Why China invited SA to join BRIC

(L-R) Russia's President Dmitri Medvedev, Brazilian President Luiz Inacio Lula da Silva, China's President Hu Jintao and India's Prime Minister Manmohan Singh pose for a photo of the II BRIC Summit at Itamaraty Palace in Brasilia, on April 15, 2010. The BRIC nations -- Brazil, Russia, India and China -- together account for 40 percent of the world's population, 16 percent of global economic output and 50 percent of global growth, underlining their clout.

(L-R) Russia's President Dmitri Medvedev, Brazilian President Luiz Inacio Lula da Silva, China's President Hu Jintao and India's Prime Minister Manmohan Singh pose for a photo of the II BRIC Summit at Itamaraty Palace in Brasilia, on April 15, 2010. The BRIC nations -- Brazil, Russia, India and China -- together account for 40 percent of the world's population, 16 percent of global economic output and 50 percent of global growth, underlining their clout.

Published Jan 27, 2011

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Access to the resource-rich Southern African Development Community (SADC) region is one of the main reasons behind China's invitation to SA to join the BRIC (Brazil, Russia, India and China) group of countries.

This is according to independent economic analyst Roelof Botha, who spoke at the release of the MasterCard Consumer Confidence Index on Thursday.

Botha says SADC is destined to become a region like the European Union, sharing a single currency.

“This is a nifty little market,” Botha said of SADC.

Russian President Dmitry Medvedev confirmed SA's membership of BRIC during his opening speech at the World Economic Forum in Davos, Switzerland, on Wednesday.

China announced SA's invitation to the group of the fastest-growing economies in the world during late 2010.

“Hopefully the membership of BRIC will allow us to put a little bit of pressure on the Chinese. [We have a] 25 billion rand trade deficit with China,” Botha notes.

On SA, Botha says certain growth drivers will ensure that consumer confidence recovers in 2011 and 2012. The identified growth drivers include low interest rates, higher levels of formal-sector employment creation and a gradual correction in an overvalued currency.

“The rand is grossly overvalued and our manufacturing sectors are taking a beating. The rand is overvalued by about 20%,” Botha said.

Positive wealth effects are also expected to boost consumer confidence this and next year. - I-Net Bridge

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