PPP being differentiated from nominal GDP for taking country-specific cost factors into consideration.

On almost any criteria related to GDP, trade, investment, or currency reserves, China performs as a super-BRICS member. Russia, by contrast, is an outlier, depending excessively on oil and gas exports with a conspicuous component of high-end consumers, but little else in the way of a BRICS ascendant profile.

The Next 11: Bangladesh, Egypt, Indonesia, Iran, Korea, Mexico, Nigeria, Pakistan, the Philippines, Turkey, and Vietnam.

After the shocks of the global financial crisis in 2008, this process of engagement between the BRICS and the members of the G7 was accentuated by the elevation of the finance Group of 20 (G20), created in the late 1990s due to the fallout from the Asian financial crisis, to a G20 summit at the leaders’ level.

Russia was granted a unique form of compensation in the aftermath of the collapse of the USSR, by its accession into an extended leaders’ forum of G8, although it was excluded from the G7 finance ministers’ forum.

India and China, for example, continue to compete over energy sources and supply chains, including the establishment of ports in nearby countries.

The global financial crisis reversed this relationship. Unlike the Asian financial crisis, the epicenter of the global financial crisis was not located in the global South, radiating with worries about a contagion effect spreading to the West. The shocks caused by the “made in the US” character of the global financial crisis and then the subsequent euro crisis added to the legacy of grievance in the BRICS, but there was now a new-found sense of confidence.

Not only has intra-BRICS trade been traditionally low, but major barriers in terms of the movements of people remain. South Africans, for example, enjoy visa-free entry only into Brazil.

Good timing certainly played a part. The idea of a big cluster of growing, emerging economies was well placed to grab attention in a time of growing anxiety in the West in the aftermath of 9/11 and amid the increasingly uncertain contours of economic globalization.

Brazil enjoyed strong growth at approximately 7% annually from 1940 until the debt crises of the 1980s.

By contrast, the features that acted as brakes instead of motors driving developmental progress were downplayed by Goldman Sachs. Population dynamics provide sources of weakness as well as strength. China is at risk of becoming old before it becomes rich. India’s high population growth will bring increased tensions over the distribution of resources. Russia is struggling with sizable population shrinkage. Other factors such as high levels of pollution and corruption also cannot be ignored.

The rationale for recognizing enhanced membership status was based on the perception that the institutional status quo was not adequate either symbolically or instrumentally for dealing with the circumstances of the 21st century. This perception was particularly acute with regard to the G8, as it was regarded even by some of its leading members as suffering from an enormous legitimacy gap because of its restricted Western-centric membership.

The sherpas — state officials who do the preparatory heavy lifting on behalf of the leaders — for the O5 countries consulted with each other in separate meetings from those of the G8.

The majority of O5 countries construed what the G8 considered to be a form of generous engagement as too little too late. The awkwardness of the G8-O5 process worked as a barrier, not a bridge.

Amid the shocks, there was a clearer appreciation by the G8 members that they could not deal with the global financial crisis alone. The G8 recognized it needed to bring rising powers to the table.

The BRICS challenge marks a complete historical departure. The most common means by which ascendant powers gain new institutional privileges is at the end of a major war as a member of a winning coalition.

In contrast to past movements, members are not asserting the need to change the international system to address issues such as poverty and economic inequality. Rather, they are contesting the international order on the basis of their rising economic and political power.

China’s economy expanded at double the rate of the rest of the members. In 2013 China accounted for double the global merchandise trade of the rest of the BRICS members combined, and held twice the foreign reserves as others.

For China, operating through informal groupings — be it the BRICS or the G20 — allows the country to avoid international attention associated with unilateral action on a host of key global issues.

Initially, the nature of this response was in large part due to a deficiency of attention. Whereas Britain and France were acutely aware of the increased power of Prussia, and the US was aware of the challenge from the USSR in the Cold, 9/11 directed American attention away from China towards the Middle East and South Central Asia.

Created in 1975 the G7 — originally the G5 with the exclusion of Italy and Canada — was created in an atmosphere of economic distress in the context of rapidly rising oil prices and economic stagflation within the core countries of the West.

The salience of the club approach stands out when one attempts to peel away the layers of ambiguity and even contradictions, which point to the difficulties in making the BRICS more than a mix of individual parts. Unlike formal institutions such as the UN, the IFIs, and the WTO, the BRICS makes no attempt to negotiate, never mind impose, binding rules upon its member states.

Until some form of key deliverable becomes operational, the interpretation that the BRICS is all declarations with no real tangible action is difficult to dislodge. As such the push by the BRICS to establish the NDB is extremely important.

For China, Africa represents a crucial part of its “going out strategy,” intended to direct excess savings at home towards securing assets — and particularly natural resources — abroad.

In terms of instrumental rationale, the functional motivation to set up the NDB was to fill the gap in the existing architecture of global governance created by insufficient resources for infrastructure development throughout the global South. From this critical perspective, the established institutions, above all the WB but also the AfDB and other regional funding bodies, have not met these pressing needs.

Alongside the CRA, the NDB eased the way to using China’s renminbi rather than the US dollar. More symbolically, the creation of a new institution helped bolster the image of a new bargain between China, the BRICS, and the rest of the global South. The multilateralism of development could offset the growing backlash against Chinese investment abroad.

There was speculation that China was willing to pay part of the shares of other BRICS members and might thus take a leading role in safeguarding and advancing its own political interests. From an Indian perspective, this response exacerbated the unequal relationship with China. India worried that China’s dominance might eventually make the bank’s decision-making more like the IFIs and overshadow the voting rights and interests of the other members. India even explored the idea of offering the advanced economies a minority stake (between 40-45%) to offset China’s overarching role.

The process of moving away from the US dollar led to speculation about Chinese control through the internationalized renminbi, especially as China had an incentive to advocate the use of its own currency to offset currency risks in development finance.

Indeed, while India and Brazil prioritized building their own infrastructure capacity, China primarily sought alternative and less sensitive means to finance development projects on a global basis.

In resource terms it remains far behind the IFIs, both in terms of the NDB’s $50B in subscribed capital and the CRA’s $100B pool versus the WB’s $233B in subscribed capital and the IMF’s $755B in liquidity.

Leadership from the front was played down in terms of hosting. Whereas the US hosted the 1st and 3rd of the G20 summits, China only hosted the 3rd in the cycle of the BRICS summits. And unlike the G8 with a set rotation of summits, the BRICS allows improvisation.

In 2013:

  • China: $9.47T
  • Brazil: $2.39T
  • Russia: $2.08T
  • India: $1.87T

  • South Africa: $366B

  • Korea: $1.3T
  • Mexico: $1.26T
  • Indonesia: $912B
  • Turkey: $821B

Korea, Mexico, Turkey, and Indonesia have gained membership in the G20, but aside from Mexico were never considered for G8 membership in an expanded summit process. Nor were they deemed systematically important. Indeed, these countries were only included in the G20 at the discretion of the US, which saw political advantages from a diluted BRICS-plus approach.

This pattern of extended ties was a testimony to the massive role of China, in that it is the only member to have impressive economic ties with all of the other members. It has moved into the lead in terms of trade with Brazil, India, and SA, while retaining the number 2 position vis-a-vis Russia.