Tuesday, June 27, 2006

BRIC by BRIC, Beijing Builds a New World Order

BRIC by BRIC, a new world is being built.

BRIC, for the uninitiated, stands for Brazil, Russia, India, and China, the countries destined to dominate the global economy by 2050, according to Wall Street investment banking firms. Goldman Sachs is credited with developing the BRIC thesis, which also argues that the component countries will increasingly cooperate in the coming years.

China is the crucial player. And cooperation is a key feature of Chinese diplomacy, as the world's fastest growing and most populous nation steps up efforts to lock up energy supplies, capture markets, and counter the power, prestige and influence of its superpower adversary, the United States.

BRIC by BRIC....

Relations between China and India, as we recently reported, are at the highest level ever. Same for China and Russia, which are reporting massive increases in trade and energy cooperation.

And arms. Russia has become one of the most important suppliers of arms and military technology to its former rival for control of the world Communist movement.

The two countries are the main members of the once obscure Shanghai Cooperation Organization (SCO)--China loves that word, cooperation--an increasingly effective tool of Chinese diplomacy that groups the Central Asian nations of Uzbekistan, Tajikistan, Krygystan, and oil-rich Kazakhistan in opposition to the US, which has established an arc of bases in the region.

India is an SCO observer (like Pakistan, Mongolia, and Iran). With India, too, China's relations are at an all-time high, to the dismay of the US, which had high hopes of employing India in its China containment strategy.

Then there is Brazil, the BRIC country in America's backyard. With a population of 186 million, a highly developed industrial sector and a number of world-class companies, Brazil is South America's dominant power and China's main partner in Latin America, apart from oil-rich Venezuela. China's trade with the South American giant--currently estimated at $10 billion--is booming. Energy-starved China is investing around $5 billion in the construction of a gas pipeline in Brazil; and Beijing has also shown interest in Brazil's large uranium reserves while inviting Brazilian companies to participate in the construction of nuclear power plants in China.

China and Brazil have also cooperated in developing and launching satellites, and the two countries have formed a Space Technology Cooperation Commission to coordinate their activities, and are reported to be cooperating in the development of an aircraft.

The only negative news in the China-Brazil relationship: Brazilian company CVRD, one of the so-called Big Three mining companies that constitute the secretive cartel controlling over 70 percent of the world's reserves of iron ore, the key component of steel. China is the world's largest producer and consumer of steel. Last year, it was forced to accept a massive 70 percent price hike in the price of iron ore. This year's price rise of 19 percent has spurred Chinese efforts to crack the cartel by accelerating domestic production and overseas investment--for example, in Gabon's giant, untapped iron ore deposits and mining operations in Western Australia.

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