The progress of BRICS (Brazil, Russia, India, China, and South Africa) member states’ goals has become increasingly significant, and it seems that the members of this team are on the right path in the global economic struggle, successfully advancing. Their performance has been remarkable, and they have made notable strides toward de-dollarization. This issue serves as a clear warning to the West, particularly the United States, which we will explore in detail here.
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The content collected in this article is sourced from the Think BRICS YouTube channel under the title: “BRICS Dismantled America’s Economic Domination.”
Definition of BRICS
BRICS is the name of a group of countries led by emerging economic powers, and its name is derived from the initials of these countries in English: Brazil, Russia, India, China, and South Africa. Initially, in 2006, this group was called BRIC, but after South Africa joined, it was renamed BRICS. As of January 1, 2024, six additional countries—Argentina, Ethiopia, the United Arab Emirates, Iran, Saudi Arabia, and Egypt—joined this group.
It is noteworthy that 17 other countries, including Algeria, Indonesia, Palestine, Thailand, and Venezuela, have officially applied to join BRICS. Another 15 countries, such as Malaysia, Pakistan, Syria, and Sudan, are recognized as interested in joining BRICS.
The Pivotal Changes of BRICS in the Global Economy
To date, BRICS’ performance has yielded remarkable results. The widespread impact of the de-dollarization policy pursued by BRICS members has been so significant that even Donald Trump reacted during his election campaign, threatening countries seeking to abandon the dollar with a 100% tariff on their goods. This shows that Western economic advisors have fully grasped the potential risks of this movement and have warned U.S. politicians about it.
BRICS is effectively changing the trajectory of the global economy, which had been forcibly moving in a certain direction for years. The powerful actions of BRICS are redefining trade and financial dealings worldwide.
One of the most controversial aspects of this major change is the use of local currencies for trade among member countries. This development goes beyond a simple step toward achieving an independent economy; in practice, it breaks the longstanding dominance of the dollar.
A Revolution in Global Agricultural Trade
BRICS countries are outpacing their Western trade partners, especially in the agricultural sector. Since the main approach of BRICS members is to combat the dominance of the U.S. dollar, the future will inevitably shift in favor of BRICS.
The United States had long been recognized as a key player in the global economy. American farmers supplied vast regions around the world, and their export volumes exceeded their imports. However, today, the situation is changing. The seeds of this transformation are sprouting in Brazil, Russia, China, and India.
Since 2019, the world has witnessed a major shift: a decline in U.S. foreign agricultural trade. According to the American Farm Bureau Federation, U.S. exports traditionally surpassed imports. Yet, around five years ago, this indicator converged with import volumes. Currently, imports have surpassed exports in the U.S., marking a significant divergence.
This is not a temporary event but a critical turning point in agricultural trade, as BRICS countries break the longstanding dominance of the U.S. in this sector.
China: The Supply and Demand Powerhouse of the East
China, once a major importer of agricultural products, now stands at the heart of this change. The country has permanently canceled vast orders from the U.S. and Australia, delivering a massive shock to the global wheat market. Notable cancellations include 240,000 tons and 264,000 tons of soft red wheat from the U.S., along with 1 million tons from Australia—some of the largest cancellations in wheat trade history.
However, what lies behind this phenomenon is even more intriguing. Bloomberg, known for its sourcing of such statistics, failed to identify where the canceled 1.5 million tons of wheat orders were redirected. This lack of transparency is one of the outcomes of the BRICS trading system, which operates outside traditional Western-dominated channels.
These developments are poised to significantly affect the U.S. and Western farmers. Without clear insight into global demand and supply trends, farmers face immense challenges in deciding planting volumes at the start of each growing season.
This lack of clarity about supply and demand leads to overproduction in some regions and underproduction in others, disrupting the balance of global food markets.
Following this disruption of balance, corn and soybean prices in the U.S. dropped by 30% last year. Typically, when such a price drop occurs, global demand increases; however, this time, it didn’t happen. Instead, countries like China have increasingly turned to BRICS nations such as Brazil for their agricultural needs. This shift in trend has also changed the outlook for global economic growth.
BRICS nations, by replacing the payment system with alternative solutions, are effectively exerting pressure on the dominance of the U.S. dollar, and China, as one of the economic powerhouses of this group, has taken significant steps in this direction.
Will A Multipolar Economy Replace The Dollar?
Recent data on international monetary policy indicates that over 50% of China’s transactions, previously conducted in U.S. dollars, are now settled in Chinese yuan. Meanwhile, Brazil and Russia have agreed to trade in their national currencies, a policy that India is also expected to adopt.
All these measures are part of a larger plan to create a multipolar global economy with less dependency on U.S. financial policies. The growing number of BRICS members and applicants speaks volumes. The group’s membership now surpasses that of the Group of Seven (G7), a major intergovernmental organization comprising Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States, along with the European Union.
China Surpasses the U.S. in GDP
(Purchasing Power Parity)
China’s GDP (Purchasing Power Parity) is accelerating rapidly, surpassing the U.S. with a GDP of $35 trillion compared to the U.S.’s $28.8 trillion. India has claimed the third position in these statistics.
This economic revolution, which began just two decades ago, has had a significant impact on global economies. China’s transaction volume, which serves as one of the main pillars of this revolution, exceeds that of all other countries, including the U.S.
BRICS’ Impact on Global Economic Infrastructure
BRICS member countries have also introduced a new approach to global economic infrastructure. The New Development Bank, formerly known as the BRICS Bank, has added the national currencies of BRICS members to its list of supported currencies instead of relying on the U.S. dollar. This bank operates independently of traditional Western financial institutions and serves as an alternative payment system outside the SWIFT network.
This new system enables countries to trade without requiring dollar mediation. Clearly, the West, especially the U.S., will not sit idly by and allow such competition to arise.
Donald Trump has proposed penalties, such as imposing 100% tariffs on goods from countries moving away from the dollar. However, these measures, in practice, only accelerate the de-dollarization trend, especially in agriculture, a sector with many producers worldwide and less dependence on the U.S.
Many believe China aims to establish its yuan as the global reserve currency. As long as the U.S. benefits from the dollar’s status as a reserve currency, it will face trade deficits and deindustrialization. Meanwhile, China and its partners are striving to create a financial system that enables international trade and investment using diverse currencies, including agricultural commodities.
Time for Historic Changes
The policy of using diverse currencies benefits not only BRICS members but also countries outside the group. Saudi Arabia, for instance, is considering using the Chinese yuan in oil transactions with China, as this move is highly favorable for its agricultural trade.
Furthermore, China is reducing its dollar reserves and increasing its gold purchases for its national reserves. China’s massive gold purchases have drawn reactions, with JP Morgan noting in a recent report that the world will likely witness a historic separation of financial and economic domains. This separation will lead to the use of various countries’ currencies in global trade, decentralizing the global economy and transforming everything from trade to geopolitics.
The West’s Urgent Need for the Dollar
These developments pose significant challenges for the West, especially the U.S., which relies on dollar dominance to sustain its large deficits. Weakening this system threatens the dominance of the Western economy, making it harder to influence food pricing globally.
BRICS challenges traditional development models by diverging from Washington’s policies. The far-reaching effects of this revolution inspire many other countries to improve their agricultural industries and enhance their food security. This highlights the potential for other nations to experience even greater growth while the West faces slower growth and, in some cases, declining production.
BRICS nations are experiencing robust economic expansion. For example, India has targeted a 6% annual economic growth rate in its five-year plan to secure its position as the world’s third-largest economy. China, meanwhile, is surpassing many of the world’s major economic powers. This trend is reshaping the structure of the global economy. Turkey and Mexico’s GDPs now exceed Italy’s; similarly, Indonesia has outpaced the UK and France.
These figures are not coincidental but a clear sign of historical changes in the global economy. More intriguingly, this trend is redefining how global trade and financial systems operate, forcing policymakers and people worldwide to adapt to the changes BRICS is driving.
Final Words
We are heading toward an incredibly complex economic outlook. It remains uncertain whether these changes will lead to greater balance in the global economy or heightened tensions. As BRICS grows, Western nations are also rewriting the rules of the game for everyone. However, what is clear is that the West is losing its dominance. To ensure favorable outcomes, we must employ various national currency systems and adapt BRICS systems to ever-changing trade models.
