Information Bulletin of the BRICS Trade Union Forum
Issue 12.2020
2020.03.16 — 2020.03.22
International relations
Foreign policy in the context of BRICS
A number of activities planned for March and April 2020 within the framework of Russia's Presidency of the Shanghai Cooperation Organisation (SCO) in 2019−2020 and the Russian BRICS Chairmanship in 2020 postponed (Ряд мероприятий, запланированных на март и апрель 2020 года в рамках председательства России в Шанхайской организации сотрудничества (ШОС) в 2019–2020 годах и председательства России в БРИКС в 2020 году, перенесен) / Russia, March, 2020
Keywords: cooperation, social_issues, chairmanship

Due to the measures taken by the Coordination Council of the Russian Government to control the incidence of the coronavirus infection in the Russian Federation, as well as due to the restrictions on official trips abroad imposed by several SCO and BRICS countries, it was decided to postpone the SCO and BRICS events planned for the second part of March and April 2020. This decision was made at the interdepartmental meeting on holding events of the Russia's Presidency of the Shanghai Cooperation Organisation (SCO) in 2019−2020 and the Russian BRICS Chairmanship in 2020.

"The Russian Federation is taking all the necessary measures to protect the health of its citizens and foreign visitors staying in the country," said Anton Kobyakov, Adviser to the Russian President and Executive Secretary of the Organising Committee for Russia's Presidency of the Shanghai Cooperation Organisation (SCO) in 2019−2020 and the Russian BRICS Chairmanship in 2020. "We maintain constant working contacts with the Government Coordination Council. I am confident that our joint efforts will ensure the successful implementation of all the tasks outlined in the framework of Russia's Presidency of the SCO in 2019−2020 and the Russian BRICS Chairmanship in 2020. As for the postponed events, their new dates will be determined by the Organising Committee on the proposals of the relevant Russian Line agencies with due regard for the development of the sanitary and epidemiological situation in the world. At the same time, I would like to note that some events planned for March and April will be conducted in a new format of video conference."

Investment and Finance
Investment and finance in BRICS
Russia, South Africa Considering Equipping BRICS Peacekeepers with Drones (Россия и ЮАР рассматривают возможность оснащения миротворцев БРИКС беспилотниками) / Russia, March, 2020
Keywords: national_security, cooperation

Russia and South Africa are considering the possibility of cooperation within BRICS to equip peacekeeping missions with intelligence tools, in particular, drones, South Africa Ilya Rogachev told Sputnik in an interview.

"Russia and South Africa are considering the possibility of cooperation with BRICS partners to increase the level of combat training of peacekeeping contingents, including by equipping them with modern reconnaissance equipment, in particular, with unmanned aerial vehicles," Rogachev said.

The ambassador recalled that South Africa had about 1,250 peacekeepers the second-largest number in the bloc after India deployed abroad.

According to the diplomat, the majority of South African peacekeepers operate in the Democratic Republic of the Congo, where they actively collaborate with Russian military observers.

BRICS Should Initiate Cancellation Economic Sanctions - Kosachev (БРИКС должен инициировать отмену экономических санкций - Косачев) / Russia, March, 2020
Keywords: quotation, economic_challenges, expert_opinion

BRICS countries should initiate cancellation of all economic sanctions that had not been approved by the UN Security Council amid the global crisis and COVID-19 outbreak, Konstantin Kosachev, the chairman of the Russian upper house's Foreign Affairs committee, said.

"Time has come for a global agreement on simultaneous and total cancellation of any economic sanctions, apart from the ones introduced by the UN Security Council," the lawmaker said on Facebook.

This agreement could be "initiated by BRICS, backed by the [G]20 countries and certified by the Security Council," Kosachev said.

Roundtable discussion "Consumer Protection in the Era of E-Commerce in the BRICS Countries" (Круглый стол «Защита прав потребителей в эпоху электронной коммерции в странах БРИКС») / Russia, March, 2020
Keywords: chairmanship, social_issues, trade_relations

On 13 March, Moscow hosted a roundtable discussion "Consumer Protection in the Era of E-Commerce in the BRICS Countries" held within the framework of the Russian BRICS Chairmanship in 2020. The event was organized by the Federal Service for the Oversight of Consumer Protection and Welfare (Rospotrebnadzor). The meeting saw the presence of the heads and experts of the relevant ministries and line agencies from the BRICS countries, as well as representatives of the Eurasian Economic Commission, UNCTAD, OECD, and other international organizations and public associations.

The experts discussed a wide range of current issues modern society is facing , , focusing on the benefits and risks of e-commerce, cross-border payments security, the prevention of fraud, effective on-line settlement of disputes, timely notification of consumers in a cross-border trade environment, and in particular the protection of consumers of digital goods and services.

"These topics seem to be most relevant for consumers in BRICS countries, their importance is enshrined in the UN Guidelines for Consumer Protection," said Rospotrebnadzor Head Anna Popova. "The discussion of these issues meets the main modern challenges of the international consumer movement.

"I would like to note that expert discussions take into account the real experience and their statutory regulation in BRICS countries, which will make it possible to successfully close the existing gaps and prevent collisions in the legal regulation of many matters."

The experts confirmed the importance of exchanging international best practices taking into account the legal transformations and prospects for standardizing consumer protection legislations based on international law.

The roundtable discussion resulted in BRICS countries formulating proposals on promoting international consumer protection collaboration in a digital economy environment.

Will the Chinese Economy Catch the Coronavirus? (Поймает ли китайская экономика коронавирус?) / Russia, March, 2020
Keywords: expert_opinion, economic_challenges
Author: Yana Grigoryeva

Yana Grigoryeva, Intern at the Russian National Committee on BRICS Research - special for InfoBRICS

Considering the consequences of coronavirus, it is necessary to note the key points: the epidemic itself is not as dangerous as the consequences of fighting against it, primarily for economic development. Following the impact on the economy are two more profound aspects – the consequences for China's emergency response system and, more broadly, the country's governance, as well as the impact on China's international positioning. Turning to the consequences of the COVID-19 epidemic, it is necessary to identify the main reason for such a significant impact of this disease on the world economy – the actions of the governments of the world's largest countries. The tone of these actions was set by the Chinese government, which failed to effectively stop the threat at the early stages, and then, for fear of a public reaction, resorted to the only means available within the framework of the established management system – national quarantine and complete blocking of social and economic life. This initially raised the level of tension regarding the new coronavirus, and the world's second largest economy went into a state of siege.

Later, a new wave of the disease, now outside of China, led to the need for similar measures in other countries. This led to the suspension of human and commodity flows, and also spun the flywheel of panic, thereby disrupting business activity. The impact on the Chinese economy, according to forecasts of Chinese and international experts, in particular the IMF, Deutsche Bank and the Chinese Academy of Social Sciences, will be most noticeable in the first and second quarters. The outbreak of the virus will affect the following development parameters: direct economic growth in the short term, the level of inflation and the size of unemployment.

The first and immediate impact has already been taken by the service and consumer sector. This sector of the economy is always on the front line of the strike in the event of epidemics or other natural disasters. The service sector has a significant number of small and medium-sized businesses that are most vulnerable to such crises.

It was the SMEs that were hit hard by the consequences of the SARS epidemic in 2003: then the growth rate of SMEs in the second quarter of the year that the epidemic fell by 5%. In 2020, the impact on services and consumption may be much heavier. In contrast to the mid-2000s, the service sector accounted for 54% of China's GDP in 2019, so the overall impact will be more significant than during the previous epidemic. According to surveys of SME entrepreneurs conducted by Peking University, about 30% of businessmen said that they expect revenue to fall by more than 50% by the end of 2020.

The quarantine also affects the situation with unemployment. Before the epidemic, China also had problems with employment. The unemployment rate in the country's cities in 2019 reached a record high of 5.3%, and as a result of the epidemic may exceed 6% in 2020.

The epidemic is also affecting the manufacturing sector and investment. Due to the forced holidays in China, almost all production was suspended. Published on February 28, the PMI index showing a drop in economic activity was 35.7%, having decreased by 14.3% over the month. This indicates an actual slowdown in the Chinese economy, and within two months, the Chinese government will revise its forecasts.

Production is now gradually recovering. By the beginning of March, industrial activity was restored almost completely in the Eastern coastal provinces and a number of regions within the country: in 13 of the 34 administrative divisions at the provincial level, production was restored by more than 80%. Meanwhile, a full quarantine is still in effect in Hubei province. And this province is a significant transport hub and manufacturing center. Wuhan is one of the leading centers of the automotive industry. In the province itself, there are more than 100 factories for the production of automotive components, including the companies Robert Bosch, Valeo and ZF Friedrichshafen. The shutdown of these factories is already affecting the entire Chinese economy.

Another significant consequence of the national quarantine will be the acceleration of inflation. Inflation will increase along with the consumer price index. Consumer inflation in China in January 2020 was higher than expected and amounted to 5.4% in annual terms compared to 4.5% in December 2019. The main growth factor was the increase in the price of food products by an average of 4.4%, compared with a decrease in the price of food in December by 0.4%. This is so different from the expectations for inflation, which were based on a decline in prices due to the normalization of the situation in the pork market. Investors ' expectations for easing the Chinese government's monetary policy in 2020 were not met. The coronavirus outbreak has affected the production of many goods. After the epidemic, consumption will recover quickly, but production will recover much more slowly. Therefore, we should expect a high price level in the first half of 2020.

In order to cope with these problems, the Chinese government will take certain actions. They will be implemented in the following four main areas: fiscal policy, monetary policy, financial regulation and structural reforms.

In the area of fiscal policy, the Chinese government is expected to continue its policy of reducing the tax burden for lower-middle-income people and SMEs. This policy has already produced positive results in 2019: after reducing the tax burden on SMEs by 2 trillion RMB, China's GDP growth further accelerated by 0.8%. In 2020, the state Council of the People's Republic of China is likely to adopt new measures to simplify taxation. The government is already taking the first steps in this direction. The introduction of tax deductions and subsidizing lending for SMEs is discussed. Tax incentives, however, there is a downside – a possible increase in the budget deficit. Economist Zhang Ming predicts that the budget deficit will grow to 3% of GDP. By increasing the budget deficit, China will invest in healthcare, creating new jobs and stimulating economic activity.

In the area of financial regulation, the Chinese government will face a dilemma. On the one hand, in 2017-2019 there was a tightening of regulation, the Chinese government fought for the purity of assets of local governments and state-owned companies. However, faced with the epidemic, the financial authorities have already moved to a policy of quantitative easing. In early February, the state Council of China allowed local governments to issue 290 billion RMB ($41.6 billion) of special bonds, in addition to 1 trillion RMB of such debt approved in November 2019 to increase infrastructure spending. On February 11, a second round of local government debt distribution worth 558 billion RMB ($79.7 billion) was announced. In total, according to the forecasts of economist Zhang Ming, local governments may issue bonds worth more than 3 trillion RMB during 2020. The people's Bank of China has already allocated 1.2 trillion RMB ($174 billion). This money will be used for large-scale infrastructure projects and stimulating economic activity, which goes against the policy of tightening regulation that has been implemented so far.

In addition, monetary policy easing is also expected. However, given the increase in inflation in the first half of the year, easing will probably occur in the second half of the year. Chinese economists expect a 50-basis point reduction in the reserve ratio for banks. This should reduce the mandatory reserve requirements, thus freeing up additional funds for investment. In addition, interest rates are expected to fall by 50 basis points. The People's Bank of China on February 17 has already lowered the base rate by 10 bps, to 3.17%, reaching the lowest level since 2017. This should reduce the cost of loans, making them more accessible to affected companies. The bank lowered its benchmark 1-year Loan Prime Rate (LPR) by 10 bps to 4.05% on February 20th 2020, in an attempt to inject more liquidity into the financial market and lower financing costs for companies.

The impact of the Chinese coronavirus on the global economy will be limited in time, but it will have a significant impact on a number of sectors, primarily transport, services and industry. According to Deutsche Bank, the virus will reduce the growth rate of the world economy in the first quarter of 2020 by 0.5%, or $0.4-0.5 trillion, provided that the growth rate of China's GDP in the first quarter will fall by 1.4%. The fall in stock markets will be short-term, but will not be limited to short-term fluctuations.

The decline in global stock markets, which began after news of the spread of coronavirus in Italy and South Korea, reflects investors fear of a possible blockade of these countries, as well as the spread of the disease and, consequently, quarantine to other countries. However, this fall is supported only by the fear of trading participants and falls under the definition of "stock market volatility". The shock of falling quotes will be consolidated in the time period of the epidemic itself. On the one hand, players on the exchange will try to play on the downside. On the other hand, there are investment funds that will be willing to buy undervalued assets.

The quarantine will have a direct impact on global production chains. Production in other countries will decline in the first quarter of 2020. According to Nikkei data, a $ 10 billion drop in output in China will reduce production in the rest of the world by $6.7 billion. The economies of South Korea, Japan and the United States are most exposed to this risk. There is one significant uncertainty in the outlook for the global economy – a new wave of the epidemic is gathering strength, this time outside of China. Regardless of the actual death rate, the spread of the disease outside of China can lead to general panic and harsh actions by the authorities of the world's leading economic powers. In this case, a fairly long wave-like correction may occur.

NDB Board of Directors Approves Rmb 7 Billion Emergency Assistance Program Loan to China to Fight COVID-19 Outbreak (Совет директоров NDB утвердил кредит на чрезвычайную помощь в размере 7 млрд. юаней для Китая на борьбу со вспышкой COVID-19) / China, March, 2020
Keywords: ndb, investments, social_issues

On March 19, 2020, the Board of Directors of the New Development Bank approved RMB 7 billion Emergency Assistance Program Loan to the People's Republic of China. The Program is aimed at helping the Chinese Government in combating the outbreak of COVID-19 and it will contribute to China's ongoing efforts to address the health and economic consequences of the outbreak.

The Program is NDB's first emergency assistance program in response to an outbreak in one of its member countries and is also NDB's largest loan to date. It will finance urgent and unexpected public health expenditures. The Program will focus on three provinces in China, including Hubei, Guangdong and Henan that are hit the hardest by COVID-19. The Program will support these three provinces in financing their most urgent needs for fighting the spread of COVID-19, and reducing the adverse impacts of the outbreak on their local economies.

The Program will contribute to reducing the loss of human lives and to improving resilience of the public health sector in the three provinces, particularly to strengthening their health emergency response system. The positive impacts will include mitigation of adverse social and economic impacts from the outbreak and recovery of social and economic activities.

Background Information

The NDB was established by Brazil, Russia, India, China and South Africa to mobilize resources for infrastructure and sustainable development projects in BRICS and other emerging economies and developing countries, complementing the existing efforts of multilateral and regional financial institutions for global growth and development.

World of Work
Conference on BRICS economic partnership strategy held in Moscow (В Москве прошла конференция по стратегии экономического партнерства БРИКС) / Russia, March, 2020
Keywords: economic_challenges, cooperation, chairmanship

On 19 March, 2020 Moscow hosted an international conference, "The Strategy for the BRICS Economic Partnership". The event was organized by the Russian Ministry of Economic Development as part of the Russian chairmanship's economic agenda.

The conference saw the presence of the representatives of Russian ministries and government agencies, development institutions and the BRICS Business Council, as well as leading experts from Russia and other BRICS countries.

Given the difficult epidemiological situation due to the coronavirus pandemic, many speakers chose to participate remotely, and an online broadcast of the event was organized for the audience.

The experts discussed the key dimensions of the Strategy for BRICS Economic Partnership 2025, such as trade, investment, finance, digitalization and sustainable development. They also shared their assessments of the impact the coronavirus pandemic will have on the BRICS economies, as well as outlined main problems faced by businesses and the ways to overcome them with the use of the potential of the cooperation among the five countries.

"Cooperation between the BRICS countries in digital transformation, increasing the role of the agenda of sustainable and inclusive development, and the implementation of the sustainable development goals by our countries are especially important now that the world is fighting the epidemic," said Natalya Stapran, Director of the Department for Multilateral Economic Cooperation and Special Projects at the Russian Ministry of Economic Development. "Today, against the backdrop of new and unforeseen challenges, it is more important than ever before to coordinate the efforts of our countries in order to maintain economic growth, revive and find new opportunities for trade and economic relations," she added.

Annual IT Forum of BRICS, SCO Countries in Russia Postponed Due to COVID-19 (Ежегодный ИТ-форум стран БРИКС и ШОС в России перенесен из-за COVID-19) / Russia, March, 2020
Keywords: social_issues

KHANTY-MANSIYSK, Russia (Sputnik) - The annual international IT forum of BRICS and the Shanghai Cooperation Organisation (SCO) countries will not be taking place this year due to COVID-19 concerns, the department of information technologies of Russia's Khanty-Mansiysk Autonomous Area (Ugra) said on Friday.

"The 12th International IT-Forum with BRICS and SCO participation, planned for June 16-17, is postponed for June 2021. This decision was made by the IT-forum's organizing committee after the meeting of the emergency response center on countering the spread of the new coronavirus infection and the inter-agency sanitary and anti-epidemic commission of the Ugra government," the department said in a statement. On Thursday, the first case of COVID-19 was registered in the area. On the same day, the Khanty-Mansiysk authorities declared a state of high alert.

As of Friday, the total number of the coronavirus cases has reached 244,602, while the number of fatalities stands at 10,031. Russia has so far registered 199 cases with no fatal outcome.

Inaugural BRICS Manufacturing Conference to Take Place in Johannesburg (В Йоханнесбурге состоится первая производственная конференция БРИКС) / South Africa, March, 2020
Keywords: social_issues, business_council
South Africa

An inaugural, one-day BRICS Manufacturing Conference is scheduled to take place in Johannesburg on 21 May, Conference organisers said.

Kaizer Nyatsumba, Chairman of the Manufacturing Working Group of the SA Chapter of the BRICS Business Council (BBC), said the conference is born out of the need to help embattled South African manufacturers to make better use of the country's existing relations with its BRICS counterparts.

The conference – which is expected to be attended by captains of industry, policy makers and public sector representatives, amongst many other stakeholders – also aims to assist South African manufacturers take better advantage of the opportunities presented by BRICS amidst the economic slump that the economy in general and domestic manufacturers in particular currently find themselves in.

"The manufacturing industry's contribution to the economy has been declining over the past two decades as a result of cheap imports from Asian economies, lacklustre domestic demand, rising operational and input costs and, most recently, frequent power shortages.

"It goes without saying, therefore, that domestic manufacturers should look beyond the South African borders if they are to survive and grow. It is against this backdrop that we decided to host the conference that will seek to investigate how manufacturers can leverage the BBC manufacturing working group (MWG) and discuss, among others, progress on MWG Projects and how they will advance the course of manufacturing in the country," Mr Nyatsumba said.

He said that Trade and Industry Minister Ebrahim Patel is expected to deliver the Conference's opening address, while Aspen Pharmacare Group Senior Executive and BBC SA member Stavros Nicolaou, Manufacturing Circe CEO Phillipa Rodseth, NAAMSA CEO Michael Mabasa, IDC CEO and BBC Financial Working Group Chairman TP Nchocho, Department of Trade and Industry Deputy Director-General Ilse Karg and IBM SA Chief Operations Officer Ziaad Suleman will take part in plenary sessions.

Some of the topics that will be discussed at the conference include "South African Manufacturers and the BRICS Business Council: The Manufacturing Working Group – Does It Matter? Progress Report on Priority MWG Projects", "A Focus on Some of the Planned New Special Economic Zones", and "How South African Business Can Leverage BRICS Membership Better".

Mr Nyatsumba encouraged manufacturing industry stakeholders to attend the conference in order to make a contribution towards hammering out the necessary solutions that will reverse the fortunes of the industry and ultimately see it out of the doldrums.

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