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UPDATED: April 9, 2012 NO. 15 APRIL 12, 2012
Claiming Their Place
Leading emerging economies strengthen cooperation on finance and global governance
By Ding Ying

According to Qu Xing, President of the China Institute of International Studies, although the plan showed BRICS' efforts to advance South-South cooperation and improve the World Bank mechanism, it remains a task that is difficult to fulfill within a short time. The West, considering it an attempt to challenge the World Bank, may easily politicize the initiative. It will take a long time and a complicated procedure to define the BRICS development bank's relationship with the World Bank and the International Monetary Fund (IMF), Qu said.

In response to their debt problems, European countries and the United States started to draw their money back from developing countries, including the BRICS members, in the second half of 2011. Chen Fengying, Director of the Institute of World Economic Studies at the China Institutes of Contemporary International Relations, warned this capital flight could be dangerous to the BRICS members.

"Last year, the world economy was kidnapped by Western countries' debt crisis. In 2012, the BRICS economies should see to it that they will not be victimized by the Western crisis," she said. They should keep alert to Western nations transferring their debt crises to emerging economies through inflation or currency depreciation caused by quantitative easing, she added.

Global governance

In the Delhi Declaration, the BRICS leaders called for a "more representative international financial architecture" to increase the voice and representation of developing countries, as well as the establishment and improvement of a just international monetary system that could serve the interests of all countries. Experts pointed out that BRICS' cooperation on global governance can spearhead efforts to make the international financial system more equitable.

Song said there are many problems in the current international financial system. For example, developing countries speak with a much weaker voice than developed ones. He suggested that the BRICS countries work together to improve major developing countries' status and increase their influence in international institutions like the IMF, in order to establish a fairer and healthier world economic order.

Emerging economies have become the main engine of global economic growth. BRICS' contribution to world economic growth has exceeded 50 percent. Comparing their contribution, the BRICS countries' voting rights at the IMF are still low, as they occupy only 13 percent of IMF voting rights even after an IMF reform in 2010.

In the Delhi Declaration, the BRICS leaders said they are "concerned at the slow pace of quota and governance reforms in the IMF." They underlined the importance of a comprehensive review of the IMF's quota formula to better reflect the economic weight of emerging markets and developing countries.

Liu Guchang, Executive Director of the China Foundation for International Studies, said the conflict between the global economic governance system under developed countries' dominance and the changing landscape of economic power is becoming sharper. The West frequently creates obstacles for emerging economies and developing countries and transfers its crisis to the latter, by using current international economic and financial systems.

"Strengthening global governance is an urgent need of BRICS as well as an obligation that emerging economies should fulfill. Governance reforms will not only benefit the BRICS nations, but also bring confidence to world economic recovery and growth," said Liu.

At the New Delhi summit, the BRICS leaders opposed the introduction of trade and investment barriers on the grounds of developing a "green economy," saying all nations were entitled to choose their paths toward sustainable development based on each country's stage of development, national strategies and priorities.

Representing developing countries' stance, the BRICS group is going to play a unique role in the reforms of the international order and global financial systems, Liu said. However, he explained, strengthening cooperation among BRICS nations doesn't mean confronting developed countries. "The best way to work is always cooperation, not confrontation, between the South and the North," said Liu.

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