Global Policy Forum

By Julio Godoy

The five strongest developing countries -- Brazil, China, India, Mexico, and South Africa -- will have a place at the Group of Eight summit of the richest countries Jun. 6-8 in Heiligendamm, Germany, both as partners and as competitors of the industrialised world. The G8 (Britain, Canada, France, Germany, Italy, Japan, Russia, and United States) became partners out of necessity during the economic crisis of the 1970s. Now, the developing world's "G5" has demonstrated that their growing economic and political clout in the global balance of power can no longer be ignored.

As global businesses from these developing countries expand, they have emerged as competitors to the G8, even fighting for access to natural resources and to profit from trade and industry opportunities. Further, China and India -- due to their rapid economic growth and skyrocketing energy consumption coupled with inefficient use of energy resources -- have rapidly emerged among the world's worst polluters, especially as emitters of carbon dioxide and other greenhouse gases (GHG) responsible for global warming and climate change.

Take China: In 2004, with 4.7 billion metric tonnes of GHG emissions, the country was already the second largest emitter, after the United States. Estimates suggest that China will overtake the U.S. in 2008. India is still a long way away from reaching these levels, but, nonetheless, it emitted 1.1 billion tonnes of GHG in 2004, some 300 million more than Germany. The Indian trend shows a worrying upward spiral.

Until 2012, both countries, as developing economies, are not obliged to comply with the Kyoto Protocol directive of the United Nations Framework Convention on Climate Change to reduce GHG emissions. But, with the Protocol ending in 2012, and a new global agreement needed to curb emissions, China and India are under pressure to adopt cleaner energy resources. This was obvious at the eighth Asia-Europe meeting (ASEM) in the German port city of Hamburg on May 29, where the European Union demanded that both countries reduce emissions. The Chinese and the Indian delegates fought off the pressure.

India's foreign minister Pranab Mukherjee warned in Hamburg that "attempts to secure uncompensated GHG abatement commitments from developing countries is not the way forward." He instead pressed for "a constructive response recognising common but differentiated responsibilities for the developed and developing countries." Mukherjee also argued that "the mitigation (of GHG) regime must not reduce the prospects for economic growth and poverty alleviation" in developing countries. However, a successor to the Kyoto Protocol is unavoidable. China and India will have to be involved in the next round of negotiations slated to be held in Bali, Indonesia, in December. Meanwhile, at Heiligendamm, discussion on an international environmental protection policy will be high on the agenda.

Barring China, the other four developing countries invited to participate at the June meeting are also outspoken members of the G20, which emerged during the failed World Trade Organisation ministerial conference at Cancun, Mexico, in 2003. The talks collapsed over their demand, so far unfulfilled, that the EU and United States must reduce subsidies to farmers. At Heiligendamm, they will be both competitors, and partners, offering investment opportunities, and their potentially huge markets to the G8.

The G8, particularly the United States, is uneasy about Asia's growing investment, trade and financial ties with Africa. During the first half of this decade, trade between Africa and China has doubled to reach 120 billion dollars. China has become Africa's third largest trading partner, with bilateral trade amounting to 55.5 billion dollars in 2006.

This growth in China-Africa trade is expected to continue, and to reach 100 billion dollars by 2020. Chinese investments in that continent also grew in 2006, and reached 11.7 billion dollars, while contract labour service from China to Africa has surged to 9.5 billion dollars. Additionally, Beijing has extended preferential loans worth billions to Africa. Debts for some 1.4 billion dollars have been cancelled with 11 countries, and additional debts of over one billion dollars with another 22 countries are to be deleted in 2007. China was also launching an Africa Development Fund worth five billion U.S. dollars by 2009 to support Africa's development.

At a May 19 summit preparatory meeting of the G8 finance ministers, in Potsdam, near Berlin, the delegates issued a joint declaration, in which they expressed their support for "the development of a 'charter for responsible lending' and seek to involve other interested parties, including the G20."

Although China was not explicitly mentioned in the communiqué, it was obvious that the call for "responsible lending" was addressed to Beijing. China is also a leading member of the G20. Piqued European leaders have responded to China's economic expansion by raising questions about its human rights, environmental, labour, and other democracy issues in investments in Africa. But Beijing has been unruffled.

Axel Berkofsky, a political analyst at the Brussels-based European Policy Centre, observed: "China's political leaders are surprisingly transparent and up-front about their global political and economic ambitions and seem to care very little about international criticism accusing Beijing of conducting 'value-free' economic and energy diplomacy toward energy-rich dictatorships in... Africa."

In a paper for the Organisation for Economic Cooperation and Development (OECD), economists Andrea Goldstein, Nicolas Pinaud and Helmut Reisen concluded in May 2006 that as a result of Chinese and Indian investment and trade in Africa, "Sub-Saharan commodity producers benefited from a higher global demand for their exports and from improved terms of trade." "This fuelled growth performances in sub-Saharan Africa over the period 2001-2004 (4.2 percent on yearly average) compared to the period 1996-2000 (3.3 percent)," the authors said. "China's and India's growing demand for commodities turns them into major outlets for African commodities, helping to diversify Africa's export destinations," they added.

"Sub-Saharan Africa's imports from China (and to a lesser extent India) have also grown fast, benefiting urban consumers (who gain from cheaper consumer goods) and enterprises (which can source cheaper capital goods)."