Shanghai Cooperation Organization: From Regional Bloc to Global Economic Challenger of U.S. Power

M.T.B

By admin Last updated Sep 4, 2025

Introduction

China recently hosted the Shanghai Cooperation Organization (SCO) Summit, bringing together leaders from nearly 20 countries. The two-day event concluded with a massive military parade in Beijing, marking the 80th anniversary of the end of World War II.

Among the prominent attendees were Russian President Vladimir Putin, Indian Prime Minister Narendra Modi, North Korean leader Kim Jong Un, Turkish President Recep Tayyip Erdoğan, Iranian President Masoud Pezeshkian, Egyptian Prime Minister Mostafa Madbouly, Cambodian Prime Minister Hun Manet, and Malaysian Prime Minister Anwar Ibrahim, alongside UN Secretary-General Antonio Guterres, ASEAN Secretary-General Kao Kim Hourn, and other world leaders.

The Most Important Summit Since 2001

The 2025 SCO Summit in China is widely regarded as the most significant gathering since the organization’s founding in 2001. It came at a time of overlapping global crises directly affecting its members: the U.S.–China and U.S.–India trade disputes, the Russia–Ukraine war, Iran’s nuclear issue and the subsequent U.S.-Israeli strikes on Tehran, the war in Gaza, tensions over Taiwan, and other urgent international matters (Modern Diplomacy).

In his opening remarks, Chinese President Xi Jinping declared that the SCO “represents a model for a new kind of international relations,” stressing the need to defend balanced multipolarity, inclusive globalization, and a fairer global governance system.

In a veiled criticism of U.S. President Donald Trump’s tariff wars, Xi warned that the “shadows of Cold War mentality and bullying have not dissipated.” He added that the world had entered “a new stage of turbulence, with global governance at a crossroads,” urging joint efforts to establish a more just and balanced international order (CNBC).

The 2025 Summit also symbolized solidarity among the Global South against Western and U.S. dominance. Xi called on SCO leaders to play a greater role in safeguarding peace and stability while presenting China as a “reliable global power” and partner of the developing world.

Thaw Between China and India

One of the summit’s highlights was the meeting between Narendra Modi and Xi Jinping—their first on Chinese soil in seven years. The two leaders emphasized partnership over rivalry, pledging to work toward resolving their long-standing border disputes.

Together, India and China represent a combined population of 2.8 billion people—over a third of the global population. Their rapprochement came as both nations face steep U.S. tariffs. According to Wendy Cutler, Vice President of the Asia Society Policy Institute, “Modi and Xi employed all the diplomatic language available to signal a renewed commitment, partly driven by Trump’s punitive tariffs” (CNBC).

Symbolically, Xi, Modi, and Putin appeared together, holding hands and sharing laughter, even as Washington accused both China and India of enabling Moscow’s war in Ukraine.

Key Outcomes of the 2025 Summit

According to China’s Ministry of Foreign Affairs, the summit produced several major agreements:

Ten-Year Strategy: A roadmap to guide SCO cooperation through 2035, aimed at strengthening multipolarity and mutual benefit.
Trade System: Support for the WTO-led multilateral trading system, rejection of unilateral measures that undermine its rules.
Development Bank: Political agreement to establish an SCO Development Bank to finance infrastructure and socio-economic growth across Eurasia.
Cooperation Platforms: Six new platforms in energy, green industry, digital economy, scientific innovation, higher education, and vocational training.
High-Quality Growth Plans: Adoption of six joint action plans covering sustainable energy, AI, digital economy, and trade cooperation.

Goals of the SCO

According to its official website, the SCO’s main objectives are:

Building mutual trust and good-neighborly relations.
Strengthening cooperation in politics, trade, economy, science, culture, and education.
Advancing collaboration in energy, transport, tourism, and environmental protection.
Jointly maintaining peace, security, and stability.
Working toward a new political and economic international order based on democracy, fairness, and rationality.

A Brief History

The SCO was founded on June 15, 2001 in Shanghai by China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan. Before that, all except Uzbekistan were part of the Shanghai Five, a political grouping created through two key agreements:

The 1996 Treaty on Deepening Military Trust in Border Regions (Shanghai).
The 1997 Treaty on Reduction of Military Forces in Border Regions (Moscow).

These treaties built trust and reduced tensions in Central Asia. With Uzbekistan’s accession in 2001, the group was renamed the SCO.

Initially, the SCO focused on combating terrorism, separatism, and extremism in Central Asia. Later milestones included:

2002: SCO Charter signed in St. Petersburg, effective in 2003.
2006: Launch of anti-narcotics initiatives.
2008: Active involvement in Afghanistan’s stabilization.
2017: Full membership for India and Pakistan.
2023: Iran admitted as a full member.

Today, the SCO has expanded to include 9 full members, 3 observer states, and 14 dialogue partners.

Economic Importance

The SCO is the largest regional organization in the world by geography and population.
SCO members account for 27% of Earth’s landmass and 42.8% of the global population (3.4 billion people).
They generate 23.6% of global GDP, rising to 33.8% on PPP terms.
China and India rank 2nd and 7th globally by nominal GDP, and 1st and 3rd on PPP terms.
SCO economies grew by an average 5.4% in 2024, outpacing the global average of 3.3%.

Trade within the SCO has surged:

Intra-SCO exports rose from $463 billion in 2021 to $725 billion in 2024.
Russia redirected much of its trade from the West to China and India, boosting bilateral trade dramatically.
Countries like Belarus, Tajikistan, and Kyrgyzstan now send over half their exports to SCO members.
China and Russia dominate intra-SCO trade, with shares of 46.2% and 35.7%, respectively.

Looking Ahead

According to AP, Derek Grossman (University of Southern California) noted: “Even if the SCO’s impact remains limited, one fact is clear: China is rising diplomatically, while the U.S. is undermining itself.”

The SCO is steadily positioning itself as an alternative to Western-dominated institutions. To achieve this, it is working on:

Independent Financial System: The SCO Development Bank, Chinese aid packages, and expanded use of local currencies, including the digital “electro-yuan,” particularly in energy trade.
Technological and Energy Cooperation: Joint projects in digital economy, green industry, AI, and renewable energy.
Global Role: Expanding use of China’s BeiDou satellite system as an alternative to U.S. GPS.
AI Partnership: The Tianjin Declaration emphasized equal rights of all nations to develop and use artificial intelligence (CNBC).

Conclusion

The Shanghai Cooperation Organization has evolved from a regional security bloc into a powerful platform with growing economic, political, and technological influence. It represents a challenge to U.S. hegemony and offers the Global South a framework for multipolar cooperation.

Despite internal rivalries and geopolitical complexities, the SCO’s trajectory points toward becoming a decisive force in shaping a more balanced and just international order.

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