China’s Growing Influence from BRICS Expansion
With powerful trading power, strong economic growth, and one of the largest industrial production and manufacturing exports, China has become one of the most powerful nations in the world. BRICS is an intergovernmental organization to reduce the over dependence on Western countries. It was established in 2009 by five founding countries such as Brazil, Russia, India, China, and South Africa. The expansion of BRICS is a sign of China’s growing power and its rising economic and political power over Western countries. In 2024, BRICS officially invited six members to join the organization: Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates (UAE). After this inclusion of its new members, BRICS’ Gross Domestic Product (GDP) accounted for 37.3% of global GDP (European Parliament, 2024). Moreover, China's GDP accounted for 60% of BRICS' GDP, showing its dominance over the group (ChinaPower Project, 2023). The European Parliament was concerned about the expansion of BRICS due to the impact of BRICS currency and the continued trade policies of China and other BRICS members.
China plays the leading role in trade and investment between BRICS members and exerts a strong influence on their economic growth. First, according to a report by the Taihe Institute, intra-BRICS trade increased by 56% between 2017 and 2022 (2022). Intra-BRICS trade greatly benefited China, as Chinese exports of industrial machinery, consumer electronics and automobiles increased significantly. The growth in intra-BRICS trade continues to be driven by the growing middle class and the expansion of the market of major oil-producing countries such as Iran, Saudi Arabia and the United Arab Emirates (U.A.E.). This illustrates that BRICS will continue to grow under China's leadership and balance the power of Western countries. Secondly, China's exports would benefit from BRICS policies that facilitate trade through improved market access. This may make China's exports cheaper for these countries, which would significantly boost China's GDP. An increase in intra-BRICS trade can provide significant advantages for China in mitigating the impact of the ongoing trade war between the United States and China. China can reduce its dependence on trade with the United States without facing high economic trade barriers from the U.S. government.
China's expanded partnership with the leading nations of the BRICS plays an important role in counterbalancing Western dominance by supporting investment opportunities in China’s Belt and Road Initiative (BRI). The expansion of BRICS heavily supports the BRI, which aims to expand ancient trade routes connecting China with Europe, Africa and Asia. Through cooperation with Russia and India, BRICS is “the most important platform for cooperation among emerging markets and developing countries,” according to Chinese diplomat Wang Yi (ChinaPower Project, 2023). BRICS supports financial cooperation between its members. The BRICS members operate a banking and payment system with China to support the flow of investment. For example, Iran plans to replace U.S. dollar reserves in overseas banks with the Chinese RMB (Council on Foreign Relations, 2023). Iran is also considering accepting the Chinese yuan instead of the U.S. dollar in oil trade, Argentina and Brazil already accept the yuan instead of the U.S. dollar when buying Chinese imports (S&P Global, 2024). Thus, the increased reliance on China from the expansion of investment opportunities amplifies Chinese influence among leading nations in the world.
Despite growing investment opportunities through the BRI, the expansion of BRICS strengthens China’s economic position and reduces the risks of Western trade policy. With major oil producers such as Saudi Arabia, Iran and the U.A.E. in BRICS, which control nearly half of the world’s crude oil production, China has strengthened its economic position by reducing the risks of future volatility in the price of natural gas (National Library of Medicine, 2023). China’s trade with the Middle East surpassed that of the European Union in 2020, making China the largest trade partner of Middle Eastern countries (National Library of Medicine, 2023). China is also Saudi Arabia's largest oil buyer. Cooperation within BRICS enables China to reduce its dependency on Western economies, as China no longer relies so heavily on trade with the Western world. Instead, China can prioritize trade with the Middle East and other BRICS members to further increase its economic growth.
On the other hand, there are some concerns and obstacles to BRICS expansion. First, Western nations, especially the United States, may retaliate against China's expansion of power by raising import tariffs or other trade barriers to limit China's growth. This would significantly limit the size of its international markets, capital, and technology and complicate global reach and economic strategies. Secondly, according to the Council on Foreign Relations (2023), the U.S. dollar remains the most important currency for international trade. This dependence makes BRICS economies vulnerable to U.S. interest rate fluctuations, inflation, and economic policy changes.
To conclude, the inclusion of new members, such as Saudi Arabia, Iran, and the U.A.E., has expanded BRICS’ power, securing vital partnerships in key sectors like energy, manufacturing, and trade. By fostering strong intra-BRICS trade, China not only mitigated the effects of its trade war with the United States but also reduced its dependence on Western markets. Furthermore, BRICS' support for China's BRI underscores the country's strategic expansion and its ambition to reshape global trade routes. As China continues to strengthen ties with emerging markets and resource-rich nations, it positions itself as a dominant force capable of counterbalancing Western influence and driving the global economy forward.
Edited by Nora Ni
References
The 2023 BRICS Summit: A Mixed Bag for China | ChinaPower Project. (2023, September 5). ChinaPower Project. https://chinapower.csis.org/analysis/the-2023-brics-summit-a-mixed-bag-for-china/
News, B. (2023, December 29). Brics: What is the group and which countries have joined? Bbc.com; BBC News. https://www.bbc.com/news/world-66525474
Expansion of BRICS: A quest for greater global influence? European Parliament, 2024 https://www.europarl.europa.eu/RegData/etudes/BRIE/2024/760368/EPRS_BRI(2024)760368_EN.pdf
Gusarova, S. (2019). Role of China in the development of trade and FDI cooperation with BRICS countries. China Economic Review, 57, 101271. https://doi.org/10.1016/j.chieco.2019.01.010
BRICS expansion, a positive catalyst for stronger BRI collaboration - AP Institutional | Invesco. (2022). Invesco. https://www.invesco.com/apac/en/institutional/insights/fixed-income/brics-expansion-positive-catalyst-for-stronger-bri-collaboration.html
With BRICS expansion, China and Middle Eastern powers draw closer. (2023). IISS. https://www.iiss.org/online-analysis/online-analysis/2023/08/with-brics-expansion-china-and-middle-eastern-powers-draw-closer/
“The Dollar: The World’s Reserve Currency.” Council on Foreign Relations, 2023, www.cfr.org/backgrounder/dollar-worlds-reserve-currency#:~:text=In%20addition%20to%20accounting%20for,their%20currencies%20to%20the%20dollar. Accessed 8 Nov. 2024.
Wilhelm, Benjamin. “U.S. Sanctions on Iran Boost China’s Plans to Internationalize the Yuan.” World Politics Review, 14 Oct. 2020, www.worldpoliticsreview.com/u-s-sanctions-on-iran-boost-china-s-plans-to-internationalize-the-yuan/#:~:text=In%20a%20further%20round%20of,currency%2C%20replacing%20the%20U.S.%20dollar. Accessed 9 Nov. 2024.
Chen, Junhua, et al. “Evolution of China’s Interaction with Middle Eastern Countries under the Belt and Road Initiative.” National Library of Medicine, vol. 18, no. 11, 9 Nov. 2023, pp. e0293426–e0293426, pmc.ncbi.nlm.nih.gov/articles/PMC10635491/, https://doi.org/10.1371/journal.pone.0293426. Accessed 9 Nov. 2024.
Saudi-China ties and renminbi-based oil trade. (2024). S&P Global. https://www.spglobal.com/en/research-insights/special-reports/saudi-china-ties-and-renminbi-based-oil-trade
EPA-EFE. (2023). Brazilian President Luiz Inacio Lula da Silva, Chinese President Xi Jinping, Indian Prime Minister Narendra Modi and South African President Cyril Ramaphosa speak as they attend the Brics summit in Johannesburg, South Africa, August 24, 2023 [Photograph]. SCMP. https://www.scmp.com/comment/opinion/article/3232423/brics-has-embraced-expansion-not-moment-too-soon
