Banks in India are required to provide 40% of their net credit to other sectors like agriculture, retail trade, small scale industries and business.Net assets of the banking sector are held by private banks which holds 18.2%, 75% by public sector banks while the 6.5% are held by foreign banks.
China is the largest economic powerhouse of the BRIC countries by both population wise and GDP. It had an estimated foreign reserve of about $2 trillion in 2009. China has become a destination of choice to many multinationals keen to establishing a firm and solid manufacturing base for global competition. The economywatch (2010) describes that China's agricultural sector is driven by a sharp rise in the procurement and semi-privatization of agriculture. In 2010, the agriculture sector accounted for 10.9% of the total GDP while 48.6% and 40.5% came from industry and service sectors respectively.
China's total population totals to 1.341 billion. 39.5% of this population is employed in agriculture, 27.2% in the industry and 33.2% in the service sector. China ranks first in production of cotton, tobacco and red meat. Other products include oilseeds, silk, tea, ramie, jute, hemp, sugarcane and sugar beets.
According to the UN World Food Program, China fed 20% of the world's population with only 7% of the word's arable land. (Bureau of East Asian and Pacific Affairs, 2011). China is the most important market for U.S. markets and in 2010 exports to china reached an all time high of $91.9 billion with agricultural exports totalling to $17.9 billion. Agriculture alone contributes to about 10.3% of China's as recorded in 2009.
In the industrial sector contributes about 46.8% of the China's GDP with major industries concentrated in the mining and processing of ore, steel, aluminium, machinery, textile textiles and apparel; armaments; cement; chemicals; fertilizers; consumer products including footwear, toys, and electronics; automobiles and other transportation equipment including rail cars and locomotives, ships, and aircraft; telecommunications equipment; commercial space launch vehicles; and satellites.
According to the Bureau of East Asian and Pacific Affairs report (2011), China overtook Japan to become the world's second-largest economy in terms of gross domestic product in 2010 just behind U.S. In the same year, China's economy was $5.88 trillion over one third the size of the U.S. economy.
China is also a net exporter of oil. Her rich coal deposits are important sources of energy which makes up about 71%. The International Energy Agency estimates that China will contribute to 36% to the projected growth in the energy use with its demand rising by 75% between 2008 and 2035. This is because China's electricity is expected to rise to 10,555 billion kilowatt hour by 2035.
Export trade is a major driver of China's economic growth. For this reason, China has embarked on economic reform policies to foster rapid development and attract Foreign Direct Investments.Once the government introduced legislations and regulations that are designed to encourage foreign investment. This has made china one of the leading FDI recipients in the world, receiving a record of $105.7 billion in 2010 as recorded by the Chinese Ministry of Commerce. More so, the chinese government to the establishment of a social safety net, reduction of income gap between the rich and the poor and protection of the environment including other strategies of privatizing un profitable state owned enterprises. The government has also reduced bureaucracy aiming to attract the presence of more FDI in the country.
Reasons why BRIC countries are growing in importance.
BRICs are the fastest growing and largest emerging market economies.As the U.S. maintains its superpower, its facing an increasing challenge from the BRICs countries whose powers and economic might have become influential in decision making of global matters. The BRIC countries offer an environment that is attracting multinationals to heavily invest in them. Their growing importance comes from the fact that these countries are expected to become major economic players by 2030 all around the globe making the current economic giants unable to compete with BRICs. This shift in economic power will also be accompanied with realignment of political power.(globalization report,2011).
South Africa joined BRIC membership in December 2010 and South Africa hopes to use the influence of BRIC powers to steer growth and development in the whole of Africa (Badasie,2011). According to IMF report, BRIC countries recorded a combined GDP of R. 18 trillion in December 2010.
China and India has continued to cement ties with Africa through establishment of investments in different parts of Africa through trade and economic cooperation.(Makwiramiti,2011).China in particular has invested across African continent to secure access to natural resource needed to sustain its rapid economic growth and they while maintaining a bilateral agreement with African countries to help build infrastructure such as roads, power plants, telecom system, industries, hospitals and schools thus a mutual friendship.
The four BRIC countries have a great potential of a new economic club of their own even without the presence of U.S., France, Germany, Italy, Japan, United Kingdom, economic giants of the world currently. The U.S. has tried to push G20 powers to BRICs to join the rich man's club. This is because BRICs poses a great economic threat to existence of the rich man's club that characterised by individual selfish interests in the global trade.(economist,2010)
The prediction that 93% of the global middle class will come from the emerging markets by 2030, has accelerated the growing importance of the BRICs. All roads will lead to BRIC countries instead of Washighton as other institutional investors based in developed markets will be eyeing BRICs markets which as a group has much lower volatility than individual markets.(Karz,2010).
BRICs significance to the world economy is undisputed. The original four are among the largest accumulators of reserves accounting for 40% of the world's total. China is the largest among the four with $2.4 trillion which can buy NASDAQ quoted companies and is the second largest creditor after Japan. If BRICs can set aside only 1/6 of their reserves, they have the potential to create a fund the size that of IMF.
Another growing importance of the BRICS is that they are expected to change the global economic order and their economic performance. When this happens, a shift in the global economic power is expected to change drastically from the developed countries to the developing emerging countries. The shift in economic power will also be accompanied by realignment of political power meaning that BRIC countries will continue to act as powerful engines for global economic growth.(Makwiramiti,2011).
In conclusion, the BRICS bilateral relationship is meant to increase south-south ties but they seem not to cooperate on issues like energy policy, and they are wary of each other's leadrship in global market. This tendency may delay them from achieving a common goal of becoming the next economic powerhouses in the world.
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