하나은행 하나금융연구소

Which side is more beneficial for China, G2 or BRICs?

Recently, as terms such as "G2 World," "Chimerica" are emerging, the arise of Chinapower and the possibility of G2 replacing G7 or G20 are become the debate point. At the same time after the first BRICs Summit in June, possibility of China arise as an opposing power to US by developing alliance with the emerging market are becoming to attract interests.

As trades and investments between China and the U.S. increase, conflicts such as currency problems, trade disputes, global unbalance are upgrading. However, The economic interdependence on each other is getting higher as the U.S becomes to be China’s largest export destination and China becomes to be U.S.’s largest creditor.

After the financial crisis, a large amount of the U.S. treasury bonds that China currently
holds, strengthened their interdependence even more. While both realized that the opponent country‘s recovery plays an important role in domestic economic recovery, U.S’s attitude towards the China has changed rapidly, placing China in an obscure spot.

For China, the trading volume with BRICs is relatively small since the BRICs countries have the small domestic markets. Also China will have to face these countries as the exports competitors and even on the international reserve currency issue China and BRICs countries are also showing different attitude. In short-term, China cannot see much economic benefit from the relationship with BRICs.

Due to the regional, economical, political factors, it seems unlikely BRICs to develop to be a economic or political alliance. Although China will try to strengthen the relationship with BRICs, it will utilize the "alliance" only in a symbolic manner.

on the other side, with the economic benefits resulting from the relationship with the
U.S., China’s foreign strategy will lean heavily towards the U.S. However, considering the international community responsibility and diplomatic principles, China will likely maintain the cautious attitude towards G2.