BRICS is the abbreviation for the group formed in 2010 by Brazil, Russia, India, China, and South Africa in a trade association. These major developing countries joined forces to promote trade and economic development among themselves, challenging the global power of the G7, led by the United States.
Now, the group is known as BRICS+ after its expansion this year, with the inclusion of Egypt, Iran, the United Arab Emirates, Saudi Arabia, and Ethiopia. Additionally, up to forty countries have requested membership, including Thailand, Indonesia, Malaysia, Senegal, Venezuela, Cuba, Bangladesh, and Pakistan. Other countries invited to join have declined, such as Algeria or Argentina, with the election of Milei.
This group is projected to consolidate 46% of the world’s population and control 43% of global crude oil production, along with more than a quarter of global trade. These are highly significant factors in the current societal functioning.
China dominates the organization, and its clear intention is to develop relations with these emerging countries as an alternative to the Western world. This has a direct impact on global trade flows and supply chains. The New Silk Road began its “westward conquest,” establishing strategic investments in Southeast Asia, Africa, Eastern Europe, and LATAM. The intention to trade in Chinese Yuan, as an alternative to the US dollar, is evident. China is signing bilateral agreements to trade using its own currencies, outside the SWIFT system. The trade wars between the United States and the European Union with China could worsen trade flows, altering cargo volumes and destinations. The automotive industry is one of the main obstacles. The transition from internal combustion engines (ICE) to electric vehicles (EV) seems necessary, although its adoption by the public has slowed down. Both the US and Europe are unprepared to compete with Chinese EVs, as the level of development is vastly in favor of China. American protectionism imposes a 100% tariff on Chinese EVs, while the EU will apply rates ranging from 17.4% to 38.1%, depending on the brand. Even so, Chinese EVs remain competitive and of equal or superior quality to European or American EVs, which were late in developing new platforms and technologies.
Amid these trade conflicts, it is clear that China needs to continue selling manufactured goods to the US and Europe, but it is also ensuring the strengthening of trade flows with BRICS+ members, which will likely result in a shift of cargo towards these alternative destinations. China has already invested in transportation infrastructure in key countries to strategically control global trade routes.
The next BRICS+ conference will take place in the third week of October in Kazan, Russia, with Vladimir Putin as the host. Putin is currently in great need of support from his guests, which is something to ponder.
Global geopolitics directly affects trade and transportation. The revitalization of BRICS+ controls the Suez Canal, thanks to the inclusion of Egypt, Iran, and Ethiopia. It remains to be seen when the transit through Suez will be fully restored, returning to the traditional route and avoiding detours around the Cape of Good Hope in South Africa.
