General

In terms of purchasing power parity, the total GDP of BRICS countries has exceeded G7. The New Development Bank created by BRICS countries and the Asian Infrastructure Investment Bank created by China have also attracted more and more participating countries. The economic influence of developing countries represented by BRICS countries has gradually increased. The BRICS countries are expected to end the dominant position of the US dollar in international trade settlement and support the use of domestic currencies such as the renminbi for international trade settlement, which will have a huge impact on the Western led international system.

At the beginning of this year, a little-known but significant event occurred: at purchasing power parity, the combined GDP of the BRICS countries (Brazil, Russia, India, China, and South Africa) exceeded that of the G7 (Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States). In addition, according to data released by Acorn Macro Consulting, a British economic research firm, the BRICS countries account for 31.5% of world GDP, while the G7 accounts for 30.7%. In the future, as more and more countries become the new 'BRICS', it is expected that by 2030, the proportion gap between the two will further widen, and the economic influence of BRICS countries will also be enhanced.

The 15th BRICS Leaders' Meeting will be held in Durban, South Africa from August 22nd to 24th. South African Foreign Minister Pandor stated that 12 countries are interested in joining the BRICS organization, including Saudi Arabia, the United Arab Emirates, Egypt, Algeria, Argentina, Mexico, and Nigeria. The upcoming summit will consider this issue. In addition, other countries willing to join include Indonesia and Türkiye. At that time, the total population of BRICS countries will exceed 4.3 billion, accounting for more than half of the global population. The total GDP of the restarted "BRICS+" is expected to reach 30 trillion US dollars.

Although the BRICS countries have not yet formed a free trade zone, their member countries agree to coordinate actions on trade issues. In 2014, the BRICS countries established the New Development Bank, with the five founding member countries distributing equity equally, with the main priority being to provide development financing outside of Western countries. In the same period, China established a similar Asian Infrastructure Investment Bank. New Development Bank and Asian Investment Bank both have AAA ratings and a capital of $100 billion.

These development banks have become alternative options for traditional Bretton Woods financial institutions such as the World Bank and the International Trade and Monetary Fund. These Western led development institutions are unwilling to increase the equity share of major developing countries and limit their influence in management institutions. When providing loans and advice to developing countries, they usually rely on the country's political system reform as a condition, which makes developing countries dissatisfied.

The New Development Bank also plans to expand its scale. In 2021, the bank approved the accession of Bangladesh, Egypt, the United Arab Emirates, and Uruguay, while other countries also plan to become shareholders of the New Development Bank in the near future.

Meanwhile, on April 14th, Brazilian President Lula stated at the inauguration ceremony in Shanghai for his political ally Rousseff as the President of the BRICS New Development Bank: Why must every country be pegged to the US dollar in trade? Who has decided to make the US dollar a (world) currency?

It is obvious that other BRICS countries also have plans to take decisive action to end the dominance of the US dollar in international trade settlements. At the BRICS summit held in July 2022, Russian President Putin announced that countries are planning to issue a "new global reserve currency" and stated that Russia is willing to cooperate openly with all sincere partners.

The process of de dollarization in international trade has begun. Since last year, Saudi Arabia has been discussing with China the acceptance of RMB payments for oil exports. On March 8th, it was reported that most of India's oil purchases from Russia were paid in non US dollar currencies, including the UAE dirhams and the recently used Russian ruble. On March 28th, Brazil and China announced the signing of an agreement that all future trade between the two countries will be settled in their own currencies.

Recently, during President Xi Jinping's visit to Russia, President Putin publicly supported the use of the Chinese yuan as a settlement currency within the BRICS group and even among all other emerging economies. The West is surprised by these moves to abandon the US dollar, and the United States is particularly shocked that not only China and Russia, but all BRICS countries are taking the same measures.

What can we expect from the ongoing global economic and political restructuring? Rapidly developing emerging countries will increasingly actively promote international institutional reform, as they believe that their representation in these institutions is insufficient, such as the United Nations, the World Bank, the International Monetary Fund, the World Trade Organization, and the World Health Organization.

Developing countries are demanding that developed countries such as the G7 relinquish control over these international institutions, putting enormous pressure on the latter. In recent years, geopolitical struggles have evolved from confrontations between individual countries to competitions between groups of countries, and the possibility of confrontational economic and political differences will increase. As developing countries continue to grow stronger, they not only realize their growing national strength, but also establish mutual trust and begin to unite. But it is worth noting that they are not doing so to strengthen the global system centered around the West.

The competition between different political and economic systems will continue to intensify, and many countries are pondering which group of countries to deal with better. Here, the famous ice hockey player Wayne Gretzky's famous quote is worth referring to: "I want to skate to the place where ice hockey will go, not the place it has already been."