By Rajiv Biswas, Asia-Pacific Chief Economist, IHS Markit
The decision by China and India to de-escalate border tensions in the Bhutan border area is a major positive for the future economic co-operation agenda of the BRICS grouping ahead of the BRICS Summit due to be held on 3 September. The five BRICS nations currently account for approximately 23% of world GDP, making these nations an important part of the world economy.
China, as the world’s second largest economy, has been the key driver for sustained global economic growth since the global financial crisis of 2008-2009, accounting for around 40% of the total increase in world GDP since 2009. The BRICS, led by China, have also been a key driver for growth in world trade and investment flows over the past decade.
In the face of rising protectionism in some parts of the world, BRICS can champion new initiatives for trade liberalization and development cooperation to boost South-South trade and investment flows, including bilateral and multilateral FTAs and creating joint funds for technological development such as a fund for medical research focused on health solutions for developing countries or a fund for developing online education technology.
BRICS countries can play a key role at the forefront of efforts for greater international trade liberalization and economic development cooperation. Key examples of how BRICS nations can lead international trade and investment liberalization are China’s leadership role in advancing RCEP trade negotiations among 16 APAC nations as well as China’s strategic plan to boost economic development cooperation through the Belt and Road Initiative.
BRICS nations have also established the New Development Bank in 2014 to finance infrastructure development in developing countries worldwide and this new multilateral bank is already operational.
The decision by China and India to pull back troops from their confrontation on the Bhutan border is a great outcome for the economic co-operation agenda of the BRICS and for the peaceful economic development of the Asia-Pacific. The future economic development of Asia is crucially dependent on close economic co-operation between China and India for the regional peace, stability and prosperity of all the Asia-Pacific.