BRICS has to take up more challenges
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Brazil, Russia, India, China and South Africa (BRICS) together have a population of more than 3 billion - or about 43 percent of the world total. The BRICS economies account for 18 percent of the world's economic aggregate, 15 percent of foreign trade volume, and attract 53 percent of the foreign capital. By 2015, BRICS' total GDP will increase to 23 percent of the world total, and by 2020 to 31 percent.
The five countries' combined population will peak at 44 percent of the world total by 2015 but is expected to fall to 37.1 percent by 2030. Their continuous GDP growth and falling population (after 2015) are bound to increase their per capita income and improve the living standards of their peoples.
The leaders of the five countries will meet at the BRICS summit in Sanya, Hainan province, on April 14 to discuss global developments, financing and cooperation. But apart from the points on the Sanya summit agenda, the leaders have to deal with five domestic problems.
First, they have to take measures to narrow the large income gap in their countries, although they are already implementing social policies to this end.
Second, the BRICS economies have to increase the pace of industrialization. Currently, their industrial structures and most of the products they export are resource-intensive or labor-intensive. But to become countries with high per capita income, they have to transform themselves into skill-intensive and knowledge-intensive economies.
Third, the five economies have to improve their social security systems. They are indeed trying hard to do that, but they have to intensify their efforts.
Fourth, they have to take steps to control inflation. In the past 10 years, Brazil has successfully implemented macroeconomic control. It has basically stabilized inflation - at least it doesn't face hyperinflation. But inflation is a serious problem for China and the other three BRICS economies. For China, rising prices of iron ore and imported oil are increasing prices of goods in the domestic market. So it has to find the best way to control inflation and maintain steady and fast economic development at the same time, which is not an easy task.
Last, the five countries have to stem the flow of hot money into their economies. This again is a difficult task, because their fast development and investment opportunities offer high returns and thus attract overseas investors.
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