Indian Prime Minister Narendra Modi, left, and Chinese President Xi Jinping arrive for a photo ahead of the BRICS summit in Goa, India in October 2016. Photo: Reuters
Indian Prime Minister Narendra Modi, left, and Chinese President Xi Jinping arrive for a photo ahead of the BRICS summit in Goa, India in October 2016. Photo: Reuters

Chinese President Xi Jinping said on Sunday a rising tide of protectionism and anti-globalization was endangering the world economy’s still fragile recovery as BRICS leaders vowed to forge closer business and trade ties.

At a summit in the Indian tourist hub of Goa, host Prime Minister Narendra Modi and the leaders of China, Russia, Brazil and South Africa issued a joint declaration on a range of measures, including the setting-up of a new credit ratings agency and fighting tax evasion.

BRICS was formed in 2011 with the aim of using members’ growing economic and political influence to challenge Western hegemony.

The nations, with a joint estimated GDP of US$16 trillion, set up their own bank in parallel to the Washington-based International Monetary Fund and World Bank and hold summits rivaling the G7 forum.

But the countries, accounting for 53% of the world’s population, have been hit by falling global demand and lower commodity prices, while several have also been mired in corruption scandals.

Russia and Brazil have fallen into recession recently, South Africa only just managed to avoid the same fate last month and China’s economy has slowed sharply.

Both Xi and Modi said the group must stick together, insisting there was much to remain positive about even though its members have been beset by domestic woes and problems sparked by the 2008 financial crisis.

“At present the deep-seated impact of the international financial crisis is still unfolding. The global economy is still going through a treacherous recovery and deep adjustments,” Xi said.

The Chinese president said “deep-seated imbalances that triggered the financial crisis” were far from being resolved.

“Some countries are getting more inward-looking in their policies. Protectionism is rising and forces against globalization are posing an emerging risk,” he added.

While Xi did not single anyone out, Republican candidate Donald Trump has threatened to erect trade barriers to Chinese products if elected US president. Britain’s vote to leave the European Union has been interpreted partly as a backlash against globalization.

While China’s economy has been running out of steam of late –although it is still the world’s second largest — India is now the fastest-growing major economy and its GDP is expected to increase 7.6% in 2016–17.

Deeper bonds

Modi said it was vital the BRICS nations increased cooperation by dismantling trade barriers and developing infrastructure.

“I think I speak for all when I say that through a common vision and collective action, we will create and sustain deeper bonds among BRICS nations, develop our economies and secure our societies,” he said.

“While our achievements have been substantial, we need to sustain the positive direction and strong momentum of intra-BRICS engagement.”

Xi said BRICS countries had much to be proud of and had contributed to more than 50% of global growth in the last decade.

“The past decade has seen the BRICS partnership expanding with win-win results,” he said.

“We need to deepen our partnership: we BRICS countries are good friends, brothers and partners that treat each other with sincerity.”

Russian President Vladimir Putin meanwhile called for closer cooperation in areas such as e-commerce and space exploration. Modi confirmed that the leaders had agreed to fast-track setting up a new ratings agency amid accusations from within the bloc that the three traditional agencies — Moody’s, Standard & Poor’s and Fitch Ratings — are all Western-based.

“We look forward to translating into reality the idea of a BRICS Credit Rating Agency,” he said, without giving details of the much-trailed agency or timeline for its establishment.

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