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BRIC gets built up: South Africa’s inclusion and China’s response

18th January 2011

By: In On Africa IOA

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The end of 2010 and beginning of 2011 have seen South Africa busy on the world stage. The country has joined two of the foremost organisations in international politics and economics - the Security Council and the Brazil, Russia, India and China (BRIC) bloc. Given this context, this discussion paper will assess the Chinese Government’s and Chinese society’s response to the inclusion of South Africa in BRIC. What are the perceived motivations for South Africa? What are the economic and political incentives for China? And finally, what are the potential international political ramifications of the expanded BRICS?


South Africa on the world stage

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On 1 January 2011, South Africa joined the Security Council for its second two-year term as a non-permanent member. According to a press release from Pretoria, the Government of South Africa’s guiding principles include domestic priorities, “promot[ing] the interests of the African continent,” and international cooperation for economic development.(2) They will serve as the chair for the 1540 Committee on non-proliferation of nuclear, chemical and biological weapons and on the Committee for Conflict Prevention in Africa, and as vice-chair for committees on Cote-d’Ivoire and Liberia.


This election to the United Nation’s (UN) most powerful body was prefaced by something perhaps less prestigious, but certainly more prominent in the international media. On 23 December 2010, South Africa received a formal invitation to join Brazil, the Russian Federation, India, and the People’s Republic of China in the group of emerging economies known as BRIC. In an official statement, Minister Nkoana-Mashabane located South Africa’s interest in the organisation as part of its larger commitment to multilateralism, global financial and political balance, and South-South cooperation.(3) She highlighted South Africa’s other multilateral involvement - with India-Brazil-South Africa (IBSA), the Non-Aligned Movement (NAM), and the G-77 - as complementary components of their emerging market-based international relations strategy. The South African press has commented that the invitation “legitimises South Africa as a future global power.”(4)

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South Africa and BRICS: a “natural fit”?


Experts within South Africa and abroad acknowledge that while geopolitics played a role in encouraging the BRIC offer, economics provided the key incentive. They argue that South Africa’s selection was driven by the priorities of existing BRIC members, namely a need for geographic representation in the group. Sub-Saharan Africa was fairly insulated from the economic downturn and is projected to have regional market growth of over 5% in 2011. According to The Economist, seven out of ten of the projected fastest growing economies from 2011-2015 are located in sub-Saharan Africa; China and India top the list and South Africa, incidentally, is not included.(5) They have, however, been able to leverage their leadership and their position as a “gateway” to the region to increase attractiveness to investors and to the BRIC countries.(6) South Africa’s ultimate success in gaining entry to the group despite a relatively weak showing against other emerging economies - for example, Turkey, Indonesia, South Korea and Mexico - underscores the effectiveness of marketing themselves as regional representatives.


The rest of the world has watched with interest over the past few years, when South Africa lobbied strongly for consideration as an emerging economy, and with surprise when their bid in November 2010 met with success. Experts commented that South Africa was not a “natural fit,” and even Jim O’Neill of Goldman Sachs, who coined the term in 2001, voiced his opinion as late as mid-December 2010 that Nigeria would be a better candidate for inclusion.(7) China, however, gave South Africa “the best Christmas present ever” by extending the BRIC invitation just before the holiday. The economic benefits accruing to both countries are second to China’s political and geopolitical considerations.


Beijing as BRICS leader


In his 2011 New Year message, Chinese Foreign Minister Yang Jiechi emphasised China’s role during the first decade of the new century as a regional and global actor.(8) He particularly noted the increasing importance of diplomacy in ensuring state interests such as security, sovereignty, and development. This public message reaffirms Ministry spokesperson Jiang Yu’s earlier comments to the press about South Africa’s accession to BRIC, where she highlighted the stated goals of the group - harmony, stability, and “win-win outcomes” in economic development.(9) The third summit of BRICS leaders will be held in Beijing in April 2011.


Xinhua, the national news agency in China, has applauded more generally the recent developments in BRIC. South Africa’s accession to BRIC, an article by Wang Guanqun notes, comes at the same time as the inauguration of new Brazilian president Dilma Rousseff.(10) The attention paid to these two “stars” among emerging economies further underlines the importance of BRICS nations to leading global economic growth. Their continued economic prosperity stands “in stark contrast” to the economies of the United States (US) and Western Europe.


The majority of other Chinese news outlets also frame the decision to invite South Africa to join the organisation as an economic boon to all nations involved. On the one hand, the economic opportunities South Africa could gain through enhanced cooperation with the BRIC economies provides compelling motivation for South Africa’s lobbying efforts. On the other hand, the Chinese media also places an emphasis on the large number and relative wealth of South African consumers, and on the relatively high Government regulation of South African enterprise.(11) The nation has the largest energy production capacity in the region, and is the largest producer of precious metals.(12) Both characteristics are attractive to Chinese investment and trade interests, which in 2010 enabled China to surpass Germany as South Africa’s major trading partner.


However, the South African economy alone would not justify its inclusion in BRICS. All articles note that their economy, with a GDP of just under US$ 300 billion, is less than a quarter the size of the smallest BRIC economy, Russia.(13) However, as Martyn Davies of Frontier Advisory says, it is a perfectly reasonable argument if South Africa represents more broadly the interests and opportunities of the sub-Saharan region.(14) Davies continues, arguing that South Africa would further strengthen its position in BRICS with increased integration of the Southern African Development Community (SADC). Companies in South Africa, one report notes, have subsidiaries in a number of sub-Saharan African countries and South African foreign direct investment benefits from geographic proximity and cultural similarities.(15) The entire sub-Saharan economy has tripled over the last decade, from US$ 300 billion to US$ 900 billion, a growth rate that more closely approximates that of other BRIC countries.(16)


The theme of strengthening trade relations, it would seem, is certainly a two-way street. In these reports, South Africa takes on the roles of both beneficiary and facilitator of Chinese economic growth. China’s dominance as South Africa’s trading partner would be cemented through the increased cooperation and harmonisation of policies implied by the latter’s integration into BRICS. Furthermore, although China consulted with Brazil, Russia, and India before extending the invitation to South Africa, they stand to benefit the most from this relationship. China is sub-Saharan Africa’s largest trading partner and continues to drive growth on the continent through trade in natural resources and large-scale infrastructure projects.


Political consequences and conclusions


It will be interesting to consider potential political implications of China’s economic interest, via BRIC, in South Africa. On the positive side, this relationship will benefit emerging economies in their push to address issues of global climate change, reform of the United Nations (UN) system, and poverty alleviation.(17) The shift from economic to political cooperation could have substantial influence on the ability of emerging economies to manage international discourse on current events.(18) It is also seen as a step towards establishing a “more equal and more balanced global political ‘new world order’.”(19) The cooperation and economic success of the BRICS economies, another article claims, proves that “development models not based on the Western model also work.”(20) The establishment of a potential “Beijing Consensus” as an alternative to standard development narratives would shore up Chinese aspirations to become a power player in international politics, as well as economics.


However, there could be negative consequences. First, one effect of South Africa’s inclusion in the third summit of BRIC leaders emerges, which belies the club’s origins. Goldman’s O’Neill used BRIC to refer to the “hot” economies that attracted international investors because of their fast growth rates and large populations. With the inclusion of misfit economy South Africa, the group takes on a political personality that O’Neill did not, perhaps, predict. While US news outlet The Wall Street Journal dismisses these political ties,(21) both South African and Chinese media have clearly drawn linkages between economics and politics, between development growth and growing international influence.


Second, the formation of a close relationship between South Africa and China could lead to tension within BRICS between China and India, who historically has stronger trade and development ties with Africa. In response to the BRICS invitation, India stated its interests in continuing G-4 (India, Germany, Japan, and Brazil) talks that include South Africa as a beneficiary of a reformed Security Council.(22) Furthermore, there are indications that South Africa’s accession may render IBSA obsolete, despite public Indian commitment to this group, consisting of the emerging market democracies of India, Brazil, and South Africa.(23) If BRICS takes on a political agenda, India may be hard-pressed to navigate between its interest in the group and its close economic and political ties with the US.


Finally, within China, some question the wisdom of choosing South Africa - one blogger argues cogently that, for both economic and geopolitical reasons, Indonesia would have been a more logical partner.(24) They are strategically situated in Southeast Asia, control the Straits of Malacca, and have access to large amounts of natural resources, not to mention the fact that their economy will grow at an estimated 6-6.5% in 2011.(25) However, the BRICS group has been “frozen” at five members, and will not admit more until it stabilises. This move shifts accession aspirations from Egypt and Indonesia to the backburner.(26) If any of China’s allies and trading partners from Asia feel slighted, especially in the aftermath of Indonesian criticism and concern over the China-Association of South-East Asian Nations (ASEAN) Free Trade Agreement, it may have an impact on their regional political capital.


In short, China sees South African membership in BRICS as a mutually beneficial relationship. It offers South Africa a high-profile affiliation and the accompanying cache. For China, closer ties to South Africa mean increased investment opportunities, increased market size, and decreased barriers to expansion throughout sub-Saharan Africa.


NOTES:


(1) Contact Sarah M. Brooks through Consultancy Africa Intelligence's Asia Dimension Unit (asia.dimension@consultancyafrica.com).
(2) “South Africa takes up its Seat in the United Nations Security Council.” Media briefing, Embassy of the Republic of South Africa in Washington, D.C., 5 January 2011. http://saembassy.ogt11.com.
(3) Press release, “Minister Nkoana-Mashabane on South Africa’s full membership of Brics,” Government Communication and Information System, Republic of South Africa, 24 December 2010. http://www.info.gov.za.
(4) Jon Herskovitz, “SA, not just another Bric in the wall,” The Mail and Guardian, 29 December 2010. http://www.mg.co.za.
(5) “The lion kings?” The Economist, 6 January 2011. http://www.economist.com.
(6) World Economic Outlook. International Monetary Fund. October 2010. p.88. www.imf.org
(7) Cohn, Carolyn, “Analysis: Nigeria may be Africa’s first Bric, but long,” Reuters, 13 December 2010. http://www.reuters.com.
(8) Press release, “New Year Message by Foreign Minister Yang Jiechi,” Ministry of Foreign Affairs of the People’s Republic of China, 31 December 2010. http://www.fmprc.gov.cn.
(9) “Foreign Ministry Spokesperson Jiang Yu's Regular Press Conference on December 28, 2010,” Ministry of Foreign Affairs of the People’s Republic of China, 29 December 2010. http://www.fmprc.gov.cn.
(10) Wang Guanqun, “Building BRICS,” Xinhuanet, 31 December 2010. http://news.xinhuanet.com.
(11) Ibid.
(12) 孙永剑. “南非崛起.” 中华工商时报. Sun Yongjian. “South Africa Soars.” China Business Times. p. 3. 7 January 2011. http://www.cbt.com.cn (Author’s translation from original article in Chinese)
(13) Seria, Nasreen, “South Africa to join BRIC to Boost Emerging Markets,” Businessweek, 26 December 2010. http://www.businessweek.com.
(14) 张敏. “南非加盟金砖集团意义何在?”“South Africa joins BRIC: What’s the point?” Zhang Min, trans. from Herskovitz, Reuters China, 30 December 2010. http://cn.reuters.com. (Author’s translation from original article in Chinese)
(15) 邵海军, 李建民. “新闻分析: ‘金砖’扩容促新兴市场国家合作”. Shao Haijun and Li Jianmin. “News Analysis: BRIC expansion extends cooperation of emerging markets.” Xinhuanet. 25 December 2010. http://news.xinhuanet.com. (Author’s translation from original article in Chinese)
(16) 张敏. “南非加盟金砖集团意义何在?”“South Africa joins BRIC: What’s the point?” Zhang Min, trans. from Herskovitz, Reuters China, 30 December 2010. http://cn.reuters.com. (Author’s translation from original article in Chinese)
(17) 邵海军, 李建民. “新闻分析: ‘金砖’扩容促新兴市场国家合作”. Shao Haijun and Li Jianmin. “News Analysis: BRIC expansion extends cooperation of emerging markets.” Xinhuanet. 25 December 2010. http://news.xinhuanet.com. (Author’s translation from original article in Chinese)
(18) 赵海娟. “南非入盟 ‘金砖’”.中国经济时报 Zhao Haijuan. “The importance of South Africa’s accession to BRIC.” China Economic Times. 29 December 2010. http://www.hnjjbs.com. (Author’s translation from original article in Chinese)
(19) 邵海军, 李建民. “新闻分析: ‘金砖’扩容促新兴市场国家合作”. Shao Haijun and Li Jianmin. “News Analysis: BRIC expansion extends cooperation of emerging markets.” Xinhuanet. 25 December 2010. http://news.xinhuanet.com. (Author’s translation from original article in Chinese)
(20) Wang Guanqun. “Building BRICS.” Xinhuanet. 31 December 2010, http://news.xinhuanet.com.
(21) Back, Aaron, “Brazil, Russia, India, China + South Africa = BRICSA?”, The Wall Street Journal, 28 December 2010. http://blogs.wsj.com.
(22) Dikshit, Sandeep, “With South Africa in, it will be BRICS,” The Hindu, 27 December 2010, http://www.hindu.com.
(23) Ibid.
(24) “吴智刚. “谁是下一个‘金砖国家’?” Wu Zhigang, “Who is the next ‘BRIC’?”, http://blog.stcn.com (Author’s translation from original article in Chinese).
(25) Manurung, Novrida, “Indonesia Raises Economic Growth Forecast to 6%-6.5%,” Businessweek, 11 March 2010. http://www.businessweek.com.
(26) Dikshit, Sandeep, “With South Africa in, it will be BRICS,” The Hindu, 27 December 2010, http://www.hindu.com.


Written by Sarah M. Brooks(1)

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