BRICS digital economy cooperation should rise above obstacles to gain new ground

China Daily

The 15th BRICS summit is scheduled to take place in South Africa on Aug 22 to 24, with the theme “BRICS and Africa: Partnership for Mutually Accelerated Growth, Sustainable Development and Inclusive Multilateralism”. The upcoming summit will push the global agenda to refocus on development issues and prompt the international community to return to genuine multilateralism. The summit will also officially begin the BRICS membership expansion process and create new opportunities for cooperation in the digital economy among the BRICS members.

The BRICS cooperation is characterized by dialogue on an equal footing, mutual benefits and win-win results, inclusiveness and mutual learning, and common development. The BRICS cooperation is not targeted at any third party, but rather, focuses on mutually beneficial cooperation in the economic area. The five BRICS members are all emerging and developing economies and non-Western major countries. They all want to reform the existing international order, which is neither fair nor reasonable, safeguard the interests of developing countries, and promote world peace and development.

Currently, the BRICS members have vastly different economic development levels, policy priorities and strategic focuses, but they also have convergence of interests and need each other in many areas. Therefore, they should find a way out of the stalemate of “multiple initiatives and implementation challenges”. They should invest substantial resources in areas of common concern, such as infrastructure, technological research and development, and industrial transformation, to create sample projects for practical cooperation, based on which new breakthroughs could be made in elevating the overall cooperation level. The digital economy is a prime area in which they can bolster their cooperation.

After more than 10 years of development, the BRICS members have already made significant strides in cooperation in the digital economy. For instance, China’s e-commerce business AliExpress currently accounts for 25.8 percent of Russia’s e-commerce market; Russia’s largest e-commerce business Ozon is working closely with China Post to jointly build a China-Russia cross-border e-commerce logistics network.

Bilateral investment cooperation has been expanding as well. Since 2021, China and Russia have signed a memorandum of understanding on investment cooperation in the digital economy and pushed for the implementation of a number of projects including the Sino-Russian Research Center for the Digital Economy, among others. Furthermore, the BRICS members are going all out to advance cooperation in infrastructure construction, industry and supply chains, technological research and development, small- and medium-sized enterprises and digital finance.

Once an international cooperative mechanism takes shape, it will continuously push forward cooperation. To date, the cooperative mechanisms among the BRICS members have been established, with a good start for cooperation in all areas. This will produce an “accumulative effect” and a “spillover effect” for the BRICS cooperation and create new room for cooperation.

The five BRICS members have fast-growing digital economies and huge market potential, providing ample room for further cooperation in the digital economy. The BRICS members collectively account for a considerable share of global GDP and the world’s population. Together, the BRICS countries comprise more than 40 percent of the world’s internet users and have abundant digital resources. In 2022 alone, China’s data output and data storage capacity reached 8.1 zettabytes and 724.5 exabytes respectively, accounting for 10.5 percent and 14.4 percent respectively of the global total. Moreover, the membership expansion process has opened new room for the BRICS cooperation in the digital economy.

However, the BRICS cooperation in the digital economy is still in the primary stage. Currently, on average, the digital economy accounts for around 44 percent of the global GDP, with digital trade accounting for 64 percent and 13 percent respectively of the global goods trade and services trade. The BRICS members fall short of the global average in all these indicators.

Cooperation in the digital economy among developed nations such as the United States and European countries has evolved from “first-generation” cooperation, such as in the internet and e-commerce, to “second-generation” cooperation, such as in artificial intelligence, big data, cloud computing, the internet of things, open source and digital security. In comparison, the BRICS cooperation in the digital economy has yet to rise above the “first-generation” policy cooperation. They even have disparities over e-commerce rules such as paperless customs clearance, electronic billing, and mutual authentication of e-payments, among other things.

The different development strategies, governance concepts, policy focuses and opening-up levels in the digital economy of the various BRICS members have become a significant obstacle to their cooperation. In particular, in recent years, India has been advocating “India first” and “data localization”, in the face of the rising nationalist sentiments domestically. The nation even cracks down on Chinese digital companies based in India and Chinese digital products without any bottom lines, which wreaks havoc on the BRICS cooperation in the digital economy.

Compared with other areas for cooperation such as trade and investment, the digital economy is more sensitive as it concerns a nation’s development and security interests. Over the past few years, with the rapid increase of China’s comprehensive national strength, certain BRICS members have become more suspicious of China. Moreover, the US-led West has been going all out to court some of the BRICS members and consequently increased divisions within the bloc. In particular, to counter the growing influence of China, India has been noticeably stepping up efforts to court the US-led West, which is detrimental to the solidarity of the BRICS.

That said, the aforementioned obstacles and constraints are neither uncontrollable nor overwhelming. Compared with the G7, the BRICS is a relatively young and a new type of international organization. It’s quite normal for such a new organization to have some growing pains. The BRICS members should face up to the difficulties, adopt corresponding measures to play to their strengths, and promote the steady, sound growth of the BRICS cooperation in the digital economy.

In the face of a decline in political mutual trust, the BRICS members should display greater political courage, resolve and wisdom, rise above challenges brought by populism and nationalism, seek common ground while shelving differences, and dilute and resolve differences through cooperation in the digital economy, so as to break the vicious cycle of “conflict — decline in mutual trust — deepened conflict”.

The author is a researcher and the director of the Center for BRICS and G20 Studies at the China Institutes of Contemporary International Relations. The author contributed this article to China Watch, a think tank powered by China Daily.