Officials in China’s banking regulatory authority and Export-Import (EXIM) bank have indicated their backing to push forward a BRICS development bank, but have voiced caution at recent moves to accelerate setting up the body ahead of next year’s Durban Summit.
Officials in interviews with The Hindu outlined a number of factors that they believed might pose obstacles to the initiative, including differences within the BRICS (Brazil, Russia, India, China and South Africa) grouping and managing Beijing’s relations with other multilateral lending institutions, some of which have expressed wariness at the proposal.
Ahead of the meeting between BRICS Finance Ministers this week in Tokyo, the Chinese government brought together officials, economists and members of think-tanks from the five countries to hear concrete proposals about setting up the development bank, at a recent conclave in the south-western municipality of Chongqing. The five governments had tasked think-tanks to come up with ideas following the decision at the Delhi Summit in March to examine the feasibility of a development bank.
Xu Qinghong, section chief of the Banking Supervision Department at the China Banking Regulatory Commission, said he had some concerns about getting all countries on the same page and “non-economic factors” that might pose obstacles. “There are vast differences between us,” Mr. Xu said. “Looking at the history of other multilateral institutions, I think such a feasibility study will take a long time and it may test our patience. Since the Delhi Summit, so far in China there have been a lot of doubts about a proposal.”
He also cited the “irrational voting powers” in other multilateral institutions as an indicator of problems that may lie ahead. “There are risks that some countries are pushed aside in decision-making,” he said. “We do not hope that the BRICS bank follows the footsteps of the other multinational banks.”
Wang Jianye, Chief Economist, EXIM Bank of China, told The Hindu that the bank needed to be “as simple and non-political as possible” in order to “reduce risk of turf fighting”.
He said the bank could serve as the “operator” or “manager” of a settlement system between the five countries, which agreed in New Delhi to promote settlement of trade in their own currencies and reduce reliance on the dollar.
While Indian and South African officials see the development bank as a possible source of funds for the much-needed infrastructure projects, Beijing sees the proposal as not only a platform to promote its currency internationally but as also opening up markets for its infrastructure companies.
“If we can have a BRICS bank it will certainly help India solve this problem, but the prerequisite is India has a very clear idea of its development strategy,” Ai Ping,a Vice-Minister in the Communist Party’s International Department , told The Hindu.
Mr. Ai said the bank could learn from China’s own experience with policy banks, that were “a very good combination between the visible hand of the government and the invisible hand of the market.”
Officials from China and South Africa acknowledged in interviews that the BRICS grouping was under pressure to show concrete progress before next year’s Durban Summit in South Africa. “The details [on the bank] have not been worked out,” Bheki Langa, South Africa’s Ambassador to China, told The Hindu .
He said it was important that the countries do not “dwell too long on planning” and get bogged down on discussions regarding structuring the bank. A better approach, he said, was “to prioritise the most important deliverables” and focus on concrete projects, rather than “embrace too wide an agenda that is not properly focussed.”
“One can understand the impatience on the part of everybody [as we] would like to see concrete and tangible results coming out of BRICS,” Dr. Langa added. “Otherwise it wouldn’t make sense for countries to participate if they don’t see any tangible benefits.”
There are risks that some countries are pushed aside in decision-making, says Xu Qinghong