The BRICS brand of rising economic powers began as a marketing gimmick by China-worshippers at Goldman Sachs. It never had any coherence, and should have disappeared from the media lexicon long ago.

Yet it refuses to die. The BRICS idea has roared back to life, more fashionable than ever, dividing the world along an unnatural line of cleavage.

Brazil, Russia, India, China, and South Africa have little in common. Some are democracies: others are one-party dictatorships at war with democracy. Some endured imperial rule within living memory: others are today’s imperialists.

Some are energy and food importers. Others live off commodity rents. As a group, they have failed to sustain the promise of economic take-off, assumed to be inevitable 15 years ago.

It is America that has rebounded. It is China that has suffered a collapse in productivity growth and is sliding into the middle income trap.


The BRICS share a vaguely stated aim of “multipolarity”, but China is not trying to achieve anything of the sort.

Its own strategy documents aspire to dominance over the world’s economic and technological infrastructure, with Beijing setting the rules of a new global order.

One might ask why on earth India is still party to China's hegemonist agenda. It holds to its post-colonial credo of non-alignment, but is implicitly aligned with the US, Japan, and Australia in the Quadrilateral Security Dialogue.

Whether or not the Quad evolves over time into the Nato of the East, it is already viewed as a “military alliance aimed against China’s resurgence” by Xi Jinping.


Yet for all the absurdities, the BRICS club is now expanding. Twelve countries have submitted applications to join and another six are putting out feelers. “There is huge interest worldwide,” says South Africa, host of the 15th BRICS summit this summer.

Officials have variously named Saudi Arabia, Egypt, Algeria, Argentina, Mexico, Nigeria, the Emirates, Indonesia, Kazakhstan, Afghanistan, and even Turkey.

The BRICS bank in Shanghai has been upgraded politically under Brazil’s ex-leader Dilma Rousseff, even as it is downgraded financially to AA by Fitch Ratings.

It has to pay 100 basis points above the International Monetary Fund and the World Bank rates to raise money on capital markets.

This bank aspires to be the rival Bretton Woods lender for the global South, breaking the stranglehold of Washington, and free from the harsh lending conditions of the IMF, or so the applicants think.

The actual terms of debt restructuring under China’s opaque Belt & Road are draconian. Yet Egypt and Bangladesh have joined, and Uruguay will soon follow.

There is much heady talk of a BRICS currency to defy dollar supremacy. “Every night I ask myself why all countries have to base their trade on the dollar,” says Brazil’s president ‘Lula’ da Silva.

Of course, it makes sense for Brazil to sell iron ore and soybeans to China under yuan contracts. But Lula of all people ought to know why the dollar endures. His country explains the riddle. So does Russia.

Brazil and Russia each looked like commodity superpowers during the bubble of the early 2000s, supplying energy, metals, and food for Asia’s industrial revolution.

But both were succumbing to the resource curse. Their industrial cores were being hollowed out by overvalued currencies.

Both sank into a lost decade when the commodity supercycle deflated. The combined GDP of Brazil and Russia was $4.7 trillion in 2011: it was $3.4 trillion by 2021, according to World Bank data. In the meantime the US vaulted from $15.6 trillion to $23.3 trillion.

The BRICS story is really about China. It is an article of faith in the global South that China’s GDP will soon overtake America’s GDP by some preordained process of history.


This looked plausible for a brief moment circa 2008. It seemed self-evident that China, growing at double-digit rates, would inherit the earth by compound arithmetic. The dollar was then at rock bottom. Brazilian supermodel Gisele Bündchen famously refused to accept it as payment.

Peak oil was in vogue and America had become dangerously reliant on energy imports. The US current account deficit had ballooned to 6pc of GDP. China’s surplus was 10pc of GDP, albeit by holding down its currency to gain mercantilist market share.

What most people did not know is that US free enterprise and technology between them had already cracked the potential of shale. Opec and Russia lost their monopoly power in short order. Within a decade the US was again the world’s biggest producer of oil and gas, with energy and chemical feedstock prices low enough to power a US manufacturing renaissance.

The heart attack in the US banking system was not the crisis of capitalism that China and the global Left supposed it to be. It was just an episode (a bad one) in the Schumpeterian cycle of creative destruction.

We can see in retrospect that China suffered deeper damage from the Lehman crisis. The Central Party School falsely concluded that it vindicated the Communist model of top-down control of bank credit and five-year industrial plans.

Hubris ran rampant.

China doubled down on a development model that was already obsolete. The economic return on each yuan of credit hurled at construction and industrial over-capacity has fallen from around 1:1 in 2008 to nearer 1:3 today. Such is debt saturation. China may have missed its chance to reform in time.

It is following Japan and Korea into demographic collapse, with the big difference that it is becoming old before it is rich.


Xi Jinping has progressively abandoned the Deng Xiaoping model that delivered 40 years of super-charged growth. He strives for global technological ascendancy but has reverted to Maoist thought control and treats China’s tech entrepreneurs as a threat to Party control.

China’s structural growth rate is heading for 2pc to 3pc this decade, converging on mature US growth rates long before it has caught up. Informed economic opinion no longer thinks that China’s sorpasso is inevitable before 2030, and if it does not happen this decade it is unlikely to happen this century given America’s demographic edge – so long as America does not self-destruct: the new Fukuyama thesis.

The BRICS revival today is very different from its original flowering in 2008. For all the bluster, what anti-Americans object to this time is American strength. The dollar is not weak, it is too strong for global comfort. The US has weaponised control over the dollarised system of global payments and credit in order to enforce American foreign policy.

Personally, I think the US Treasury has been too quick to roll out extraterritorial sanctions across the globe over recent years. To deploy this weapon too often is to degrade it. That said, Washington has been careful not to get ahead of Europe on Russia sanctions. It has not stopped India buying as much Russian oil as it wants, judging that the discount price is low enough to bleed Putin’s budget.

If the BRICS are not the economic force of global imagination, does it matter whether or not applicants want to join? Yes it does, because this amorphous front for Chinese ambitions has succeeded in capturing the political microphone of the global South, reviving a superannuated concept that ought not to exist.

Is modern Chile part of such a South? Is Qatar, or Russia for that matter?

The West is paying a high price for dragging its feet on reform of the UN Security Council and the Bretton Woods regime.

To have pushed India and Brazil into the clammy embrace of this racket has been a failure of statecraft. But it is also reversible.

Lula’s visceral anti-Americanism and infatuation with China make Brazil a tough nut to crack for the global democratic alliance. India offers more strategic promise right now.

Pessimists say India has already drifted into the autocratic camp under Narendra Modi but this line of argument is strangely bleak and defeatist.

Civil society is alive and well. India is nothing like totalitarian wolf-warrior China.

Indian leaders have been attending G7 summits intermittently as a guest over the last 20 years. It is time to ditch this half-hearted courtesy and invite India to play its full part in an expanded G8, and time to turn this body into a muscular, unapologetic, standard-bearer of pluralist values.

The G8 should be the best club to join. The democracies must beat China at its own game.