(L-R) India's Prime Minister Manmohan Singh, Russia's President Dmitry Medvedev, China's President Hu Jintao, Brazil's President Dilma Rousseff and South African President Jacob Zuma attend a joint news conference at the BRICS Leaders Meeting in Sanya
SANYA, China (Dow Jones)--Brazil, Russia, India, China and South Africa, collectively known as BRICS, Thursday called for greater supervision of commodity markets and international capital flows, as the countries look to boost their influence in debates about how the world's major economies should address such issues.
BRICS officials have warned that developing countries face risks from capital inflows caused by loose monetary policies in developed nations. BRICS trade officials on Wednesday said they still face economic overheating issues like inflationary pressures and asset bubbles, and agreed they need to boost coordination in the Group of 20 industrial and developing nations, and in areas like climate change negotiations, to ensure the interests of developing countries, according to Chinese Commerce Minister Chen Deming.
"We call for more attention to the risks of massive cross-border capital flows now faced by the emerging economies," the five countries said in a joint statement Thursday after their leaders met in China's southern island province of Hainan.
"Excessive volatility in commodity prices, particularly those for food and energy, poses new risks for the ongoing recovery of the world economy," the statement said. "The regulation of the derivatives market for commodities should be accordingly strengthened to prevent activities capable of destabilizing markets."
The five nations also said they support reform of the international monetary system leading to "a broad-based international reserve currency system providing stability and certainty," an apparent reference to a diminished role for the U.S. dollar as the world's primary reserve currency.
The state development banks of the five countries Thursday agreed to open credit lines in their national currencies to each other, the latest concrete step by developing nations to reduce their reliance on the U.S. dollar. The framework credit-line agreement was signed by Russia's Vnesheconombank, Brazil's Banco Nacional de Desenvolvimento Economico e Social, China Development Bank Corp., Eximbank of India, and the Development Bank of South Africa. However, details and regulations, as well as the projects eligible for such financing are yet to be defined in the framework deal.
China Development Bank plans to issue around CNY10 billion of yuan-denominated loans this year to other BRICS nations, CDB Chairman Chen Yuan said at a news briefing, adding most of these loans will fund oil and gas projects.
CDB is in talks with Brazilian state-owned Petroleo Brasileiro SA (PETR4.BR), or Petrobras, regarding further loans for the oil company, Chen said.
"Both parties expressed interest in continuing cooperation and we are in talks regarding the next step of cooperation," Chen said, without elaborating on the size of potential loans.
China and Brazil reached a $10 billion oil-for-loan deal in 2009, under which Petrobras agreed to supply crude oil to China Petrochemical Corp. for 10 years in exchange for funding from China Development Bank.
Russia's Vnesheconombank is also in talks with CDB to borrow about US$1.5 billion worth of yuan for a currency swap between the two lenders, VEB's Chief Executive Vladimir Dmitriev said on the sidelines of the summit. He added that the BRICS countries are moving towards mutually trading each others' currencies, following Russia's launch of yuan trading in Moscow at the end of 2010.
The BRICS countries also said they welcome current discussions about elevating the role of Special Drawing Rights, a kind of synthetic reserve currency created by the International Monetary Fund, and discussions on changing its composition. Including the Chinese yuan in the basket of currencies that makes up the SDR is a reform currently being considered, although this wasn't specifically referred to in the BRICS countries' statement.
The five countries' leaders--Chinese President Hu Jintao, Indian Prime Minister Manmohan Singh, Russian President Dmitry Medvedev, South African President Jacob Zuma and Brazilian President Dilma Rousseff--on Thursday also discussed expanding the BRICS grouping's membership and agreed they should all support a country before it can join, Chinese Assistant Foreign Minister Wu Hailong said at a news briefing. Wu reiterated other countries have expressed interest in joining BRICS, but didn't name any countries.
When asked if the leaders discussed the yuan's exchange rate, Wu only said the topic wasn't on the meeting's agenda. Developing countries like Brazil in recent months have begun following developed countries like the U.S. and France in expressing concerns about China's undervalued currency.
The BRICS summit Thursday was the first if its kind to include South Africa. A shared position among the BRICS members on economic issues like how to address commodity price fluctuations could boost their joint heft in talks at the G-20, an increasingly influential forum for global economic policy debate and setting.
South African Trade and Industry Minister Rob Davies on Wednesday said capital inflows from developed countries have fueled a rise in South Africa's currency, the rand, and that the BRICS countries are likely to take their concerns about currencies and global economic instability to the G-20.
The statement Thursday also said nuclear energy "will continue to be an important element in future energy mix of BRICS countries." International cooperation is needed, however, to ensure nuclear energy is developed in strict observance of relevant safety standards.
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http://online.wsj.com/article/BT-CO-20110414-704029.html
BRICS officials have warned that developing countries face risks from capital inflows caused by loose monetary policies in developed nations. BRICS trade officials on Wednesday said they still face economic overheating issues like inflationary pressures and asset bubbles, and agreed they need to boost coordination in the Group of 20 industrial and developing nations, and in areas like climate change negotiations, to ensure the interests of developing countries, according to Chinese Commerce Minister Chen Deming.
"We call for more attention to the risks of massive cross-border capital flows now faced by the emerging economies," the five countries said in a joint statement Thursday after their leaders met in China's southern island province of Hainan.
"Excessive volatility in commodity prices, particularly those for food and energy, poses new risks for the ongoing recovery of the world economy," the statement said. "The regulation of the derivatives market for commodities should be accordingly strengthened to prevent activities capable of destabilizing markets."
The five nations also said they support reform of the international monetary system leading to "a broad-based international reserve currency system providing stability and certainty," an apparent reference to a diminished role for the U.S. dollar as the world's primary reserve currency.
The state development banks of the five countries Thursday agreed to open credit lines in their national currencies to each other, the latest concrete step by developing nations to reduce their reliance on the U.S. dollar. The framework credit-line agreement was signed by Russia's Vnesheconombank, Brazil's Banco Nacional de Desenvolvimento Economico e Social, China Development Bank Corp., Eximbank of India, and the Development Bank of South Africa. However, details and regulations, as well as the projects eligible for such financing are yet to be defined in the framework deal.
China Development Bank plans to issue around CNY10 billion of yuan-denominated loans this year to other BRICS nations, CDB Chairman Chen Yuan said at a news briefing, adding most of these loans will fund oil and gas projects.
CDB is in talks with Brazilian state-owned Petroleo Brasileiro SA (PETR4.BR), or Petrobras, regarding further loans for the oil company, Chen said.
"Both parties expressed interest in continuing cooperation and we are in talks regarding the next step of cooperation," Chen said, without elaborating on the size of potential loans.
China and Brazil reached a $10 billion oil-for-loan deal in 2009, under which Petrobras agreed to supply crude oil to China Petrochemical Corp. for 10 years in exchange for funding from China Development Bank.
Russia's Vnesheconombank is also in talks with CDB to borrow about US$1.5 billion worth of yuan for a currency swap between the two lenders, VEB's Chief Executive Vladimir Dmitriev said on the sidelines of the summit. He added that the BRICS countries are moving towards mutually trading each others' currencies, following Russia's launch of yuan trading in Moscow at the end of 2010.
The BRICS countries also said they welcome current discussions about elevating the role of Special Drawing Rights, a kind of synthetic reserve currency created by the International Monetary Fund, and discussions on changing its composition. Including the Chinese yuan in the basket of currencies that makes up the SDR is a reform currently being considered, although this wasn't specifically referred to in the BRICS countries' statement.
The five countries' leaders--Chinese President Hu Jintao, Indian Prime Minister Manmohan Singh, Russian President Dmitry Medvedev, South African President Jacob Zuma and Brazilian President Dilma Rousseff--on Thursday also discussed expanding the BRICS grouping's membership and agreed they should all support a country before it can join, Chinese Assistant Foreign Minister Wu Hailong said at a news briefing. Wu reiterated other countries have expressed interest in joining BRICS, but didn't name any countries.
When asked if the leaders discussed the yuan's exchange rate, Wu only said the topic wasn't on the meeting's agenda. Developing countries like Brazil in recent months have begun following developed countries like the U.S. and France in expressing concerns about China's undervalued currency.
The BRICS summit Thursday was the first if its kind to include South Africa. A shared position among the BRICS members on economic issues like how to address commodity price fluctuations could boost their joint heft in talks at the G-20, an increasingly influential forum for global economic policy debate and setting.
South African Trade and Industry Minister Rob Davies on Wednesday said capital inflows from developed countries have fueled a rise in South Africa's currency, the rand, and that the BRICS countries are likely to take their concerns about currencies and global economic instability to the G-20.
The statement Thursday also said nuclear energy "will continue to be an important element in future energy mix of BRICS countries." International cooperation is needed, however, to ensure nuclear energy is developed in strict observance of relevant safety standards.
Read More
http://online.wsj.com/article/BT-CO-20110414-704029.html
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