Shrewd Japanese financial diplomacy: sidestep Americans and the G7 and focus on emerging BRIC Alliance (Brazil, Russia, India, China)
Priya Laskar, Special Correspondent
February 01, 2005

China, whose economy expanded 9.5 percent in 2004, became Japan's biggest trading partner the same year, replacing the United States for the first time. India has also expanded economic relations with Japan, and posted 8.2 percent economic growth in the year to March 2004.

It was a wake up call for Japan. Japan understood the new superpower alliance BRIC – Brazil, Russia, India and China.

"Japan cannot ignore the growing influence of the BRICs to the world economy," said Vice Finance Minister for International Affairs Hiroshi Watanabe, Tanigaki's deputy at G-7 meetings, calling for closer tie-ups with the emerging economies as a way of diversifying Japan's economic diplomacy.
Measured by gross domestic product, China ranks seventh in the world economy, India 12th, Brazil 15th and Russia 16th. However, in 2015 these BRICs will hold 1st, 3rd,4th and 5th positions based on projections from International think tanks.

BRIC’s demand and growth is so heavy that the G7 is going no where without considering the effects of BRIC on the global economies. For example, the G7 had no clue that the crude oil price can go to $50 a barrel because of India and China’s demand. On top that survival of G7 economy now hinges on crude supply from another BRIC nation – Russia.

"Japan and China should play in Asia a role similar to the Franco-German alliance in Europe, a driving force of European integration, including monetary integration," Sakakibara said.

"Closer Japanese-Chinese cooperation would represent a strong force if the G-7 were reorganized into a G-4 or G-5."

Internally Japan is extremely nervous about its close dependence on G7 especially the US economy which has all signs of catastrophe especially if BRIC keeps growing.