Trade in services key to BRICS ties

Trade in services and related investments will receive priority and help in cementing business relations among BRICS countries, senior commerce ministry officials said.

Their comments followed calls by the trade ministers of Brazil, Russia, India, China and South Africa in Shanghai early last month to enhance trade in services and intra-BRICS investment.

With trade and investment in services becoming new drivers for global economic growth, BRICS countries will intensify cooperation in information exchange, manufacturing capacity building and coordination within the group, as well as undertake practical measures in priority fields, such as tourism, education and healthcare services, said Zhang Shaogang, director-general of the Department of International Trade and Economic Affairs in the Ministry of Commerce.

BRICS countries accounted for 23 percent of global GDP in 2016, 16 percent of global trade, 16 percent of total foreign investment and 12 percent of outbound investment, while trade among them was worth $300 billion, data from the Ministry of Commerce show.

Outbound direct investment, or ODI, from BRICS countries totaled $197 billion in 2016, but intra-BRICS investment accounted for only 6 percent of the world's total, Zhang said, implying there is great potential yet to be tapped.

"Services trade can offer BRICS countries opportunities to balance their trade structure and investment options. It will also push forward the development of China's services sector and ongoing supply-side structural reform," Zhang said.

Eager to restore their earning ability, China and Brazil signed a memorandum of understanding in August to diversify services trade to upgrade their commerce structure from commodity and goods exchanges.

The MoU, or a two-year action plan, is designed to encourage the two countries to improve services trade in eight areas, including engineering, architecture, e-commerce, banking automation and tourism, to enrich bilateral trade ties over the next two years.

Hu Yingzhi, deputy negotiation commissioner at the Department of World Trade Organization in the Ministry of Commerce, said China also will further open up its market to other BRICS countries and stimulate goods imports, as they are highly complementary in trade.

"For instance, agricultural commodities from Brazil, medical products from India, energy products from Russia and wine from South Africa enjoy high demand in China," said Hu.

China imported $70 billion worth of goods from other BRICS members in the first half of this year, up 33 percent year-on-year, according to the General Administration of Customs.

"However, there are challenges confronting BRICS countries, such as weak external demand as the world economy remains in a period of recovery and deep adjustment," said Wang Lei, director of the Research Institute for BRICS Economies at Beijing Normal University.

The business environment in BRICS countries needs to be improved, given policy restrictions in areas such as market access, taxation and visa issuance, according to the 2017 BRICS Sustainable Development Report published by the China Development Bank's Financial Research and Development Center.