BRICS by Brick
The continuous development of both India and China as Asia’s two BRICS nations is one rife with economic challenges, and for every sign of progress, a stumbling block awaits
As documented last year, 2015’s meeting between Indian Prime Minister, Narendra Modi and former US president, Barack Obama sent a message out to not just the rest of Asia, but indeed the rest of the world; as the former stated: “India is not simply emerging; it is emerged!”
At the time, it was widely acknowledged that India was indeed the ‘last BRIC standing’; alluding to the stunted growth of its fellowship - Brazil, Russia, China and South Africa. Labelled as a ‘star performer’ among emerging market economies, it was outperforming -most notably - its Asian counterpart, China; a label that was validated in becoming the only BRIC nation to see notable improvements across its economic performance in 2015.
“Now's the time to dip your toe back into emerging markets”, said Aakash Ohri, Executive Director of DLF, one of India’s biggest property and development companies. “India, the biggest success story of the BRICS, presents a particularly profitable growth opportunity for investors.”
He continued: “The market suffered a slump... but now the sector is making a recovery as India’s economy stands firm amongst other emerging markets and large economies.
“The country’s real estate market has proven that it’s able to accommodate global, regional and local economic dynamics. With the relaxation of rules on foreign direct investments, there has been no better time to invest in the Indian property market [in particular].”
It was expected that India’s rise to economic prominence would lead to an abundance of employment opportunities in particular, and while 2016 did indeed prove to be a year of solid growth for sectors such as real estate and from an FDI perspective, the notion that India is alone in heralding such achievements may - at first glance - be a bit of an oversight.
China’s shortfall in relative terms has always been the inherent expectation that a country as big and perceivably dominant as that should already be among the established elite. The reality is of course that - while this is true in some cases - there is still an inordinate amount of work to be done to be economically successful on such a vast scale. Russia and Brazil have similar logistical problems of course.
One industry set to salvage the BRICS focus for China however, is the tech domain, with its commitment to digitisation and technological evolution set to have ramifications on a much more all-encompassing scale when comparing its growth to that of India’s.
Across Asia-Pacific and certainly China, areas of smart cities, the Internet of Things and cloud computing are setting them apart as developed nations on the tech front; arguably the most significant front there is in generating long-term financial growth.
Trend Micro explained: “Set to redefine the way we live and work, smart cities integrate IoT technologies such as virtualisation, big data and cloud. Smart cities reduce the strain on local government finances and promote sustainability through advanced, connected systems.
“One such example would be smart water systems in Singapore that utilise sensors to continually track the pressure, flow and quality of water within the network. This helps end-users monitor their water usage, and at the same time aids the Public Utilities Board in predicting and minimising pipe bursts.”
As far as China is concerned, this one-off example may seem irrelevant, but it is precisely initiatives like these which will sow the seeds of technological prowess and, consequently, economic development in the digital age; all encompassed within the country’s Vision 2025 plan.
“China is well set to accomplish the goals of its Vision 2025 plan, with its Chengdu smart city placing the nation at the forefront of industrial automation. Urban planners in China have initiated an Urban Data Lab to collect government information, existing urban plans, mobile phone metadata from carriers, and behavioural data from location-based services, that brings up concerns of sensitive data abuse,” Trend Micro continued.
No ground for exuberance
If you’re looking for proof, then look no further than news of China’s economy growing 6.7 percent in 2016; a statistic that matches India - supposedly the last BRIC nation left standing.
“Chinese policy makers will take heart from the new economic growth data,” Kamel Mellahi, Professor of Strategic Management at Wawrick Business School noted.
The expert in Chinese business continued: “Despite the overall slowdown in 2016, economic growth during the last quarter rebounded significantly.
"But although the Chinese economy has picked up again, there is no ground for exuberance. The Chinese economy is subject to massive uncertainties that could have a significant impact on its growth in 2017.”
So maybe it is these uncertainties and the still lack of seemingly sustainable parameters that keeps forecasters erring on the side of Indian caution.
"It’s widely expected that Chinese policy makers are going to push through some painful structural reforms to address the root-causes of a number of economic problems, particularly rising debt in order to secure a stronger and more stable economic future. The impact of such reforms will be reflected in slower growth in both the short and long-terms,” Mellahi continued. "But the biggest unknown, without question, is the looming trade war with the US. The current ping-pong rally of accusations and hostile political rhetoric will no doubt leave its mark on the China-US business relationship.
"The impact of subtle hostilities may not be so immediate and so dramatic but it should not be overlooked. If subtle hostilities persist, businesses may choose to invest in alternative locations, and key talent may resist moving to countries where they are not made to feel very welcomed.”
Unforeseen variables including the recent US election may after-all bring us back full circle when comparing Asia’s two dominant areas. Maybe the truth is that the BRICS nations are still actually on the same footing as they were when the term was initially coined: nations with untold potential, still looking for emergence to turn into emerged.
And while both India and China can both justifiably claim to have made inroads towards the latter over the past 12 months, it’s more realistic to state that neither are any closer to achieving complete emergence when assessing the grander present-day picture.