Could the BRICS Bank Make China More Responsible?
Below is a guest post by Isabella Bennett, assistant director of the International Institutions and Global Governance program.
Last weekend’s World Bank and International Monetary Fund (IMF) meetings took place under a flurry of questions about their new “competition:” the BRICS development bank and contingency fund. In July, the BRICS bloc (Brazil, Russia, India, China, and South Africa) established these new institutions as parallels to the World Bank and IMF.
While neither of the BRICS institutions is likely to be fully functional soon, the BRICS bank is more likely to launch in the near term, which is prompting concern that the “New Development Bank” (the BRICS bank’s official name) will undermine the World Bank’s longstanding efforts to foster good governance alongside economic development. Despite the inevitable challenges and moral conundrums of judging which countries and programs deserve financing, at least the World Bank attempts to protect human rights and the environment. With the BRICS bank, all bets are off. Or so the theory goes.
There are plenty of reasons to be cautious about the new BRICS bank. China is clearly the group’s economic powerhouse and will almost certainly wield disproportionate power over the institution’s decisions. Indeed, for precisely this reason, there was significant resistance within the other four BRICS countries to basing the bank in China. But China ultimately won the argument. The BRICS bank will be based in Shanghai. The episode suggests that, among the bank’s governors, China will be the first among equals.
And China’s investment record is far from spotless.
As Chinese activity in developing countries spanning the globe—from Myanmar to Sudan to Peru—has surged, so has criticism of Chinese investement practices. Though some of this condemnation is misleading or exaggerated, other charges are valid.
Chinese companies operating outside of China have been reported to hire primarily Chinese laborers, …read more