Grandstanding in Hainan

On the southern island of Hainan in China, India could have helped redefine the world's existing economic order in light of the view expressed by the Chinese President Jintao, that “the world economy is undergoing profound and complex changes”. The idea of dialogue and cooperation is invariably a part of every summit of countries gathering to confabulate but most of the time nothing much comes out of the event. At Hainan, more than mutual trade modalities the BRICS members ought to have discussed, in more detail than they did, their relationship with the rest of the world that is undergoing those “complex changes.”

At this point in the world economy's evolution, dealing with those changes means finding the right position vis-à-vis the US and the European zone that are the major consumers of emerging market exports. Both have been, and will remain, the dominant trading partners in a world trading system built on multilateral trading. But that is the dilemma: can that multilateral world continue to exist with every grouping determined to limit the baneful influence of imports on domestic industries? It may not if protectionism gains the upper hand, in the event of which the emerging countries may face the prospect of a challenge in the western markets; the World Trade Organisation is bleating about the lack of consensus on negotiations on the Doha Round and the developing world knows its voice is not heard. This means that the BRICS meet in China ought to have determined just how, as a lobby, it could manoeuvre its members and the rest of the developing world into a multilateral trading system and a smoother financial order favourable to the comparative advantages of its members. Condemning commodity derivatives is one thing but it is rhetorical: achieving a revamp of the world monetary system is quite another and is imperative; the BRICS members can cavil endlessly about the inequity in the world financial management system but unless they get to have some say — in the management of the IMF, for instance — the western economies will prevail. At Hainan, India had the opportunity to offer ways of regulating financial systems. After all, it has been quite successful in staving off the worst effects of the financial meltdown; and for the European countries now facing a contagion of the debt crisis, India continues to offer some remedial lessons. But this would have meant a more proactive BRICS summit, and that it was not.

India may not want to admit it but the BRIC summit offered it a unique advantage to grandstand, in the best sense of the word; it has policies that have warded off crisis; its calibrated liberalisation works wonderfully in allowing individual initiative while permitting oversight and, most of all, its growth is a morality tale to inspire the world. India should have, but did not, seize the day in China.

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