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Opinion | BRICS push for dollar alternatives is not a threat but a positive development
- Amid growing concern about dollar risks, BRICS is increasingly pushing the use of local currencies like the yuan and rupee
- A stable, reliable non-Western alternative currency system would benefit a multipolar world and be a major milestone towards an Asian century
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With the International Monetary Fund predicting that China and India will contribute to half of global economic growth this year, and Goldman Sachs forecasting that their economies will each be bigger than America’s in decades, we seem to be moving towards a multipolar world and an “Asian century”.
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With this has come growing concern that the economic powerhouses of China and India could challenge the US-led international order.
This is a good time to reflect on BRICS, the bloc comprising Brazil, Russia, India, China and South Africa. In particular, India’s Prime Minister Narendra Modi has just had a high-profile reception in Washington – how India interacts with the United States and China in the next decades will profoundly shape our global political economy.
But when economist Jim O’Neill coined the BRICs acronym at the beginning of this century to refer to Brazil, Russia, India and China – South Africa joined later – the combined economic size of the four emerging economies was far behind that of the wealthy G7 nations.
Since then, the global political economy has experienced the 2007-2008 global financial crisis, seemingly never-ending Brexit chaos and a drastic economic downturn caused by the Covid-19 pandemic. In particular, it was difficult for the world-leading economies to build a consensus on a coordinated global effort during the pandemic.
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Post-pandemic, both developed and developing economies are looking for a new direction for globalisation and regionalisation to boost domestic economic growth. The economic potential of BRICS cannot be overlooked, as the five countries now contribute more to the world’s gross domestic product based on purchasing power parity than the G7.
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