WeeklyWorker

28.11.2024
Brics 2023: other than hostility to the US they have little in common

An acronym versus the hegemon

America and its arrogant bullying is much resented. But, asks Yassamine Mather, does the expanding Brics alliance represent a viable alternative?

Brics is comprised of (and gets its name from) five major emerging economies: Brazil, Russia, India, China and South Africa. The acronym ‘Brics’ was coined in 2001 by economist Jim O’Neill from Goldman Sachs, when highlighting the economic potential of these countries, which were predicted to be big players in the global economy. Originally, it was called just ‘Bric’ (Brazil, Russia, India and China), but then South Africa joined the group in 2010.

Its formal birth happened in 2006, when the foreign ministers from Brazil, Russia, India and China met in New York to discuss common issues and ways to work together. Since then, Brics countries have held annual summits to discuss global economic development, trade, political cooperation and more. One of its biggest achievements was the setting up of the New Development Bank in 2014. The NDB was created to fund infrastructure and sustainable development projects in the Brics countries and other emerging economies. It is seen as an alternative to western financial institutions like the International Monetary Fund and World Bank, which often favour richer nations.

The group now includes not only the five member-states upon which its name is based, but also Iran, Egypt, Ethiopia and the United Arab Emirates. This expansion shows that Brics is becoming more influential, with countries from different parts of the world wanting to join - over 40 other countries have also expressed interest in following suit, including Turkey, Azerbaijan and Malaysia. All this reflects its growing appeal.

These countries are eager to join Brics because the alliance claims to provide a platform to push for a more inclusive global system - one that is not completely dominated by the current US-led powers. It is positioning itself as a counterbalance to organisations like the G7 or the World Bank, claiming it will give emerging economies more of a voice on the global stage.

China is, of course, the biggest and most influential player in Brics. As the second-largest economy in the world, China is driving much of the trade, investment and economic power of the group. Its huge population, advanced infrastructure and tech sector make it a vital partner for countries like Brazil, Russia and South Africa, which rely on Chinese investment and trade.

Politically China’s foreign policy has shifted over the years, especially under president Xi Jinping. With policies like the Belt and Road Initiative (BRI), China is building infrastructure across Asia, Africa and Europe, aiming to boost trade. While this sounds great on the surface, critics argue that it sometimes leads to “debt traps” for participating countries - who receive so much Chinese investment that they end up owing China more than they can handle, which can make them economically dependent on Beijing.

Imperialism

The question is posed as to whether China is using its economic power to dominate other countries, or is just looking for better global connections. China often insists it is all about the need for cooperation and mutual benefit, but its growing influence - especially in Africa and south-east Asia - has led not a few to believe it is a new form of imperialism, only without the old-school colonial tactics.

Even though China does not have colonies or engage in military conquests like the traditional imperial powers of the past, it still wields a lot of global influence, especially in terms of trade, investment and infrastructure. This influence is often seen as a modern form of economic imperialism, but, of course, it is not the same as the kind of colonial imperialism where countries directly control foreign lands.

Many argue that China’s actions are an example of ‘economic imperialism’. It is not taking over countries militarily, but instead using investment and trade to build influence. Others might say that this is not really imperialism at all, but just China doing what every big power does - looking to expand its reach and solidify its place in the global order. While China has become a dominant force in global trade, it is also promoting its vision of non-interference and respect for sovereignty, which makes it seem less like a traditional imperialist power.

No-one in their right mind considers China to be anti-imperialist, but, in the end, whether you call it a proto-imperialist or an imperialist nation depends on how you define those terms. Is it simply a rising power looking to increase its influence, or is it using its economic might to shape the world in its image? Either way, its role in Brics and global politics is undeniable and will likely continue to evolve, making it a central player in future international relations.

China is now the world’s largest economy, when you look at it through purchasing power parity. Its rapid economic growth is changing the global political and economic landscape. It is often exploiting cheap energy and raw materials from developing countries. A number of Marxist thinkers and political groups, inspired by Lenin’s theory of imperialism, argue that China has turned into a capitalist-imperialist state. They believe that China’s monopoly capital and its aggressive push into global markets reflect this transformation.

With the BRI and its trade practices, China invests in infrastructure, while extracting raw materials - a dynamic often called neocolonial. At the same time, many developing countries see China’s approach as better than what is offered by the IMF or World Bank. For example, China provides lower interest rates and better co-investment terms. But this is not a new pattern. Back in the late 1940s and 50s, the US as a rising imperialist power offered favourable development deals to replace the old colonial powers, especially Britain.

There is also another side to the argument. Critics of the ‘Chinese imperialism’ idea point out that China sends more surplus value - profits from labour and production - to the US and western Europe than it takes from developing countries. This shows China’s deep integration into global value chains, where much of the profit ends up in transnational corporations in wealthier nations. Some argue this makes China a ‘semi-peripheral’ country in the global capitalist system, but others believe its growing economic influence and capital exports are pushing it toward becoming a core, dominant power.

Those who reject the idea that China is an imperialist power often reference Lenin’s classic definition in Imperialism, the highest stage of capitalism. There Lenin outlined the key features of imperialism, including the dominance of monopolies, the merging of banking and industrial capital, and the export of capital. However, critics note that today’s global economy is very different from in Lenin’s time. For instance, the colonial division of the world he described no longer exists, thanks to national liberation movements and decolonisation in the mid-20th century. Modern Marxist theories of imperialism have shifted to focus on global systems of economic exploitation and the unequal distribution of wealth and power.

In the ongoing debate about whether China is imperialist, there are those Marxists who argue that it has become a monopoly-capitalist economy internally and that its export of capital abroad proves this. NB Turner, for example, points to China’s massive state and private monopoly capital. He highlights how the country’s four largest state-owned banks dominate the economy, showing the power of finance capital. Turner also notes China’s growing overseas assets and its position as one of the largest exporters of capital, engaging in resource and labour exploitation worldwide. Similarly, Yang Heping (under the pen name, ‘Hua Shi’) argues that Chinese state-owned capital has become the largest concentration of industrial and financial capital in the world, making it a global monopoly powerhouse.

Between 2004 and 2018, China’s foreign assets jumped from $929 billion to $7.32 trillion, while foreign investment into China rose from $693 billion to $5.19 trillion. By 2018, China had a net investment position of $2.13 trillion, showing how much capital it is exporting and how it has become a major global creditor. For many, this looks a lot like the behaviour of an imperialist country.

Significantly, China’s dominance is the main reason for the projected rise of Brics. By 2050, it is expected that Brics countries will produce 40% of global economic output. Between 2012 and 2022, they contributed around 45% of global GDP growth, and a quarter of that came from China alone.

The new members are a mixed bunch economically and politically. Countries like Saudi Arabia and the UAE are net creditors with strong economies, while others, like Ethiopia and Egypt, face significant debt challenges. Three of the new members - Saudi Arabia, the UAE and Iran - are big fossil fuel exporters, while Ethiopia and Egypt highlight Africa’s increasing importance in the foreign policies of China and India.

Brics has been pushing for changes in global institutions like the IMF, World Bank, and UN to give developing countries more say. It is also working on ideas like using local currencies for trade and making global trade rules more transparent.

China played a massive role in shaping the economic narrative of the original five Brics members. Thanks to its strategic policies, huge manufacturing sector and focus on exports, China has far outpaced the other Brics states in expanding trade. It has become a key trading partner for both wealthy and developing countries. Meanwhile, the others have struggled to keep up. Brazil, for example, relies heavily on agricultural and mineral exports, mostly to China, but has not diversified much. Russia is focused on energy exports, but geopolitical issues often hold it back from expanding its trade network. South Africa is also heavily reliant on mineral exports and faces internal economic challenges that limit its competitiveness.

Currency

Sanctions have left Russia unable to use major currencies like the dollar and euro, forcing it to turn to alternatives like the Chinese yuan and gold. But these come with their challenges. Russia has ramped up its yuan reserves and shifted from dollar-based trade to direct rouble-yuan transactions, with trade between the two currencies growing 80-fold between February and October 2022 alone.

However, this creates new vulnerabilities for Russia. China controls the yuan-rouble exchange rate, which could make Chinese goods more expensive for Russia or Russian exports cheaper than they would like. On top of that, if Beijing imposes capital controls, Russia could struggle to cash its Chinese bonds. Russia also depends on currency exchanges with China, but, if the US exerts enough pressure, China might cut these off.

As Russia leans more on the yuan, the balance of power in the partnership shifts heavily toward China, cementing Russia’s position as the ‘junior partner’. Gold is another option for Russia, since it holds about $140 billion in reserves and is a major producer. But using gold as a financial workaround is tricky:

China, meanwhile, supports Russia’s move away from the dollar, seeing it as a chance to promote the yuan on the global stage. By ‘yuanising’ Russia’s economy, China gets a controlled environment to test financial strategies and push the yuan as an international currency. With Russia in a tight spot, China is accelerating this process, solidifying its influence. While using the yuan helps Russia deal with sanctions in the short term, it also makes the country more dependent on China in the long run.

Gold could offer a backup plan, but logistical, legal and geopolitical hurdles limit its usefulness. For China, this collaboration is a way to advance its global financial ambitions, turning Russia’s isolation into an opportunity to experiment and grow its influence. This dynamic is complicated: Russia wants financial independence, but its moves often end up strengthening China’s hand instead.

China’s relationships in the Gulf - especially with Saudi Arabia and the UAE - have grown far beyond oil. While the energy trade remains a big part of their relationship, they are now working together on infrastructure, technology, renewable energy and even AI. Major projects include joint ventures in electric vehicles, the Mohammed bin Rashid Solar Park, and digital collaborations with large Chinese companies like Huawei and Alibaba.

The Gulf states, rich in oil and gas, are attempting to carve out a role as ‘independent middle powers’. They are balancing relationships with both China and the US, especially as tensions between the two superpowers heat up. Recent conflicts like the wars in Ukraine and Gaza have sped up their shift away from western-centric partnerships and toward greater alignment with China’s perspectives.

China is a vital economic partner for the Gulf, as the largest buyer of its hydrocarbons. Gulf states are also using their ties with China as leverage in negotiations with western powers, especially in areas like technology and nuclear agreements. Long-term oil deals with China are a cornerstone of these relationships, but technological and military cooperation are growing too. For example, China provides advanced technologies like drones and AI, which are not always available from western partners.

That said, the US still dominates, when it comes to arms sales, and remains the Gulf’s main ‘security’ guarantor. So, while the Gulf is strengthening its ties with China, it is carefully balancing these relationships to maximise its strategic position.

Iran-Russia-China

Iran has been working hard to get around US sanctions, and one key strategy has been shifting from the US dollar to the Chinese yuan for trade. In 2022, Iran’s central bank even made the yuan one of its main foreign exchange currencies. While this might seem like a natural fit, given both countries’ shared interests, their relationship is not without friction.

The ties between China and Iran are largely economic, focusing on trade and infrastructure. Meanwhile, Russia’s relationships with both countries add another layer of complexity, especially since Moscow sees Beijing and Tehran as key players in its multi-polar world vision. Russia, China and Iran are all pushing back against western dominance, promoting state sovereignty and regional autonomy over ‘liberal’ ideals. This shared outlook has driven forward their cooperation on issues like Iran’s nuclear programme, ‘security’ and efforts to bypass US-led global financial systems.

That said, this is not a solid alliance. Their cooperation is often reactive and lacks the deeper, institutional framework needed to form a strong partnership.

When it comes to Iran’s nuclear programme, Russia and China have been pivotal in shaping Iran’s nuclear development. It was Russia that built Iran’s Bushehr nuclear power plant, while China initially offered support, but backed off under US pressure. Both nations supported multilateral talks through the International Atomic Energy Agency and the UN security council, opposing unilateral US sanctions. They favoured negotiation over confrontation, even working with western powers at times to address non-proliferation concerns.

The Shanghai Cooperation Organisation (SCO) has given Iran a platform to focus on sovereignty and combat regional threats. Iran has been an active observer since 2005, but has struggled to achieve full membership. China, in particular, is cautious about letting the SCO appear overtly anti-western. Despite this, Iran sees the SCO as a tool for stability and influence, even if the organisation’s overall capacity is limited.

Iran also plays a critical role in connecting Russian and Chinese economic initiatives, like the Eurasian Economic Union and China’s own BRI. For instance, joint projects in railways and ports aim to boost regional connectivity, but US sanctions and funding issues have slowed progress.

All three nations are eager to ditch the dollar in favour of other currencies, but, despite shared goals, the China-Russia-Iran relationship has clear limits:

So, while they align on challenging US power, their collaboration remains loose and opportunistic rather than part of a stable alliance.

Lessons

The proposed 25-year partnership between Iran and China, signed on March 27 2021, has stirred a lot of debate, especially among Iranian exiles. Though not yet finalised, the deal outlines extensive Chinese investment in Iranian infrastructure - like ports, airports and oilfields - in exchange for discounted Iranian oil. Payments would sidestep US sanctions by using China’s digital yuan and goods-based trade.

According to a report of the agreement published by Petroleum Economist, “China will be able to buy any Iranian oil, gas and petrochemical products at a minimum guaranteed discount of 12% to the six-month rolling mean price of comparable benchmark products, plus another 6% to 8% of that metric for risk-adjusted compensation.” The same report added that the agreement would allow China to deploy security personnel on the ground in Iran to protect Chinese projects, and that there would be additional personnel and material available to protect the eventual transit of oil, gas and petrochemical supplies from Iran to China, where necessary, including through the Persian Gulf.

Some critics, especially Iranian regime opponents, have spread misinformation, claiming the deal is a “land grab” or that China would take over Iranian assets like Kish Island. But leaked details suggest this is more about economic exploitation than territorial control. China aims to secure cheap resources, gain port access and expand its markets, while Iran uses the deal to counter its economic isolation.

This partnership is part of China’s broader BRI strategy to lock in energy resources and increase its geopolitical influence. Iran, which supplies much of China’s oil, fits neatly into this plan.

The backdrop here is the shifting global order. The rivalry between the two superpowers has only intensified, with nations like Iran leaning more toward China in response to US isolationist policies. In the tech space, China is also making big moves, particularly in graphical processor units and quantum computing and processors. Although it still trails the US, heavy investments suggest it is determined to close the gap in the coming years.

For Iran, the pivot to China reflects its desperation under crippling sanctions and Europe’s failure to offer meaningful alternatives. While Tehran might prefer closer ties with the west, it has been left with little choice but to deepen its relationship with Beijing. Ironically, US policies designed to weaken rivals may have inadvertently strengthened China by pushing nations like Iran into its orbit.