The economist who coined the term “BRIC” says China and India have outperformed his original projections, while BRICS now needs to move beyond symbolism and take concrete steps on trade, payments and economic cooperation.
Economist Lord Jim O’Neill, who coined the term “BRIC” in 2001, in an exclusive conversation with Firstpost, reflects on how India and China have outperformed his original projections and why their growing economic weight could reshape the global order. O’Neill argues that BRICS must now move beyond symbolism and translate its collective influence into concrete action on trade, payments and economic cooperation—particularly between India and China.
Edited excerpts:
You coined the term “BRIC” in 2001 as an economic concept. More than two decades later, and amid a very different geopolitical landscape, how do you view BRICS as it stands today?
Economically, when I reflect back over the 25 years since it nearly came into existence as a concept by me, India and China are the two that have effectively succeeded in what we projected. Both of them, when you analyse the data carefully, have shown accumulated growth over the 25 years more than any of the assumptions we believed. But the other two, Russia and Brazil, have done the opposite and have underperformed considerably what we projected.
More from BusinessIt’s not surprising that in the economic aggregate of the Brics group, whether it’s Brics or Brics+, the economic importance of China and India is considerably more than the rest. China itself is twice the size of all the other BRIC members put together. But given India’s ongoing strong growth, India is becoming more and more important inside the group.
Economically, it’s dominated by these guys. Politically, we’re talking around the summit being hosted by Prime Minister Modi. I would like to see the Brics countries be more serious about things that they can contribute collectively. There’s often a lot of symbolism and big statements, but they never seem to actually do anything.
India is hosting the Brics Summit in just a few days. You have previously said that de-dollarisation is no longer a fantasy and is becoming realistic. What has changed in your thinking over the last few months?
I think this meeting is quite important, not least because of the views of the host country, India. For much of the past few years, I thought, like many conventional economists, you can’t reduce the role of the dollar if you’re not prepared to have capital market liberalisation and an opening up of the Brics countries’ capital accounts and allowing free flow of capital.
But when I thought about it more and looked at the growth of technology and digital payments and analysed carefully what Brics countries have been saying, I think in terms of a joint payments mechanism for trade between the Brics members, I now think it is possible that this is something that could happen.
In terms of it, it wouldn’t be something that would replace the dollar; I’d see it as something that would be a complement to the dollar but something that would enable cheaper cross-border payments between the Brics member countries.
Twenty-five years after your original Brics thesis, has the West finally accepted the shift in global economic power, or is it still resisting the emergence of a multipolar economic order?
The West is frankly very confused. If you take the United States, obviously it’s the country that matters most in the West, by some distance, quite frequently, particularly under this president.
He lashes out with anger whenever he sees some kind of statement from the Brics countries about replacing part of the dollar or on any other topic, especially as it relates to trade. But at the same time, he knows there are great opportunities involving India, and he knows that they can’t do a lot of things without having some connection with China, particularly when it comes to the so-called rare earths at the moment.
And there is this sort of complex relationship they have over technology and AI. And the idea that the US can completely get away from all of this is just not really very realistic.
I think much of the rest of the West is frankly a little bit confused because they’re stuck between the US and the Brics and also their own historic mentality, where, of course, many of these countries were part of some kind of colonial system.
And they find it—in not any deliberate way, but in a subtle way—sort of hard to get their minds around that these countries are becoming so important and should be of an equal standing in global organisations.
And another reason why Brics+ Thinking has come into existence is to try and foster a more effective partnership between Western nations and the Brics+, because we can’t solve major global problems unless all these countries can work together. The Brics countries can’t solve them on their own, and neither can the West or the G7. So however difficult it is, they all have to find a way of cooperating better.
You have often criticised Brics for having more symbolism than substance. But when you consider its combined economic, demographic and strategic weight, how do you explain the gap between its importance and its actual collective action?
It’s true, because each of the Brics countries is really important. Particularly China and India, but obviously in a military sense, Russia, not so much economically. And so you simply add them all together. What the numbers you cited are true. And in that regard, I am a strong believer that they should have greater representation in all the key global organisations. And it’s very disappointing that we don’t see changes.
But I guess when you say I’m critical, it’s because, other than constantly pointing this out, which is very important, they don’t actually use their collective political BRICS status to do anything together.
And another one of the papers that we are having done by some academics, which is particularly interesting for India, is actually what are the areas where China and India together can truly cooperate?
Because I’ve often said, if India and China could foster a more genuine, deep desire to cooperate together, that would be transformational for the Brics in my view. And because of the importance of them both working together, it would be transformational for the world, and it would mean the West couldn’t afford to ignore them.
You have repeatedly said that China and India need to cooperate seriously if BRICS is to become a genuine economic force. What areas of cooperation do you have in mind?
Well, I think there are two basic ones. One is trade between themselves. If China and India could foster—and I think there are some signs of progress—a spirit of trying to open up trade barriers and get rid of them for all forms of trade between themselves, not exactly a free trade area, but sort of thinking towards that direction, I think it would be an enormously beneficial development for both countries.
Secondly, with it, that would justify more seriousness about this idea of a payment system being used within the Brics countries. And so I think those two things in particular are really important for both China and India.
Then more broadly, given the importance of them both on two of the genuine major global issues, infectious disease management and global energy requirements and climate change, I think greater cooperation between them on those things would be fantastic for the whole of the world.
Do you see BRICS evolving into a genuinely multipolar institution representing the interests of the Global South?
It could be, and in many ways it would be nice to see. But I had two important caveats. It’s only going to happen if the Brics member countries are serious; it’s not just going to magically happen by statements. And then the second thing, as I touched on earlier, I don’t think this should come at the expense of cooperation with the G7 or the West.
I don’t think you can ultimately solve global infectious diseases or global climate change, or for that matter, global economic imbalances, without countries from the West and the Brics countries, or particularly the most important ones.
I think greater cooperation between key BRICS members like China and India is absolutely critical for the West itself to start taking them more seriously.
De-dollarisation is also driving interest in greater use of national currencies. India, for example, is pushing for the internationalisation of the rupee. What is your view on that?
I think it would be a healthy thing for India to go down that path, not least because it would be a sign of self-confidence and greater belief in the stability of their own financial system.
And that would be a very positive sign about India’s self-confidence, because we clearly live in a world where the dollar’s importance as a financial instrument is vastly bigger than the importance of the US economy. And at some point that should stop.
Donald Trump has been highly critical of Brics and has imposed tariffs in that context. Do you think Donald Trump has, ironically, become the best salesperson for Brics?
I mean, I’ve sort of joked about it before, but he’s the first president of America that’s ever even mentioned publicly the Brics. And so the very fact that he keeps talking about them, often in a negative sense, actually is effectively some kind of endorsement that they matter.
And I often wonder why he doesn’t even stop to realise that that’s the case. But, you know, obviously, when the president of America talks about something, the whole world takes notice. I once wrote a sort of tongue-in-cheek piece saying, “Is Donald Trump a secret agent for the Brics?”
If BRICS succeeds in building an alternative payment system, could it become heavily dependent on Chinese currency and financial infrastructure, or can it maintain independence?
Listen, I think if it’s going to be really effective across the Brics countries, it cannot be a Chinese-dominated thing. It has to be done on some kind of agreed role involving all the countries.
I often think in this regard about China’s One Belt, One Road or its BRI strategy that India’s always been very reluctant to be part of because they’ve seen it as a Chinese thing. And if you want to have a genuine alternative to the Brics payment system, it has to be something that all the Brics countries see as some involvement in their own initiative.
And I think from what I can tell, and again, I highlight this paper we’ve got coming out on it in a couple of months’ time, the momentum is about something that involves more than just the Chinese leadership on it.
BRICS has expanded to include countries with very different—and sometimes conflicting—interests. Does this expansion risk making the grouping too incoherent to build consensus?
I agree with that scepticism. And yet another paper that we are getting studied and will be published again in the next two months is for a more coherent rationale as to what the logical reasons are for this expansion. Why do they include country X and not country Y? And what is the consistency? And what is the actual goal?
It often seems that the Brics+ expansion is a bit chaotic, and it’s sort of effectively open to anybody that doesn’t like the United States. But I quickly contradict that because, of course, India does like the United States.
But I think there needs to be a lot more coherence about why they’re doing these things, because, as you quite rightly point out, just adding more countries, particularly if ones that don’t get on with each other and, you know, take the problems going on in the Gulf right now, Brics+ includes both Iran and the UAE.
And they’re not, let’s just say, exactly very good friends at the moment. Egypt and Ethiopia are in the same position. And that is not a good basis for treating the group as being serious about doing things together.
Has Donald Trump’s weaponisation of tariffs and sanctions actually accelerated the case for de-dollarisation?
At the margin, clearly. When you have the leader of the country that has effectively developed all the global institutions that we’ve had since World War II or soon after it, some 80 years ago, and they’re starting to basically take all the rules apart, then it’s not surprising that other countries all over the world are looking at some kind of alternative form of system which they wouldn’t be so dependent on, which at times seems rather chaotic and certainly unpredictable, American leadership on all the systems that we’ve all been used to.
Could the current trade war between the US and China become the catalyst that turns BRICS from a political forum into an alternative global economic architecture?
I mean, on the one hand, the fact that the US goes down this path definitely encourages the BRICS member countries to think about alternatives. Beijing, I think, earlier this year for the first time, what is it in seven years? I’m sure it’s no coincidence.
However, secondly, and on the other hand, it requires these countries to actually proactively do things more together because otherwise it’s just rhetoric. And it will certainly be interesting to see any specific developments that happen following this meeting over the next couple of days.
BRICS talks extensively about trade, but intra-BRICS trade has not expanded as much as one might expect. What is holding these countries back from taking trade among themselves to the next level?
I think there are two things that are going on. First of all, Chinese domestic demand has been very weak for the past couple of years, and it’s getting weaker. And so that means Chinese import growth from other countries is softer than it should be.
And given the important size of China, that’s obviously a massive influence on trade with anybody. You look at German exports and trade with China; it’s slowed dramatically, and it’s because of the weakness of Chinese domestic demand.
The second thing that I’ve touched on is that these countries need to be more serious about wanting to do trade with each other. And in many instances, they have their own trade barriers and trade tariffs between each other.
And so you can talk as much as you want about it being some kind of alliance, but at some point, it has to lead to policies that actually result in better economic relationships and trade between each other.
Given your long view of BRICS and its trajectory, where do you see de-dollarisation five years from now?
I think I’m going to contradict myself. I think it is increasingly clear that the US is struggling with the demands of being the global reserve currency as other countries get bigger. But at the same time, the US is very proud and sees the huge benefits of the dollar being the world’s transaction currency.
And these two things conflict. It will only get genuinely tested, and it could happen at any moment, certainly within the next five years, when other big countries want to take more responsibility, involving the use of currencies that represent their countries, and bringing it back to this BRICS+ meeting that Modi is hosting.
That is going to be an important thing for people like me to watch, and so is what is said and what they actually decide to do together, if anything, as a consequence of this meeting.
As India hosts the BRICS summit, what are your expectations from the meeting?
I’ve learned to not have great expectations of Brics summits. The one thing that I do know will happen is there’ll be a lot of powerful phrases used, but whether it actually means anything will change is an entirely different matter. I hope that there will be something more of substance, but I don’t approach the meeting with enormous expectations.
Looking five years ahead, where do you see BRICS standing? Do you expect it to become the economic force that you envisioned when you coined the term?
Well, China and India already are. If you look at global GDP developments since 2001, 25 years ago, most of the global GDP growth that has happened has come from three places: the United States, China, and India.
And two of those are BRICS countries. And I see no reason why that’s going to change in the next few years. I think what is really interesting for an Indian audience is within that overall picture, India’s own contribution is getting increasingly bigger as the base size of India gets bigger. If it continues to grow by 6 per cent, 7 per cent, or 8 per cent, that means its own contribution to global GDP is becoming more important.
And as everybody knows, there is a reasonable chance between now and five years’ time that India is going to become bigger than Japan and Germany and will start to clearly establish itself as the third-largest economy in the world. And without a major crisis in India, I think that’s pretty likely.
