Fissure in the BRICs

We recognize that BRIC was a clever marketing device, but besides being large developing economies, they don't really have that much in common outside of ambivalence toward unipolar world in which the US dominates.

The recent BRIC summit did not generate new initiatives and the subject of the yuan was not apparently on the agenda. However, Brazil's central bank chief Meirelles has broken the silence and said that it was "critical" for China to revalue the yuan and that it was important for the world economy. He noted that the issue will be on the G20 agenda. There is some suspicion that it may have been on the BRIC agenda, but summit ended early as Chinese President Hu returned home, where another devastating earthquake struck.

The IMF's Direction of Trade Statistics suggests that China and Hong Kong together absorb about 13% of Brazil's exports. This is represents a doubling of China's significance for Brazil since 2005.

There is much to be said for what is called South-South dialogue, but in realpolitik terms the South is no more homogenous than the North. Over time, it should become increasing clear that China is not only a customer of mostly commodities and foodstuffs from other developing customer, and a source of investment, but is also a rival in manufactured goods. Increasingly this is not just limited to labor-intensive products either. As developing countries try to move up the value-added chain, they will likely encounter China there too.

It seems rather surprising Meirelles would venture down this path in such strong language. Outside of the US and Europe, few countries seem to be willing to broach the subject. That said, Chinese officials are no more likely to take Brazil's call to heart than they are the US or Europe's calls for a stronger yuan.