US can’t change global trade alone, Brics panel hears
Globalisation is irreversible and the US will not succeed in changing the global world order by increasing import tariffs. This was the central message of a high level Brics discussion on Tuesday night, which considered risks for countries and companies in a climate of rising US protectionism.
“Brics cooperation will be a solution to [the] challenge of de-globalisation,” said chairperson of the Bank of China Chen Siqing, according to a translated version of his opening address.
Siqing and other participants at the discussion are in Johannesburg to attend the three-day Brics Summit which starts Wednesday at the Sandton Convention Centre. The threat by US President Donald Trump to impose tariffs on $500bn (about R6.5tn) of Chinese imports is expected to be discussed by the five heads of state from Brazil, Russia, India, China and South Africa during the summit.
Siqing delved into the history of the Asian superpower, saying China had experienced a closed economy for several hundred years and had only reformed 40 years ago which led to the country’s development.
US can’t change the rules alone
Leslie Maasdorp, vice-president and chief financial officer at the New Development Bank headquartered in Shanghai, said that globalisation is irreversible and the protectionist path adopted by the US will only see the country become more isolated. “Brics Plus I think… will be the defining issue of the future [and] become an alternate voice against the current G-7 bloc.”
China in 2017, when it was chairing the Brics, invited several other emerging markets and developing countries to attend the Brics Summit, referring to the grouping as the Brics Plus. Heads of state from Turkey, Argentina and Jamaica will attend the 2018 Brics Summit in Johannesburg as part of Brics Plus, as well as leaders from several African countries in the Africa Outreach programme.
Standard Bank SA CEO Lungisa Fuzile said he thinks globalisation is “here to stay, it doesn’t matter who resents it”.
The former Treasury director general warned that a trade war between the US and China will affect African countries as the continent relies on economic growth within the Asian superpower to generate demand for its commodities.
Indebted countries hardest hit
Deputy managing director at the International Monetary Fund Zhang Tao told the audience in Sandton that countries with higher debt are particularly vulnerable if global conditions tighten, while economic growth prospects are becoming more uncertain.
Zhang advised countries in sub-Saharan Africa to reduce their macro-economic vulnerabilities from debt, saying public debt ratios in the region have increased in the last five years from 30% to 50% of gross domestic product.
Countries in sub-Saharan Africa should also revive private sector investment by improving regulations, deepening access to credit and intra-African trade, according to Zhang.