The BRICs grouping of emerging market nations — Brazil, Russia, India, China, and South Africa — should move toward a single trade and economic market, in addition to creating and promoting projects and tools for global economy control, Zhang Dejiang, the Chairman of the Standing Committee of China’s National People’s Congress (NPC), said during the first-ever BRICs Parliamentary Forum held in Moscow on Monday.
Amid a difficult and quickly changing international situation, the BRICs group should stand together against a wide array of challenges to stimulate the vitality of their economies, and improve competitiveness, said Dejiang.
“We must strive for moving towards the creation of a single market in trade and economic cooperation, the creation of a multi-level mechanism of currency agreements, new infrastructure projects and strengthening cooperation on the basis of the people’s support. The key tools here include the BRICs Bank and the BRICs reserve currencies pool,” said Dejiang, according to Russia’s RIA Novosti news agency.
Dejiang said that he believes that the production structures of the BRICs countries complement each other well and that the “potential for cooperation is great.”
Alexsey Pushkov, the head of Russia’s State Duma Foreign Relations Committee, said during the forum that the combined gross domestic product (GDP) of the BRICs group will exceed that of the Group of Seven (G7) member states in the next two to three years.
Cooperation between the BRICs group has reached new levels, and is continuing to grow.
Most notable was in May 2014, when China and Russia signed a massive $400 billion gas supply deal in which Russia agreed to annually deliver 38 billion cubic meters of gas to China, the biggest contract in the history of Russia’s gas sector.
Moreover, a historic milestone for the BRICs group was reached in July 2014, where the BRICs group signed a document to form a reserve currency pool worth over $100 billion — known as the Contingent Reserve Arrangement (CRA) — as well as a $100 billion New Development Bank (NDB), also known as the BRICs bank.
The BRICs bank will be used to finance infrastructure projects in the BRICs countries as well as other emerging market countries.
The launch of the BRICs bank is seen as a first step to break the dominance of the U.S. dollar in global trade, as well as dollar-backed institutions like the IMF and the World Bank, both U.S.-based institutions that BRICs countries have had little influence within.
In December 2014, Russian President Vladimir Putin made a trip to India where 20 high-profile deals worth $100 billion were signed with Indian Prime Minister Narendra Modi in the span of under 24 hours.
Russia has recently proposed an alternate to the SWIFT global interbank payment system for the BRICs group in a move which would further ramp up de-dollarization efforts and threaten the U.S. dollar’s global hegemony.
Also in December 2014, Russia’s Central Bank announced that it had launched a rival to SWIFT in its own domestic version of a payment service which was aimed at moving away from Western financial dominance.
Similar to Russia, China has also been trying to launch its own global payment system known as CIPS, or the China International Payment System, which will be used to process cross-border yuan transactions.
The launch of China’s CIPS will pave the way for internationalizing the yuan and should greatly increase global usage of the Chinese currency by cutting transaction costs and processing times.
China and Russia recently switched to domestic currencies in trading by using such financial tools as swaps and forwards.
The Central Bank of Russia and The Central Bank of India have also been moving closer to an agreement to use their national currencies for trade settlements.
A rating agency for the BRICs group is also being discussed at an expert level, as an alternative to the western dominated ‘big three’ rating agencies.
Russian President Vladimir Putin has said that he expects to launch the new BRICs bank in addition to the currency reserve pool during the July summit of the Shanghai Cooperation Organisation (SCO) and BRICs.
The summit of SCO and BRICs is set to take place in Ufa – the capital city of the Republic of Bashkortostan, Russia – on July 8-10, 2015.
The BRICs group was established in 2010, when South Africa joined Brazil, Russia, India, and China in what was previously known as BRIC. The BRICs group represents 42 percent of the world’s population and roughly 20 percent of the world’s economy based on GDP, and 30 percent of the world’s GDP based on PPP. Total trade between the countries is $6.14 trillion, or nearly 17 percent of the world’s total.