China’s economic slowdown continues to be a cause for worry, Dr. Roselyn Hsueh and Dr. Cindy Fan told Pacific Council members during the fourth installment of the BRICS Summer Teleconference Series. The discussion was moderated by Ms. Rebecca Liao, a China analyst and the director of business development at Globality, Inc., a Silicon Valley startup.

Dr. Hsueh is an associate professor of political science at Temple University and the author of China’s Regulatory State: A New Strategy for Globalization. Dr. Fan is vice provost for international studies and global engagement at UCLA and the author of China on the Move: Migration, the State, and the Household.

"For 30 years China’s economic growth has averaged about 10 percent, but in the last couple of years we’ve seen a significant slowdown," explained Fan. "That worries a lot of people, but if you look at China’s history over the last several decades, this is not surprising. A slowdown was inevitable."

Hsueh agreed that the situation should be kept in perspective. Beijing reported in June 2016 that China's economy grew just 6.7 percent in the most recent quarter, its slowest pace since the 2008 financial crisis.

"Compared to China’s growth in the last 25 years, 6.7 percent doesn’t look so great," she said. "But if we look at China compared to the rest of the BRICS countries, then we see that China’s growth this year is actually quite close to India’s, which is about 7 percent, even though it’s technically a slowdown."

Fan pointed out that one of the reasons for China’s economic growth over the last several decades was cheap labor and land, which she said is not a sustainable model for China over the next five to 30 years.

Beijing reported in June 2016 that the country’s economy grew just 6.7 percent in the most recent quarter, its slowest pace since the 2008 financial crisis.

"The country’s population is aging, so looking forward China needs to undergo industrial upgrading," said Fan. "They should transition from labor intensive driven growth into something that is more innovative and capital intensive. That will be their next recipe for success."

Fan also expressed her concern about the housing bubble that China is currently experiencing.

"Residential property prices have increased by 60 to 80 percent from last year to this year," she explained. "Economists are saying this can’t go on. If the bubble bursts, it will set off a domino effect and it could be scary. It will affect China’s economy in a very negative way and then ripple to the rest of the world."

Another concern is that many do not trust the economic numbers that are released by the Chinese government. Both Fan and Hsueh agreed that the exact numbers are probably not trustworthy, but that the overall trend the data is showing is likely accurate.

"The data coming from the government could be quite flawed, and that includes the GDP, which is collected from the bottom up," said Fan. "So when local governments want to pad their economic performance, it’s going to show up in the GDP. However, the Chinese are aware of this and there seems to be an effort to try to correct these issues. But we can all believe there’s an economic slowdown."

Hsueh argued that the Chinese want an accurate picture of economic indicators because "ensuring the political and social stability of the Chinese Communist Party is such an important goal."

Listen to the full conversation below:

Read Dr. Hsueh’s primer on the effects of Chinese style capitalism on the country’s economy.

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Justin Chapman is the Communications Associate at the Pacific Council on International Policy.

The Pacific Council’s BRICS Summer Teleconference Series continues with a discussion about South Africa on September 14. Read summaries of our teleconferences on Brazil, Russia, and India.

India has made great progress in terms of economic growth but there is still much the government can do to strengthen the country's prospects, Dr. Meg Lundsager and Mr. Richard Rossow told Pacific Council members during the third installment of the BRICS Summer Teleconference Series. The discussion was moderated by Ms. Nishtha Mishra, a Ph.D. candidate in economic policy and an assistant policy analyst at the RAND Corporation.

Dr. Lundsager is a public policy fellow at the Wilson Center and a former U.S. executive director of the International Monetary Fund (IMF). Mr. Rossow is a senior fellow and Wadhwani Chair in U.S.-India Policy Studies at the Center for Strategic & International Studies.

India can play a constructive role on the global stage but it should be less fearful of trade with other economies.

Out of the five BRICS economies, India’s alone stands out with annualized GDP growth north of 7.5 percent. As one of the world’s fastest growing economies, the country continues to be an attractive market to foreign investors. However, Rossow pointed out that while Prime Minister Narendra Modi is pro-investment, he is also anti-trade, which could hinder further growth. He said that India can play a constructive role on the global stage but must be less fearful of trade with other economies.

"In two years Modi has lifted about 40 different foreign equity restrictions, which is very significant, and much faster than any of his predecessor governments have done," said Rossow. "He courts investment from foreign CEOs, which is a new tactic for India. But we’ve seen no steps by the Modi government to integrate themselves in terms of trade with other major economies. They’ve shown no interest in joining the Trans-Pacific Partnership, our attempts to negotiate an investment treaty with India have gone nowhere, and all the Regional Comprehensive Economic Partnership members say India’s the reason those negotiations are slow."

Rossow said that in the years just prior to Modi’s tenure, India experienced declining economic growth and a lack of interest in initiating new economic reforms. When Modi took office, international expectations were high that he would enact a business-focused agenda and initiate powerful reforms early on.

"Two years on, most say it’s a mixed record," said Rossow. "You can see signs of things they’ve done and want to do, but relatively few of the big reforms people wanted. One good example is the major tax overhaul passed by parliament last week called the Goods and Services Tax (GST), which is going to help create more of a national market in India for production."

"Among the BRICS, when there are similarities in terms of their international objectives, they can work together and become a lobbying force."

- Dr. Meg Lundsager

Modi has also pushed for states to compete, according to Rossow. India is comprised of 29 states, each of which has power over their own electric grid, labor, and land acquisition.

"Modi is getting them to compete to attract investment, and states govern far more of what investors actually face than the federal government does," said Rossow.

Lundsager commented on the evolving role of the BRICS countries, including India’s place within them.

"Among the BRICS, when there are similarities in terms of their international objectives, they can work together and become a lobbying force," she said. "But beyond that, because their economies are so divergent, in terms of that translating into any real binding cooperation, there’s much less of that. You’d think they’d each be a regional leader and try to pull together the emerging market/developing country world, but that’s not the case."

Economically speaking, Lundsager said that "South Africa can’t deliver other African countries; Brazil certainly can’t deliver all of South America, much less Mexico; Russia doesn’t really bring along the former Soviet Union or Eastern Europe; India doesn’t really have a significant role in leading any particular group; and of course China, the big guy, is unto itself. They all want deeper cooperation with China, but each one of these countries has different kinds of tensions with China."

Lundsager said that the five BRICS countries have very little trade and investment amongst themselves, but they do have influence among international organizations such as the IMF. All five BRICS are IMF "creditors," which means they are strong enough that the body draws on their quotas, resources, and commitments to the IMF to lend to other countries. In other words, the BRICS have contributed to the pool of money that the IMF has used to contribute to Greece, Portugal, Ireland, Ukraine, and others over the years.

Listen to the full conversation below:

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Justin Chapman is the Communications Associate at the Pacific Council on International Policy.

The Pacific Council’s BRICS Summer Teleconference Series continues with discussions about China on August 31 and South Africa on September 14. Read summaries of our teleconferences on Brazil and Russia.

A perfect storm of internal and external factors – from falling oil and gas prices to Western sanctions – have contributed to the sustained decline of the Russian economy, Sergey Aleksashenko and Jennifer Harris told Pacific Council members during the second installment of the BRICS Summer Teleconference Series. The discussion was moderated by Agnia Grigas, a nonresident Senior Fellow at the Atlantic Council. 

Dr. Aleksashenko is a nonresident senior fellow of Global Economy and Development at the Brookings Institution. Ms. Harris is a senior fellow at the Council on Foreign Relations.

After Russia annexed Crimea in 2014, the West imposed sanctions on Putin’s government. Then oil prices dropped, sending the Russian economy spiraling into a recession in 2015, with the value of the ruble falling about 127 percent and gross domestic product shrinking 3.7 percent. The International Monetary Fund anticipates a 1.8 percent decline this year.

"[Russia has] a presidential election in 2018 but everyone knows the outcome even today."

Harris believes, however, that the "economic downturn seems to have found its bottom. Russia is beginning to get its confidence back. Last month the federal bank decided to cut interest rates for the first time since August 2015, and the IMF came out with statements suggesting comfort with Russia’s current exchange rate, calling it appropriate for the current environment."

Aleksashenko said that as long as the world continues to consume oil and gas, which account for about half of Russia’s export revenue, then the country’s economy will not collapse. He added that the state-run energy company Gazprom is limited in terms of what it can or cannot do in the face of falling oil and gas prices.

"Gazprom is not a commercial company – it is a political instrument of the Russian government," said Aleksashenko. "In many cases it is used as a weapon against neighbor countries and others."

"We’ve seen Russian money try to prop up or bar candidacies in the heart of Europe. This has gone unaddressed for far too long."

When asked about the recent scandal regarding the U.S. presidential election, in which Russia was accused of hacking into and releasing Democratic National Committee emails and encouraged by Republican candidate Donald Trump to continue to do so, Harris pointed out that "this is certainly not the first foreign election that Russia has tried to meddle in. We’ve seen Russian money try to prop up or bar candidacies in the heart of Europe. This has gone unaddressed for far too long. We need to pass campaign finance reform, now that it is a matter of national security."

How will the future of the Russian economy impact the stability of Putin’s control? Harris argued that the Russian leader’s reign is directly linked to the country’s economic performance. Aleksashenko disagreed, saying he does not think Putin is going anywhere anytime soon.

"We have a presidential election in 2018 but everyone knows the outcome even today," he explained. "Putin is not scared of the economic situation. In order for Russia to be great, he believes the Russian people have to make sacrifices."

Meanwhile, he said, expect to see Putin increase Russian activity in the international arena as he tries to make the West less united and more vulnerable.

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Justin Chapman is the Communications Associate at the Pacific Council on International Policy.

The Pacific Council’s BRICS Summer Teleconference Series continues with discussions about India on August 17; China on August 31; and South Africa on September 14. Read a summary of our teleconference on Brazil here.

As severe droughts and other water-related crises increase around the world, no group has been affected quite as much as women and girls in developing countries.

Varsha Deshpande, a lawyer and women's rights activist in Maharashtra, India, a state hit hard by drought, told the Thomson Reuters Foundation that women are especially vulnerable in droughts because it is their responsibility to fetch water.

"She is the first to wake up, she walks the farthest to fetch water, she eats last – and probably the least – and she sleeps last," Deshpande said. "This takes a toll on her health, her menstrual cycle, and affects her reproductive cycle."

United Nations Secretary-General Ban Ki-moon said water challenges go beyond questions of access.

"In many countries, girls are forced to drop out of school owing to a lack of sanitation facilities, and women are harassed or assaulted when carrying water or visiting a public toilet," he said.

As the 2015 report Water for Women, published by UN Water, points out, "without access to clean water, the world’s poorest people will stay poor." This is because the time spent walking to, waiting, and collecting water is time not spent "carrying out income generating activities, caring for family members, attending school or simply looking after women’s needs and aspirations."

According to an article by Alix Lebec on womeneffect.org, the numbers are staggering:

• Every day women and girls without toilets spend 266 million hours finding a place to go to the bathroom.
• Women and children spend more than 125 million hours a day collecting water for their families.
• More people have access to cell phones than toilets.
• 2.4 billion people still live without proper sanitation, while 660 million lack access to safe water.
• In Africa and Asia, women and children walk an average of 3.7 miles a day just to collect water.
• Every 90 seconds a child dies from a water-related disease.
• 160 million children suffer from stunting and chronic malnutrition linked to water and sanitation.
• Involving women can make water projects 6 to 7 times more effective.
  
   

The last point is especially important. Since water issues disproportionally affect women, they must be part of the conversation to come up with solutions. 

One potential solution is WaterCredit, a small, affordable loan averaging $178 provided by microfinance institutions to families earning between $1 and $8 a day so they can afford a water connection or toilet in their home.

"The human right of access to clean water, close to home, can unlock a woman’s potential – economically, educationally, and socially," wrote Jane Wilbur in the Water for Women report. "Its absence can lock women in a cycle which is repeated from mother to daughter."​

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Justin Chapman is the Communications Associate at the Pacific Council on International Policy.

Want more on water? Read an interview with the Pacific Council’s Global Water Scarcity Project Fellow Rachel Cardone, and the takeaways from the Council’s 2015 National Delegation on water issues.

Learn how you can directly contribute to the Pacific Council's work on global water scarcity. Support us now.

Widespread corruption, political uncertainty, and the lack of economic reforms have created a perfect storm in Brazil, Latin American experts Christopher Sabatini and Philip Oxhorn told Pacific Council members during the first installment of the BRICS Summer Teleconference Series. The discussion was moderated by Jason Marczak, director of the Atlantic Council’s Latin America Economic Growth Initiative.

Dr. Sabatini is an adjunct professor at Columbia University and the founder and editor of LatinAmericaGoesGlobal.org. Dr. Oxhorn is a professor at McGill University, the founder of the Institute for the Study of International Development, and editor-in-chief of the Latin American Research Review.

Following up on the impeachment of former President Dilma Rousseff, reports of Rio de Janeiro being unprepared to host the upcoming Summer Olympics, the Zika virus being named an international public health emergency, and the continuing decline of Brazil’s economy, Dr. Sabatini and Dr. Oxhorn discussed whether Brazil should be considered part of a group of emerging markets such as the BRICS (Brazil, Russia, India, China, and South Africa).

Dr. Oxhorn said that he has always been skeptical of the term "BRICS."

"There was a sort of artificial creation of and fascination with the BRICS that they really didn’t deserve," agreed Dr. Sabatini. "They are wildly divergent countries in terms of their politics, world orientation, and economic models, and I think they will go their separate ways. We’ve already seen Goldman Sachs’ BRICS unit dissolve; I think that speaks volumes about the wisdom of viewing them together when even the people who coined the term ‘BRICS’ are leaving it behind."

"You’ve got an increasingly discredited interim government that really looks more and more like a throwback to the past."

- Dr. Christopher Sabatini

Dr. Sabatini said the economic situation in Brazil is getting worse. "Ten years ago it seemed like Brazil could do no harm," he remarked. "It was a new economic, diplomatic, even cultural giant globally. It looked like the sky was the limit. Then in 2014 its economy grew by only 0.1 percent. In 2015 it contracted by 3.94 percent. And now it’s expected in 2016 to contract by 3.7 percent."

Dr. Oxhorn said he tries to remain optimistic about the situation in Brazil, but finds it hard to do so because of the country’s extreme inequality.

"That feeds into the political crisis and makes it more easily understandable why you get the corruption and the economic consequences," he said.

The economic picture they painted was not all bad, however. Dr. Sabatini said foreign investors are rushing into Brazil.

"We can argue that fools rush in where angels fear to tread, but the truth is that the numbers are there," he said. “In 2014 foreign direct investment (FDI) in Brazil was $62 billion. In 2015 it was $56 billion, so it dipped. But now this year, just in the first quarter, FDI has been about $23 billion, so if it continues on this pattern it’s going to beat the past two years. There are some strengths in the Brazilian economy that will remain almost in spite of all the other distortions."

As for Brazil’s political crisis, Dr. Oxhorn said the "growing corruption crisis around Petrobras led to increases in protests, which fed into the political crisis and made it more difficult for the economy to keep growing at a decent rate. A majority of Brazilians expressed frustration, often in the streets, with the corruption and the lack of continued progress becoming a real threat in their minds to this Brazilian miracle that led to Brazil being included in the BRICS category in the first place."

He added that all political parties and up to 80 or 90 percent of politicians in Brazil have been implicated or stand accused of being directly involved in some form of corruption.

On top of those staggering numbers, Dr. Sabatini said the congress, with nearly 60 political parties, is hyper-fragmented, making necessary reforms more difficult to achieve.

Up to 80 or 90 percent of politicians in Brazil have been directly implicated or stand accused of being directly involved in some form of corruption.

"You’ve got an increasingly discredited interim government that really looks more and more like a throwback to the past," he said. "[Interim President Michel] Temer’s popularity is just about the same as Dilma’s at 10 percent."

Marczak referred to a recent Atlantic Council report called The Path to Power in Brazil that said the most likely outcome in Brazil’s 2018 presidential election is a "limited regeneration," in which candidates present themselves as new and alternative but are in fact still supported by the traditional political establishment. Marczak asked, "Are we primed for two more years of political uncertainty in Brazil? Or will things somewhat stabilize after the impeachment vote?"

Dr. Sabatini said that nothing is certain, and commented on the "very real possibility" that Rousseff may be exonerated.

"There are a number of people in congress who voted for the impeachment who have since expressed some remorse," he said. "So when the vote comes up on whether or not to find her guilty, it’s quite possible that she will be returned to office."

Listen to the full conversation below:

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Justin Chapman is the Communications Associate at the Pacific Council on International Policy.

The Pacific Council’s BRICS Summer Teleconference Series continues with discussions about Russia on August 3; India on August 17; China on August 31; and South Africa on September 14.