Leaders of the top emerging economic powers meeting in China yesterday warned that volatile commodity prices posed risks for the global recovery and voiced fears about capital inflows.
Inflation has been rising on higher food, energy and metal prices because of Japan’s nuclear disaster and the Libya conflict, while investors worried about the global outlook have poured money into fast-growing emerging economies.
“Excessive volatility in commodity prices, particularly those for food and energy, poses new risks for the ongoing recovery of the world economy,” Brazil, Russia, India, China and South Africa (BRICS) said in a joint summit communique.
Russian President Dmitry -Medvedev, Chinese President Hu Jintao (胡錦濤), Brazilian President Dilma Rousseff, South African President Jacob Zuma and Indian Prime Minister Manmohan Singh gathered for the talks yesterday on Hainan.
It marked the third annual meeting for the leaders of the four original BRIC nations, and the first in an expanded format that included South Africa, which was invited to join the bloc late last year.
Together, the five countries represent more than 40 percent of the world’s population, and their combined GDP accounted for 18 percent of the global total last year, according to the IMF.
They said emerging economies were threatened by “massive” capital flows that have been blamed for pushing up their currency values.
The leaders meanwhile welcomed discussion about the role of the IMF’s international reserve asset, noting the global crisis had exposed the “inadequacies and deficiencies” of the current monetary and financial system.
“We support the reform and improvement of the international monetary system, with a broad-based international reserve currency system providing stability and certainty,” the statement said.
The BRICS state development banks also agreed to open credit lines in their national currencies, Russia’s state development bank Vnesheconombank said in a separate statement, which would reduce their reliance on the US dollar.
China Development Bank (國家開發銀行), which just signed a local currency credit deal with its BRICS counterparts, is ready to pump up to 10 billion yuan (US$1.5 billion) in loans into Brazil, Russia, India and South Africa, the bank’s governor said.
Chen Yuan (陳元), the bank’s head, said the yuan loans would focus on big projects in oil, natural gas and infrastructure fields. He told a press conference that the bank aims to deepen cooperation with Brazilian state-run oil company Petrobras following the existing US$10 billion loan arrangements.
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