BRICS to rebuild confidence

China's foreign ministry Wednesday expressed hope that progress could be made on the establishment of a development bank and foreign exchange reserve pool at next week's BRICS summit, as confidence in the emerging economies' momentum declines given their slowing growth.

Leaders from the BRICS, which groups Brazil, Russia, India, China and South Africa, will meet in Durban, South Africa next Tuesday and Wednesday.

The summit will be the first multilateral meeting attended by Xi Jinping, who was elected Chinese president last week, underscoring the importance attached to China's relations with emerging economies.

South Africa, the host of the summit, prioritized the establishment of a BRICS development bank, contingent reserve arrangement, business council and think tank council in preparation for the meeting.

The idea of creating a development bank first came up at last year's BRICS summit in New Delhi.

Ma Zhaoxu, China's assistant foreign minister, told a press briefing Wednesday that details including the scale, functions, structure and location of the bank will be discussed at the summit, and that progress is expected, according to the Xinhua News Agency.

"As an important part of financial cooperation, the bank will help BRICS sustain financial risks and provide support for the development of African countries," he said.

Regarding the bank as "essential," Wang Yizhou, a deputy dean of the School of International Studies at Peking University, told the Global Times that the five countries have enough funds to launch the program but lack experience, and need to work out rules and policy orientations for the bank.

The role of the development bank has been interpreted by some as a competitor to the Western-dominated World Bank, which sometimes attaches conditions regarding politics or human rights to loans.

Wang noted that the functions of the new bank may overlap with those of the World Bank, but it would be a supplement rather than an alternative to the World Bank.

It is also expected that the bloc will make progress in establishing a foreign exchange reserve pool aimed at forming a capital security network among the members. The scale and respective shares of each country are being deliberated and will be discussed at the summit, Xinhua quoted Ma as saying.

The summit comes at a time when investor interest in the bloc is declining, and some have asked whether the emerging economies have lost their momentum.

According to Bloomberg, the term BRICS appeared in the fewest news stories in January since November 2008.

Li Xiangyang, an economist and director of the Institute of Asia-Pacific Studies under the Chinese Academy of Social Sciences, told the Global Times that the bloc was an engine for the world recovery following the financial crisis in 2008, and played a significant role in coordinating macroeconomic policies and reforms to the international financial system.

However, as developed economies gradually recovered, they had disputes with BRICS nations over macroeconomic policies following the G20 summit in late 2010, leading to a diminished role played by the BRICS nations, said Li.

"The developed economies are boosting cooperation, such as talks on the US-Europe FTA. It implies an attempt to reshape the global economic system without consulting the BRICS," Li cautioned.

Worries about the bloc also came as they are said to have passed a turning point in their development stage, which saw slowed growths.

GDP growth in China slowed to 7.8 percent last year compared with a growth of 9.2 percent in 2011, while India's growth slowed to 5.6 percent, South Africa's to 2.3 percent, and Russia's to 3.6 percent. The growth of Brazil even fell below 1.3 percent, which is the average growth rate of developed economies.

Despite some pessimism toward the bloc, Bank of America Merrill Lynch last month forecast that this year the BRICS will be "back" as concern over China's political transition, Indian currency weakness and currency appreciation in Brazil wane, Bloomberg reported.