By Cary Springfield, International Banker
This year’s Shanghai Cooperation Organisation (SCO) summit took place in the northern Chinese city of Tianjin, with President Xi Jinping hosting the burgeoning political, economic and international security bloc. Joined by more than 20 world leaders from countries including Belarus, India, Iran, Kazakhstan, Kyrgyzstan, Pakistan, Russia, Tajikistan and Uzbekistan, the SCO’s largest-ever summit adopted 24 documents to strengthen cooperation in security, economic development and cultural exchanges. And with the leaders of China, Russia and India all seen as being in warm, cooperative engagement at a time when the United States’ trade policies position it at odds with much of the world, the SCO could prove pivotal in further shifting global economic power from the West to the East.
Indeed, the images of President Xi Jinping, Russian President Vladimir Putin and Indian Prime Minister Narendra Modi together at the SCO summit—particularly against a backdrop of deteriorating trade relations between Modi and US President Donald Trump—may endure for some time to come. Just four days prior to the start of the summit, Trump imposed 50-percent tariffs on most US imports from India, thereby doubling the 25-percent tariff rate that had taken effect a few weeks earlier and intensifying Washington’s punishment of New Delhi for its purchases of discounted Russian oil.
However, with Modi appearing in fine fettle alongside his Chinese and Russian counterparts, the SCO summit served as a stark reminder to the US of the increasingly diversified and multipolar reality of global economic relations. It was the Indian prime minister’s first trip to China in seven years, one that included a bilateral meeting with Xi Jinping in which the two leaders pledged to rebuild relations as both nations face painful tariffs from the US.
“In the most iconic moment of the summit, Putin and Modi walked hand in hand to have a conversation with Xi. The three leaders’ display of solidarity served as a public rebuff of Trump’s attempt to pressure China and India to cut purchases of Russian energy,” according to Peter Slezkine, a senior fellow and director of the Russia Program at the US think tank Stimson Center. “A subsequent announcement that Putin and Xi had signed a legally binding memorandum to build the Power of Siberia 2 pipeline only reinforced the message that Europe’s (partial) refusal to buy Russian energy would simply result in greater exports to Asia.”
Indeed, some see the core focus of the SCO as having “elegantly” evolved to include a greater economic component, according to Belarusian First Deputy Prime Minister Nikolai Snopkov. “We see today how the organization’s core focus has somewhat transformed. After all, it was originally created with security in mind,” Snopkov told the Belarus 1 TV channel. “But today, it is elegantly transforming to encompass not only security but also economic cooperation. This shift is being driven by an aggressive external environment and the tough actions taken by the powers that be—the Western countries.”
This shift can perhaps be no more clearly observed than through one of the most significant outcomes of the 2025 summit: the announcement of a new multilateral development finance institution. The SCO Development Bank will be run by the 10 Eurasian member states of the Organisation—the six original members of China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan and Uzbekistan, plus the four later additions of Belarus, India, Iran and Pakistan—and will finance infrastructure initiatives and economic programmes across the 10 countries, with China’s president announcing 2 billion RMB (US$280 million) in grants plus an additional 10 billion RMB (US$1.4 billion) in loans for SCO members.
At the summit, he urged the bank “be established as soon as possible to provide stronger support for the security and economic cooperation of member states”. An official statement published by state news agency Xinhua also confirmed that the SCO had “decided to establish a development bank and accelerate consultations on a series of issues related to the financial institution’s operation”.
Analysts view the SCO Development Bank as operating as a regional version of the World Bank, ultimately helping the 10 SCO members further reduce their collective reliance on the US-dollar-dominated global financial system. “The biggest issue is US dollar dominance,” Charles Chang, a finance professor at Fudan University in Shanghai, told the South China Morning Post (SCMP). “All of these countries are still relying on US dollars for trade, including China, and that’s their lever as a group.”
According to the US Center for Strategic and International Studies (CSIS), meanwhile, Beijing has sought the establishment of an SCO bank for more than a decade, but its proposal was previously blocked by Russia, which opted to promote development financing for Central Asia through institutions over which Moscow could exert more control. “As Russia becomes ever more dependent on Chinese economic, financial, and military support, it is not surprising that Moscow is offering new concessions to Beijing,” according to Henrietta Levin, the CSIS’s senior fellow for the Freeman Chair in China Studies. “The SCO summit highlighted the strength of the China-Russia partnership at every turn, but this is a relationship in which Russia will increasingly play the junior role.”
President Xi Jinping’s wish to create a Global Governance Initiative (GGI) was another major highlight of the SCO summit. “Eighty years ago, the international community learned profound lessons from the scourge of two world wars and founded the United Nations, thus writing a new page in global governance. Eighty years later, while the historical trends of peace, development, cooperation and mutual benefit remain unchanged, the Cold War mentality, hegemonism and protectionism continue to haunt the world,” China’s president asserted. “New threats and challenges have been only increasing. The world has found itself in a new period of turbulence and transformation. Global governance has come to a new crossroads.”
His GGI proposal represents the president’s ambition of “working with all countries for a more just and equitable global governance system and advancing toward a community with a shared future for humanity”. The GGI contains five key pillars, which SCO member nations should implement:
- Adhering to sovereign equality: Maintaining that all countries, regardless of size, strength and wealth, are equal participants, decision-makers and beneficiaries in global governance. Promoting greater democracy in international relations and increasing the representation and voice of developing countries.
- Abiding by the international rule of law: Comprehensively observing the purposes and principles of the Charter of the United Nations (UN) and other universally recognised norms of international relations. Eliminating double standards and preventing the in-house rules of some countries from being imposed upon others.
- Practicing multilateralism: Upholding the vision of global governance through extensive consultation and joint contribution for shared benefit, strengthening solidarity and coordination, and opposing unilateralism. Firmly safeguarding the UN’s status and authority and ensuring its key and irreplaceable role in global governance.
- Advocating a people-centred approach: Reforming and improving the global governance system to ensure that the people of every nation are the actors in and beneficiaries of global governance, to better tackle the common challenges for mankind, better narrow the North-South gap and better safeguard the common interests of all countries.
- Focusing on taking real actions: Adopting a systematic and holistic approach, coordinating global actions, fully mobilising various resources and striving for more visible outcomes. Also, enhancing practical cooperation to prevent the governance system from lagging behind or becoming fragmented.
“By proposing the Global Governance Initiative at the recent Shanghai Cooperation Organization Summit in Tianjin, President Xi Jinping has made a great contribution to international dialogue which will help the international community address the many challenges facing the world,” Khalid Taimur Akram, executive director of the Pakistan Research Center for a Community with Shared Future (PRCCSF), wrote in a September 23 article for China Daily.
“The growing global uncertainties are not only impacting economies across the world, but [are] also partly responsible for the widening development gaps among countries,” he added. “At this critical time, the GGI comes as a ray of hope. It is an example of how China is fulfilling its global responsibilities as a major country, and it reflects the farsightedness of the Chinese central leadership in guiding the world toward peace, fairness and common prosperity.”
The SCO also issued a Joint Declaration signed by all 10 member states pledging to strengthen strategic alliances in the Global South. “Member states advocate respecting the right of people of all countries to independently choose their own path of political, economic and social development, and emphasize that the principles of mutual respect for sovereignty, independence, territorial integrity, equality and mutual benefit, non-interference in internal affairs and non-use or threat of use of force are the basis for the stable development of international relations,” the declaration stated.