Xi expands BRICS over India's objections, Plus China's 'drip feed' stimulus fails to restore confidence & CCP runs a Xi-thought school in Tanzania -- China Boss News 8.25.23

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What happened.

It almost looked as if China and Russia had hit a New Delhi wall in their latest "push" to develop the BRICS bloc of emerging markets into "a full-scale rival to the G7,” as Financial Times noted earlier this week.

But on the last day of the group’s recent summit in Johannesburg, South Africa’s president announced that six new members - Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates - will join the bloc in January.

Bouts of "internal divisions" through-out its history are well documented, but the latest controversy is over "competing visions" for growth and priorities, according to Hung Tran at the Atlantic Council.

More bluntly, Tran says that “India has tried to resist China’s efforts to turn the BRICS group into a support organization for China’s geopolitical agenda.”

Although the new members span three continents, the vast majority of the 67 leaders who were invited - the largest number yet, according to the bloc’s website - were from African countries.

Writing for the East African, a regional English-language newspaper, Chris Erasmus said that China and Russia have made "the inclusion of more resource-rich African states" top of their BRICS economic agenda.

But new African members could also be “a bulwark against further expansion of Nato,” and help the bloc “replace the dollar as the international currency denominating trade in oil, precious metals, plus mineral and other commodities, and affecting almost all international finance and trade,” Erasmus noted.

Why it matters.

‘Buying into’ the non-West

University of Johannesburg professor Bhaso Ndzendze earlier this week said Africa “is an obvious contender for major power courting" in Russian and Chinese leaders ongoing quest to challenge a US-led world order for four key reasons.

Firstly, it is the largest regional bloc in the United Nations, representing some 28% of all the votes in the General Assembly.

Secondly, it possesses some crucial raw minerals that are found only in the continent.

Thirdly, it possesses some important sea trade routes, particularly in east Africa.

Finally, the continent is home to the fastest-growing youth demographic, and will account for about 42% of the world’s youth by 2030.

As Beijing and Moscow pair up to woo African states by actively including them into alternative economic and military frameworks, NATO struggles with relevancy.

Julianne Smith, US ambassador to the NATO, recently turned up the volume on criticisms of Russia's war efforts and how, for example, Moscow’s recent termination of the Black Sea grain deal, is hurting African countries, while also pushing back against Chinese and Russian claims that NATO is to blame for the conflict.

But hers is an uphill battle.

In addition to Egypt and Ethiopia who will join the group in 2024 - Zimbabwe, Algeria, Nigeria, Sudan and Tunisia are formally seeking membership.

While “[t]he disparate nature of the six new members is bound to spark debate about the real nature of BRICS,” Ndzendze wrote in a separate article, new and aspiring members are "buying into" the bloc’s “remarkably consistent” statements promoting solidarity, progress, inclusivity, a more equitable order, and sustainable development.

Why wouldn’t they? “With BRICS members accounting for more than 40 per cent of the world’s population and around a quarter of the global gross domestic product (GDP), there is growing frustration over the West’s dominance of financial systems,” South China Morning Post’s Jevans Nyabiage explained.

“Many [African countries see] BRICS as another way of helping to advance [their] interests in addition to efforts to reform the existing instruments of global power at the G20, United Nations, IMF and World Bank,” he said.

‘Resistance is futile’

Analysts told the SCMP that, out of the five founding BRICS members, India has put up the strongest resistance to expansion. A “recent tilt towards the West” has made it an “outlier” in the group, and its interests are better served by supporting “existing regional alliances” than by upending them.

Both India and Brazil are also "a bit wary of losing influence in a large grouping," international-relations professor Oliver Stuenkel shared. “The new members would largely join to be closer to China and not to Brazil or India.”

In How the BRICS nations risk becoming satellites of China, Financial Times’s Alan Beattie quipped that new members “who are beholden to China through ties of debt or investment,” would make the group “look ever less like a steering group for the emerging world and more like a fan club for an aspiring hegemon.”

But Anu Anwar, a fellow at Harvard University’s Faculty of Arts and Sciences, emphasized the bloc’s “unlikely” chances for global dominion.

“None of the BRICS members have a military alliance among themselves, and it is highly unlikely to form one in the near future. Although expanding members to a few middle powers and regional players could indeed make a significant shift in the global balance of power, it is unlikely to contribute to forming an alternative international order,” he said.

That may be - but in remarks delivered on his behalf at a BRICS forum, China’s supreme leader pressed on expansion “to build a more just and equitable international order,” while insisting “‘hegemonism is not in China’s DNA,’” Aljazeera reported.

Then in a defiant sneer at India, Xi thumped his chest:

“China stands firmly on the right side of history and believes a just cause should be pursued for the common good. BRICS will continue to grow whatever the resistance.”

This Week’s China News

The Big Story in China Business

CHINA’S ‘DRIP FEED’ STIMULUS FAILS TO IMPRESS: Economists had hoped for a 15 basis point cut to the central bank’s one- and five-year loan prime rates, which they think is enough to restore consumer confidence and restart China's economic recovery engine, CNBC said. What they got instead was a 10 basis point cut on the one-year, and crickets chirping on the five.

Hang Seng rout deepens: Hong Kong's Hang Seng Index, which offers mostly mainland Chinese stocks, continued its descent after the PBOC’s announcement. Earlier this month, the Hang Seng lost “a fifth of its value from a recent high, officially putting into a bear market,” Wall Street Journal staff said here and here.

'Run it cold': Bloomberg analysts Rebecca Choong Wilkins and Colum Murphy on Monday argued China's "drip feed" stimulus announcements are by design.

“Xi is running his [economy] cold in a bid to finally break China’s addiction to fueling growth with speculative apartment construction and low-return projects funded by opaque local borrowing. … The risk for Xi and his team … is that the determination to avoid excessive stimulus undermines confidence across the nation’s 1.4 billion people,” they said.

China model ‘washed up’: Former head of Research and Global Strategy at Morgan Stanley David Roche told CNBC’s Squawk Box Europe that “China’s economic model is ‘washed up on the beach’ and ‘not going to take off again.’”