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BRICS could give crucial aid to debt-laden Europe

By Ding Gang (People's Daily Overseas Edition)

16:39, September 27, 2011

Edited and Translated by People's Daily Online

The group of five leading emerging economies BRICS will consider, if necessary, providing support through the International Monetary Fund or other international financial institutions to address the European debt crisis, the finance ministers of BRICS countries said in a joint statement last week.

According to a Reuters report, officials from the BRICS countries, including heavyweights China, Brazil, and India, said they would consider providing more funds to boost global stability. This positive outcome of the greater coordination among the BRICS countries shows their positive attitudes toward promoting international cooperation.

The BRICS countries started cooperation amid doubts and concerns from the West and have established a sound consultation and cooperation mechanism among Brazil, Russia, India, China and South Africa. Westerners used to think that BRICS was just an unconventional term coined by Goldman Sachs.

Certain Westerners must find it hard to believe that the BRICS countries have become powerful enough to help developed countries. The BRICS consultation and cooperation mechanism meets the growing needs for economic policy coordination and is a necessary outcome of increasing globalization.

Such a coordinated move by the BRICS countries will be repeated among various levels of economies in many ways in the future. However, the coordination is not aimed at establishing a "serious, like-minded political organization." Instead, the coordination is necessary just because of the lack of sync among the countries, and more coordination among them will promote broader global cooperation.

The world economy currently shows a mixture of two major characteristics. First, developed countries remain dominant. Once developed countries move into a recession, the world economy will surely be affected. Second, the rise of new economies has continued to provide the global economic engine with “new fuels.”

Jim O'Neill, an analyst for Goldman Sachs and the person who coined the name "BRICS," once forecasted that the contribution rate of the four BRICS countries would be at least 50 percent and even as high as 70 percent after one decade. The current five BRICS countries have replaced the former four BRIC countries.

The economic globalization, particularly the unprecedented close ties between developed and emerging countries will not leave any economy as a "solitary island." The economy of one country can pose a major impact on another country. The decision of any individual country must depend on the coordination with more countries for success. Economic crises have also been more "infectious" than ever before.

This is the reasoning behind the G20 cooperation against the global financial crisis in 2008 and also indicates the historical background for the joint rising of BRICS countries.

Although BRICS countries have many difficulties with their own economic development and face problems about balance and sustainable development at different levels, they could produce a certain "banner effect" and play an "assurance" role.

BRICS countries cannot replace developed countries to solve problems and this is also not the goal for them to coordinate with each other. Developed countries must enhance coordination more actively and put forward feasible measures faster in order to help the global economy pass through the crisis safely. Just like what Brazilian Finance Minister Guido Mantega said, the crisis is expanding every day and the cost for solving it is increasing, therefore, speed is the key.

On the whole, the rise of emerging economies has resulted in a stronger global economy and also enhanced economic multi-polarization. Emerging economies still need to improve their status and increase contributions on the basis of their partnership with developed countries. The closer coordination and solid cooperation between emerging and developed countries are needed more than ever.

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