Tatiana Bokova, Intern of the Russian National Committee on BRICS Research – special for InfoBRICS
The BRICS countries have the potential to become a driving force of the global economy in the next decade, as they have enormous joint potential and great opportunities within the organization. Trade, economic and investment cooperation is a key area of the institution, which can enhance the further growth of the BRICS economies. China takes the leading role in this process through active investment in other member countries, trade and humanitarian policies, and infrastructure projects within the territory of its partners.
According to the Strategy for BRICS Economic Partnership 2025, trade and investment are priority areas for cooperation between the five countries, and in the context of current events on the global stage, the development of these spheres within the organization is highly relevant. China, as one of the most influential states on the world stage and the second largest economy in the world, has the opportunity to invest the amount of resources in the development of BRICS through the expansion of trade, economic and investment partnerships between Russia, Brazil, India and South Africa.
Based on statistics, in recent years, the five countries have invested just over $250 billion, and the total volume of trade in goods between the BRICS countries in 2021 reached nearly $8.55 trillion. Notably, China's bilateral trade with other BRICS countries was $490.42 billion, up 39.2% compared to the previous period.
China is a significant investment partner for Russia. Statistics demonstrate that total investment from China to Russia exceeded $200 million in 2021. In 2020, the outflow of foreign direct investments from China to Russia amounted to around 570 million U.S. dollars. Investments are a boosting area of cooperation between Moscow and Beijing and reveal a growing trend according to data. Thus, Chinese investments in Russia are mainly concentrated in the mining sector, trade, particularly in the energy sector, as well as in agriculture, construction, light industry and large-scale infrastructure projects. Energy sector development will remain one of the priority areas in Sino-Russian trade, economic and investment cooperation, since China will import Russian natural gas. Some of the main oil and gas projects are the "Sila Sibiri" gas project and the "Yamal LNG" energy project.
Besides cooperation in the oil and gas sector, China is interested in infrastructure projects. For example, the construction of a railway bridge between Russia and China over the Amur River, the creation of the Free Port in Vladivostok, the construction of a floating nuclear power plant and the construction of new car assembly plants. Of the latest projects, both sides intend to build a new high-speed railway line 7,000 km long, which will pass through China, Kazakhstan and Russia, so that the route from China to Russia will take just 30 hours. Since this kind of transnational high-speed railroad requires large investments, the total investment has already reached 1.5 trillion yuan.
At present, Chinese entrepreneurs and experts in trade and economics intend to find new models of Sino-Russian cooperation in the context of the current situation, and to urge the Russian side at the governmental level to improve the relevant policies to protect investment rights and interests. Moreover, the Chinese party intends to hold regular events to cultivate investment platforms in Russia and attract capital from developed provinces to do investment business in Russia.
India is an important economic and trade partner for China. China and India are striving to increase bilateral trade and attach greater importance to building mutual relations with each other. In terms of investment, China's investment fund in India exceeds $300 million, reflecting the two countries' mutual economic and trade dependence, and showing the huge potential of the two nations' economic and trade cooperation. Moreover, India's actual investment in China was $6.32 million in 2021.
Chinese investments in India are mainly focused on the automobile industry, metallurgy, energy, and electrical equipment manufacturing. For example, the value of recently signed engineering contracts by Chinese companies in India was $1.67 billion, a decrease of 26.9% compared to the previous period. Currently, the countries cooperate in the One Belt, One Road project, electronics (e.g.: Oppo, Vivo, Xiaomi), pharmaceuticals (Fosun), automotive (Saic). As for Xiaomi, as of 2017, the company has already invested $225 million in setting up a factory in India to produce cell phones. Xiaomi's rapid growth in the Indian market is an example of China's interest in Indian investment, which has led China's emerging industries to expand actively in India.
China has been South Africa's largest trading partner for nine years. Over time, the relationship between the two countries has become stronger and more prosperous, and the investment of enterprises in South Africa financed by China is one of the major areas of cooperation. Today, there are over 200 Chinese-funded companies and institutions in South Africa, with a total investment and financing of more than $25 billion, creating 400,000 direct or indirect jobs for local people in various sectors.
South Africa has always been an interesting target for Chinese companies looking to expand their businesses. Statistics show that in 2021, total trade between South Africa and China reached $54.35 billion, and investments totaled more than $25 billion. Today, Chinese companies are investing in South African industries such as energy, finance, mining, renewable energy, home appliances, automotive, textiles, real estate, logistics and others.
Among the many Chinese investment projects in South Africa, the Dea Wind Power Project, which has successfully provided the electricity needs of 85,000 residents, and also introduced advanced renewable energy technologies, has been operating successfully. Banks such as China Development Bank, Bank of China, China Construction Bank are of great importance in the financial sector as they have actively raised funds to support various investment projects and promote the economic development of South Africa.
Currently, China and Brazil are engaged in the adoption of a new strategic plan and the development of bilateral relations, including the investment sphere. Between 2003 and 2016, Chinese companies invested $61 billion in 180 Brazilian projects. In 2021, trade turnover between China and Brazil increased 37% over the previous period to $164.1 billion; and China's total investment in Brazil exceeded $66 billion in 2020, making the People' s Republic of China its largest investor.
Chinese investments primarily focus on industry, logistics, energy, communications and finance. For example, Huawei, in cooperation with Brazilian operators, built the first high-speed fiber-optic network in the Amazon region. In finance, investment cooperation takes place directly through the Asian Infrastructure Investment Bank (AIIB) and the New Development Bank (NDB). Recently, priority was given to investments by private firms rather than state-owned projects (for example, Chinese machine-building companies such as Xugong, Zoomlion, Sany). Since 2021, Chinese investments in the energy and information technology sectors have resumed. The two states agreed on two documents of intergovernmental cooperation, the China-Brazil strategic plan 2022-2031 and the China-Brazil implementation plan 2022-2026.
The BRICS members establish trade, economic and investment partnership as one of the predominant trends within the organization. The People's Republic of China, as a BRICS participant, has undoubtedly raised the reputation of the organization in the world, as well as become the basis for its overall economic potential. Because of China's investment in the five states, the economic growth is increasing and therefore the influence of the BRICS members is expanding. Although the amount of investment between the organization is still relatively small, firstly, it may increase in the future, and secondly, the nations have great potential for deepening economic cooperation, especially in the investment sphere through projects in energy, agriculture, infrastructure, mining, education, automobile manufacturing and others.