The Shanghai Cooperation Organisation (SCO) is planning to establish a development bank, which signifies a shift towards enhanced economic cooperation. At a meeting in Tianjin, Chinese President Xi Jinping proposed this bank and announced $1.4 billion in financial assistance over the next three years.
The SCO, which includes 10 member countries and 26 partner nations, constitutes a significant economic bloc with a combined economy of approximately $30 trillion. The SCO is expanding its focus beyond security concerns to encompass development, infrastructure, and social advancement.
This new bank will be modeled on the BRICS New Development Bank and the Asian Infrastructure Investment Bank (AIIB).
Russia has supported this proposal. President Vladimir Putin has suggested that SCO members issue joint bonds and create a payment system that would not be affected by Western sanctions.
The bank’s primary focus is to be on green energy, digital economy, and connectivity projects.
China intends to use the bank to establish yuan-centered transactions, especially in Central Asia, by promoting the use of digital yuan for renewable energy and infrastructure projects. This is seen as an effort to create an alternative to the IMF and World Bank financial models.
India views this bank with both opportunity and caution.
It could offer financial support for regional connectivity and development projects.
India did not endorse China’s Belt and Road Initiative (BRI) at the SCO summit, therefore, India will closely monitor the bank’s structure and political implications.
The Ministry of External Affairs (MEA) is assessing the potential of the SCO Development Bank.
Former diplomat Ambassador Mahesh Sachdev says that the Shanghai Five was formed in the 1990s to counter terrorism and cross-border crime, which later evolved into the SCO. China’s current goal is to create a new framework that deviates from Western financial institutions like the IMF and World Bank. Amidst the Russia-Ukraine war and the US dollar’s global dominance, China is trying to create a market in Central Asia that favors Chinese companies.
SCO intensifies discussions on the development bank.
China pledges $1.4 billion in aid.
Russia proposes joint bonds and a new payment system.
Focus: Green energy, connectivity, and the digital economy.
India: Opportunity and caution.
It is clear that the SCO is aiming to be more than just a security platform, but also an emerging development and financial power.
