump era, fears looms large over Chinese growth.

China is an export-oriented economy and the USA has been the engine for China’s economic growth. It is the biggest destination for China’s exports. USA shares 18 percent of China’s export. Trump’s import substitution plus approach through tariff barriers and encouraging domestic production will bring back American investors back to the USA. Similarly, Modi’s Make in India will reduce dependence on imports from China. Currently, China accounts for a biggest share of India’s imports, fueling a wide trade deficit. The policy for protectionism by the USA and India will pose double whammy for Chinese export-led growth.

Modi’s visit to China to attend the 9th BRICS Summit comes after India refused to join OBOR. Chinese OBOR initiative is to address its domestic problems. China is engulfed by unbalanced regional development and sagging economy. Its economy dipped to 6.9 percent in 2016, lower than India. Its capital flight intensified. Large financial package by Chinese government failed to gear up the economic activity. Geopolitical connectivity is the core to Chinese OBOR led globalization than economic spread.

India considers Chinese OBOR infrastructure link globalization violates the sovereignty and territorial integrity of India by setting up CPEC project (China-Pakistan-Economic – Corridor ). CPEC passes through Gilgit-Baltistan in Pakistan occupied Indian territory in Kashmir.

China needs India, more than India needs it. China’s yearn for investment in India after losing cost competitiveness and India’s neutrality in the South China sea dispute after the ruling of UN international court of arbitration, warrant China’s ardent necessity for India’s support.

China and India are the main drivers of BRICS economy. The external health of three other economies of BRICS — Brazil, Russia and South Africa — are closely inter-linked with China. With China slipping into growth trajectory, concerns are looming large over the economic health of three member economies.

China is the biggest export destination for two BRICS countries – Brazil and South Africa and second biggest destination for Russia. China accounted for 18 percent of Brazil’s global exports. The most important export earning of Brazil is iron ore. China accounts for 47 percent of Brazil’s export of iron ore. The fall in the steel output in China owing to overcapacity will lead to drop in imports of iron ore by China and will impart a major impact on Brazil economy.

Similarly, China is the second the biggest stakeholder of Russia’s oil export. Oil is the biggest export earner for Russia, sharing about 70 of its global exports. China accounts for 15 percent of Russia’s oil export. Therefore, China is the pivot to Russia’s export.

Given the China’s predominance in Russia’s oil export, drop in oil import by China will likely shadow Russian economy, which is already reeling under recession.

China is the biggest trade partner of South Africa. China is the biggest importer of South Africa iron ore – the second biggest item of South Africa exports. The slump in steel manufacturing in China will unleash a major impact on South Africa’s iron ore export.

For India, the BRICS’s significance is related to infrastructure funds. India needs US$ 1 trillion investment for infrastructure development. To this end, setting up of BRICS National Development Bank (NDB) ensures a big support to India

Views are personal

Subrata Majumder

Subrata Majumder is a former adviser to Japan External Trade Organization (JETRO), New Delhi, and the author of “Exporting to Japan,” as well as various articles in Indian media, including Business Line, Echo of India, Indian Press Agency, and foreign media, such as Asia Times online and Eurasia Review .

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