With the 2023 BRICS summit beginning on August 22, we provide an economic breakdown of all BRICS members and their respective trade with one other
The BRICS 2023 summit starts in Johannesburg, South Africa tomorrow (Tuesday, August 22) with the Heads of State of Brazil, China, India, and South Africa all attending in person, together with significant trade delegations, including Russia. The Russian President, Vladimir Putin, will attend by video-conference. The BRICS summit is expected to be a key moment in plans that could ultimately challenge the G7 group of nations in global economic and geopolitical influence. In this article we discuss the current position as concerns Intra-BRICS trade.
Background
The first meeting of RIC (Russia, India, and China) was held in 2005 in St. Petersburg. Brazil and South Africa joined the group in February 2011, when the current version of BRICS was completed. However, BRICS is not a formal alliance, and there are differences among members, but over the past decade, with dozens of meetings and summits, it has pursued common interests in strengthening mechanisms.
BRICS countries as a total currently includes about 26% of the total global land mass, and about 42% of the world’s population. This basic clout means that BRICS combined efforts in restructuring the global economy and strengthening economic and financial cooperation have been welcomed by many countries – and been viewed with suspicion elsewhere.
Mutual Economic Cooperation
The BRICS have also provided alternatives to existing global mechanisms deemed to be heavily influenced by the collective West and their policies. The BRICS New Development Bank (NDB), established as a partial alternative to the World Bank, has approved over 90 projects worth US$32 billion to support members’ infrastructure.
Economic cooperation was also discussed at the 14th BRICS summit in June 2022. Paying attention to providing a better interfacing in handling global crises, forming a multipolar economic strategy, developing alternative commercial and financial routes, promoting economic recovery, diversifying the economy, minimizing costs, developing electronic commerce, integrating markets, and cooperating with other nations have made BRICS attractive to smaller and other emerging countries.
Practically, BRICS is seen as a union of strong emerging powers with a common currency reserve of about US4 trillion, which has already undertaken achievements in standing against unilateralism and can be useful when positioned as alternatives to Western controlled institutions such as the World Bank, the International Monetary Fund, and Western financial and trade policies in general.
BRICS 2023
2023 is an important turning point in the BRICS development and its future global role.
BRICS combined efforts are seen in cooperation and collaboration in developing alternative payment systems to SWIFT, the gradual development of a non-dollar financial system, the development of a common payment system (BRICS Pay), the increase of trade using respective domestic currencies, and creating a common currency. These are all progressing at different timescales, however the use of respective digital currencies in the settlement of future intra-BRICS trade will be a significant move.
Russia, China, and India are all poised to launch their digital currencies for common usage by early 2025. This will allow trade to be conducted between them without the global SWIFT network and to reduce threats of the same upon other countries. Brazil and South Africa are close behind. In comparison, the United States and European Union, with rather more complex financial markets, have only recently agreed their digital currency protocols – a technical step the majority of BRICS members completed three years ago.
Strengthening the role of the New Development Bank (NDB) will help achieve BRICS national interests. The West’s approach to isolate Russia has created more incentives within the BRICS to increase trade with domestic currencies or create a common currency. The former has happened and is increasing; the latter will take time.
BRICS Expansion
Incentives for official participation in BRICS have increased in 2023. Although “BRICS Plus” was created in 2017 and invited non-BRICS officials, over the last two years, China has supported the concept of expanding cooperation within the ‘BRICS Plus.’ Model. Moscow has also mentioned the potential expansion of BRICS members from 5 to 17 nations. About 40 additional countries are believed to have expressed interest in joining and include heavy hitters such as Argentina, Egypt, Indonesia, Iran, Nigeria, Saudi Arabia, Turkiye, and the UAE.
In the meantime, in addition to reviewing the collective decision of the organization and having the necessary conditions and procedures for the process of accepting new members, the structure of BRICS and the process of accepting new countries may change with the joining of more countries.
Intra-BRICS Trade
CHINA
China’s economy has returned to a sustainable recovery path after COVID-19. Despite ups and downs, foreign trade and investment has continued to grow, and foreign trade was stable during 2022. However, China’s economy is vulnerable to real estate challenges, climate change, tightening global financial conditions, and rising geopolitical tensions.
China’s economic indicators for the first half of 2023 however indicate a steady post-COVID recovery. China’s GDP experienced a healthy growth rate of 5.5% year-on-year in H1 2023, while total GDP reached about US$8.3 trillion. In the second quarter of this year, GDP grew by 6.3% year-on-year.
The per capita disposable income in the first half of 2023 stood at US$2,739, while foreign trade reached US$1.36 trillion in Q1 and grew by almost 6% quarter-on-quarter in Q2.
Various measures to strengthen the economy in 2023 focused on the priority of stimulating economic growth, expanding domestic demand and consumption, improving the flexibility of supply chains, attracting more foreign investment, and reducing unemployment.
China’s foreign trade with other BRICS countries has grown, and China’s foreign trade with other BRICS countries increased by 12.1% in the first five months of 2022 compared to 2021.
Mechanical and electrical products are one of the main export products of China’s exports to other BRICS economies, energy, agriculture, and mining products accounting for about 76.3% of the total value of China’s imports from the BRICS nations.
Signing free trade agreements, establishing common standards for products, optimizing business methods, and removing barriers to market entry is also effectively increasing the trade volume of the five BRICS nations.
Trade between China and other BRICS countries is highly complementary and is expected to maintain growth. That said, the superiority of China in terms of dominating BRICS trade is undeniable.
China-Russia
The volume of mutual trade between China and Russia has increased and reached US$190 billion in 2022. The trade volume between Russia and China in the first six months of 2023 has continued this expansion and has also grown by 20% compared to the same period last year. Russia is China’s main source of coal, crude oil, and gas imports. Since the beginning of this year, there has been an upward trend in energy exports to China, and the scope of agricultural trade and agricultural products is also expanding. Exports from Russia to China increased by 84% in the first five months of 2023.
Prognosis: A rapidly growing and evolving trade partnership, which will accelerate more given increasing use of mutual digital currencies, improving Eurasian connectivity, and a mutual, well-defined desire to break the perceived hegemony of Western managed international trade structures to a more inclusive multilateral platform.
China-India
The trade between India and China touched an all-time high of US$135.98 billion in 2022, while New Delhi’s trade deficit with Beijing crossed the US$100 billion mark for the first time. Despite frosty political relations, bilateral trade is currently steady. The main products that China exported are computers, smart phones, and semiconductors, while India exported iron ore, refined petroleum, and raw aluminium.
Prognosis: Currently stable and showing signs of growth; but remains vulnerable due to political rivalry and disputed territorial security issues. If these can be resolved – and both leaders expressed exactly this desire during August 2023 – trade development could become dynamic if infrastructure connectivity can be improved.
China-Brazil
According to data from the China General Administration of Customs, in 2022, bilateral trade between China and Brazil reached US$165.6 billion, an increase of 8.1% year-on-year. In April this year, the two countries signed multiple trade agreements to boost this further, resulting in bilateral trade reaching US$13.85 billion in June 2023, suggesting that trade levels are stable and have slightly increased, although this may also improve by the year end.
The main products that Brazil exports to China are iron ore, soybeans, and crude petroleum, while China exported semiconductors, office machines, and smart phones. The agreements signed in April will increase collaboration on a range of issues, from aerospace development to infrastructure investment.
Prognosis: Significant planned developments and investments, and mutually compatible trade commodities imply that China-Brazil trade can be expected to show healthy development.
China-South-Africa
South Africa is China’s largest trading partner in Africa, with bilateral trade of US$56.74 billion in 2022. That was an increase of 11% over the previous year, thanks in part to rising commodity prices. 2023 trade levels thus far have shown sustainability and smaller growth. The main products that China exports to South Africa are broadcasting equipment, computers, and coated flat-rolled iron. The main products that South Africa exports to China are gold, diamonds, and iron ore.
Prognosis: South Africa will never be a huge bilateral trade partner for China, however mutually diverse trade is developing and looks sustainable. South Africa’s position as a gateway to Africa can help the PRC establish east coast links and connectivity via the Middle East to the INSTC and trade other BRI trade routes. South Africa may be the smallest BRICS member, but it remains an important geographical player.
China Plus
China is a member of the Regional Comprehensive Economic Partnership (RCEP), a free trade agreement that also includes Australia, Brunei, Cambodia, Indonesia, Japan, South Korea, Laos, Malaysia, Myanmar, New Zealand, the Philippines, Singapore, Thailand, and Vietnam.
China and other RCEP members increased their trade by 7.5% year on year to US$1.82 trillion in 2022. International businesses with operations in China can access the RCEP markets under certain rules of origin conditions.
Overall, ASEAN remains China’s largest trade partner. In the first half of 2023, trade with ASEAN countries accounted for 15.3% of China’s total trade, reaching US$428.96 billion, up 5.4% from 2022. China has a FTA with ASEAN.
INDIA
The Indian economy experienced solid economic growth, recovering from the COVID-19 crisis, with increases of 7.2% GDP in the 2022-23 fiscal year. Over the past decade, India’s policies have taken many initiatives to strengthen the economy, rapid economic growth, and exports.
India’s nominal GDP as of June 2023 is projected to be about US$3.75 trillion marking a significant growth rate of 16.1%. New Delhi’s attention to the service sector, implementing reforms, increasing industrial production and their exports, appropriate foreign policy, focusing on the information technology (IT) sector, increasing consumption, private investment, taking advantage of existing resources, increasing foreign exchange reserves, increasing investments in the sector, private sector, the continued flow of foreign direct investment and appropriate economic growth. India is now the fifth largest economy in the world.
The construction of industrial infrastructure in India and economic development, while a lack of complete dependence on a specific industry is such that industry, agriculture, services, and the financial sector are important economic and commercial sectors. Over the last decade, India has almost doubled its GDP per capita and can use BRICS as a platform to leverage its global influence.
New Delhi has made strides in signing free trade agreements (FTAs) with its trading partners and has taken several measures to promote trade, including plans for a digital platform and open access to BRICS.
India recorded over US$100 billion in intra-BRICS trade in 2022 and it has traded with all members. BRICS allows India to resolve mutual differences and use it to strengthen relations with Africa and South America.
India-China
For India-China data please see under the China section above.
India-Russia
Russia has rapidly moved from 25th to 7th position among India’s trading partners over the past two years. Between April 2022 and February 2023, bilateral trade reached a record US$45 billion. Almost a third of this volume was mineral products (including ore and fuel). In turn, India exported goods worth US$4.43 billion to the Russian Federation in 2021.These are mainly chemical products, machinery, equipment and vehicles, food products and agricultural raw materials. This trade can be expected to grow given the mutually desirable commodity items the two possess, in addition to improving trade routes shortly to become available via the INSTC.
Prognosis: Rapidly growing trade based on energy, however non-oil trade is also increasing. As Indian and Russian traders and consumers adapt, and supply chains such as the INSTC come online, the bilateral trade development between these two BRICS members is highly promising.
India-Brazil
India is now the 5th largest trading partner of Brazil, with India exporting US$9.72 billion of products during 2022, a significant increase over 2021’s US$6.77 billion. Brazil exported US$6.34 billion to India during 2022, an increase from US$$4.9 billion in 2021.
The main products that India exports to Brazil are refined petroleum, pesticides, and packaged medicaments. The main products that Brazil exports to India are crude petroleum, soybean oil, and gold.
Prognosis: Mutually viable trade commodities and increased shipping routes are making Indian Brazil trade a vibrant case study of mutual trade recognition and effort. With bilateral trade growing at rates of 50% in either direction, this is a hot corridor.
India-South Africa
In 2022, bilateral trade reached just under US$20 billion, in a well-balanced trade relationship with a small increase over 2021. The main products that South Africa exported to India are gold, coal briquettes, and raw copper. The main products that India exports to South Africa are refined petroleum, autos, and special purpose ships.
Prognosis: India’s trade development focus is more on the entire African continent and especially east Africa, rather than South Africa per se. India’s total trade with Africa grew by 9.26% in FY 2022-23 reaching almost US$100 billion, with a goal to double this to US$200 billion by 2030. India doesn’t need South Africa’s regional connections so much as say China or Russia, as it already has a significant African network dating back to the British colonial times. Consequently, South Africa isn’t so important in terms of India’s overall Africa policy, but trade is steady, and opportunities can be found.
India Plus
India is cautious about BRICS expansion. India’s role in the neighbouring SAARC trade organisation is a central part of its foreign policy, while India considers sub-regional cooperation to promote economic growth, social progress, cultural development, and security in South Asia. That said, India can use the strength and power of BRICS expansion to develop a strategy for regional cooperation within SAARC.
The SAARC trade network includes India as well as Afghanistan, Bangladesh, Bhutan, Maldives, Nepal, Pakistan, and Sri-Lanka. India dominates and makes sure multifactional trade does so on its own terms, resulting in a bloc that has been hindered in terms of its true potential. SAARC’s overall GDP is worth about US$4.47 trillion. Nevertheless, SAARC does have its uses and international investors interested in the India market can access SAARC nations under certain conditions if invested there.
India is also a member of BIMSTEC, a similar trade entity that includes Bhutan, Bangladesh, Myanmar, Thailand, Nepal, and Sri Lanka. It also tends to suffer from too much Indian love; however, opportunities exist. Routes east to ASEAN via Myanmar and Thailand may show future promise, as India also has a Free Trade Agreement with ASEAN.
RUSSIA
Russia is an important source of the world’s oil and natural gas resources, as well as minerals, food products, and timber. However, the conflict in Ukraine has affected the Russian economy and its oil exports.
Russia raised its 2023 gross domestic product (GDP) forecast to average a 1.2% growth, while Russian GDP is expected to reach US$2.267 trillion by the end of 2023. The IMF also raised Russia’s economic growth outlook for 2023. However, Russia’s Q2 GDP growth hit 4.9% in 2023, suggesting growth could be higher. The economy has adapted well to sanctions placed upon it while Russian traders have been quick to re-establish and re-position its historical trade corridors east.
Since the middle of 2022, sanctions imposed on Russian export and exports to non-western countries, mainly China and India, have accelerated. In March 2023, the concept document of Russia’s new foreign policy focused on issues such as the multipolar international system, structural transformation of the world economy, new international reserve currencies, and diversification of international economic cooperation mechanisms. This document also specifically calls for developing relations with various regional trade blocs and sees opportunities for the development of global trade and investment.
The development of the Eurasian direction of Russia’s foreign policy and paying more attention to the future of the Eurasian Economic Union (EAEU) is important. Moscow is in a good position among the group that needs energy to sustain their fiscal growth and is a major energy producer for BRICS.
For Russia-China and Russia-India data see the respective country headings above.
Russia-Brazil
Trade volumes between Brazil and Russia reached a record high of close to US$10 billion by the end of 2022, as Brazilian purchases of Russian energy and fertilizers increased. Brazilian consumable products such as meat, cheese and wines are also now appearing in Russian supermarkets. Considering the 2021 Russia-Brazil trade figure was just US$723 million this represents a huge increase in bilateral activity.
The main products that Russia exported to Brazil were mixed mineral and chemical fertilizers, potassic fertilizers, and nitrogenous fertilizers. The main products that Brazil exported to Russia are soybeans, meats, and coffee. Bilateral trade volumes are fairly even.
Prognosis: Brazil has partially stepped into the EU trade gap left by Spain and Portugal with spectacular trade results. With tourism and other trade items likely to be of mutual benefit, this trade corridor can be expected to remain dynamic for the immediate future. Russia is also involved in Brazil’s nuclear power development schemes.
Russia-South Africa
Bilateral trade between Russia and South Africa has increased by 16.4% in 2022 compared to the previous year and has reached US$1.3 billion. Trade with Russia on the other hand is “very low,” to use the words of South Africa’s envoy to Moscow, with exports worth only US$132 million from January to June 2023. However, direct shipping routes have now be established for the first time in over 30 years, while Russia’s hosting of the Russia-Africa Summit in St. Petersburg earlier this year can be expected to yield results.
Prognosis: It’s still early days for this trade corridor however if both sides can engage in improved mutual result, trade can be developed. South Africa’s consumables industry has work to do to develop the Russian market as does its vinicultural sector – South African wines remain rare on Russian supermarket shelves. Trade is small volumes; but increasing. More effort and opportunity searching on both sides is required to inject better dynamics.
Russia Plus
Russia is the lead member in the Eurasian Economic Union (EAEU) a free trade group that also includes Armenia, Belarus, Kazakhstan, and Kyrgyzstan. EAEU total GDP is about US$5 trillion, while intra-EAEU trade increased about 17% in 2022. The bloc also has FTA with Iran, Serbia, and Vietnam while several other countries, including BRICS member India are also involved with FTA negotiations with the EAEU.
Foreign investors incorporated in the EAEU can access these related markets under the pertinent rules of origin conditions.
Russia is also a member of the Commonwealth of Independent States (CIS) which is not a free trade bloc, but members do have individual bilateral trade agreements with each other. The CIS includes all the EAEU countries together with Azerbaijan, Tajikistan, and Uzbekistan.
BRAZIL
For Brazil-China, Brazil-India and Brazil-Russia see the respective partner country profiles above.
With more than 200 million people, Brazil is the largest country and economy in Latin America. With the expansion of trade in Brazil’s developing economy and the internationalization of the economy, Brazil provides food for nearly one and a half billion people.
The role of the government in the economy has been reduced. Brazil’s economy has great potential in the agricultural, industrial, and service sectors but suffers from low productivity.
The presence of Luiz Inacio Lula da Silva as the new president of Brazil in 2023 coincides with the return of Brazil’s foreign policy to a global role of paying attention to BRICS. Brazil’s GDP reached US$1.894 trillion dollars in 2022, growing 2.9% over the previous year. GDP per capita was US$8,831 in 2022.
Almost two-thirds of Brazil’s GDP comes from the service sector, and the economy is characterized by boom and bust cycles. Brazil remains the largest recipient of FDI inflows into Latin America.
In trade within BRICS, Brazil is mainly directed towards Asia (China and India). In 2022, Brazil’s main trading partner was China. Meanwhile, due to the main and important role of Brazil in Mercosur, this country can be the connecting link between BRICS and Mercosur.
The pluralist structure of BRICS fully complements Brazil’s strategic vision. However, like India, Brazil is cautious about BRICS development, believing that expansion should be gradual and maintain a regional balance and prominent roles for the five permanent members.
Brazil-South Africa
Brazil is South Africa’s third-largest trading partner within the BRICS, with 2022 bilateral trade reaching about US$2.3 billion. Brazil exports meats, tractors, and ferroalloys, while South Africa exports platinum, raw aluminium, and pesticides.
Prognosis: Both sides need to explore each other’s trade benefits more and conduct more mutually beneficial research. They appear to have some trade viability if entrepreneurs can become more involved.
Brazil Plus
Brazil is the lead nation in Mercosur, a Free Trade bloc that also includes Argentina, Paraguay, and Venezuela. It has associate trade agreements with Bolivia, Chile, Colombia, Ecuador, Guyana, Peru, and Suriname. The four Mercosur partners have a collective GDP of US$5.2 trillion. Foreign businesses incorporated in Mercosur can access these markets given certain qualifying criteria.
SOUTH AFRICA
South Africa has an advanced infrastructure; it is one of the largest exporters of gold and platinum; it also has financial, legal, communication, energy, and transportation sectors and has the largest stock exchange in Africa.
Tight domestic restrictions led to a slowdown in GDP to US$730.9 billion in 2022 with growth declining to 2% as opposed to the 4.9% achieved in 2021. South Africa also has multiple social issues to resolve. 30% of people live in extreme poverty, inequality is also high, while unemployment was 32.7% as of December 2022. South Africa is trying to prevent poverty, unemployment and inequality, and low intergenerational mobility.
In addition to the lack of electricity, tight financial and monetary policies and headwinds of the global economy have created challenges.
That said, South Africa represents Africa in BRICS and remains an important regional partner in helping open up the wider continental African market. South Africa also helps with the promotion of African interests, support, and the presence of BRICS in the African Continental Free Trade Agreement (AfCFTA), especially in the development of sustainable development infrastructure.
South Africa supports the expansion of BRICS and has managed to increase its trade flow with BRICS countries, especially China. Exports to other BRICS countries are also increasing within South Africa’s export portfolio.
For South Africa’s trade figures with China, India, Russia, and Brazil please see their respective country sections above.
South Africa Plus
South Africa is the lead member of the Southern African Customs Union, which also includes Botswana, Eswatini, Lesotho, and Namibia. It is a relatively advanced trade bloc and yields significant regional trade interest and exports.
It is also a participant in the African Continental Free Trade Agreement (AfCFTA) which came into effect in January 2021. Under the agreement, AfCFTA members – which currently include 54 of the 55 African nations – are committed to eliminating tariffs on most goods and services over a period of 5, 10, or 13 years, depending on the country’s level of development and the nature of the products. General long-term objectives include creating a single, liberalised market; reducing barriers to capital and labour to facilitate investment; developing regional infrastructure; and establishing a continental customs union and development bank.
Prognosis: While the South Africa economy has its issues, its main benefit to its BRICS partners is its influence in pan African affairs.
The country has taken a global lead in many important African and related subjects and is keen to be seen as an important international player. BRICS is helping it achieve this. That said, trade with all BRICS members is increasing and there remain opportunities for South Africa’s entrepreneurs.
The BRICS Vision Ahead
BRICS is facing many challenges, such as internal differences, global economic growth slowdown, geopolitical tensions, coordination problems, disagreements and different priorities of members, along with external pressures.
Economic cooperation within BRICS is still limited, and its cohesion is not especially strong, meaning we can expect an increase in institutionalising the various BRICS initiatives during this summit. There are also likely to discussions concerning BRICS trade liberalization and reducing each other’s import tariffs.
Although BRICS is not an official alliance, broad common interests such as moving towards a multipolar global governance system have brought greater opportunities with huge potential. In this way, it represents a huge consumer market, having a large middle class, natural resources, good communication and networks, a sound legal system, and modern infrastructure.
The existing BRICS 2025 strategy, which was implemented in 2020 and will soon be due for renewal, has been useful in developing trade and mutual investment between BRICS countries, strengthening customs cooperation, inclusive growth, and diversifying cooperation into different sectors.
Related Bloc Relationships
Should institutional connections between BRICS and regional unions such as the EAEU, Mercosur, and the SACU be established, the multilateral trading system will be strengthened. Technologies, especially in digital currencies and trade facilitation are also more likely to be shared, giving the BRICS – and its allies – a far greater trade platform to base themselves on. This is crucially outside the Western based system of management – SWIFT, sanctions, and overly influential policy banking.
This may also involve the Shanghai Cooperation Organisation (SCO) with discussions already taking place about merging; or increasing trade development ties between the two. The SCO is essentially a security bloc but does have a trade remit. It would also bring into the BRICS orbit the SCO members, who include BRICS members China, India, and Russia, in addition to full members Kazakhstan, Kyrgyzstan, Pakistan, Tajikistan and Uzbekistan. There are also four Observer States interested in acceding to full membership in Afghanistan, Belarus, Iran, and Mongolia, and six Dialogue Partners being Armenia, Azerbaijan, Cambodia, Nepal, Sri Lanka and Turkiye. In 2021, the decision was made to start the accession process of Iran to the SCO as a full member, while Egypt, Qatar as well as Saudi Arabia became dialogue partners.
With each of the BRICS members regional heavyweights in their own backyards, the development of BRICS into the major global economic and trade powerhouse has every potential of manifesting itself.
It should also be said that the opportunities of joining BRICS are more than the challenges. The joining of new members to BRICS can have various consequences, even competing with the G20.
In practical terms, the total percentage of the GDP of the current BRICS member countries is 31.5% of global GDP. That is more than the G7 bloc with 30.7% of global GDP, with the BRICS share almost certain to continue outstripping its Western equivalent as there are many potentials for using BRICS+ formats, with the participation of SCO, MERCOSUR, ASEAN, AfCFTA, SAARC, and so on in creating additional economic cooperation.
Chris Devonshire-Ellis is the Chairman of Dezan Shira & Associates. He may be reached at asia@dezshira.com
Farzad Ramezani Bonesh is is a researcher and analyst of international affairs. He graduated in political science from the University of Tehran.
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