The meeting of the Shanghai Cooperation Organisation (SCO) in the northern Chinese city of Tianjin this week saw the heads of Asia’s three biggest econonomies – China, India and Russia – came together in a literally friendly embrace. So, what message can investors take away?
It is basically a message of hope, that statesmanship can prevail over narrow nationalism amid rising international tensions, slowing international trade and faltering economic growth.
At a time when the world appears to be fragmenting into rival economic blocks led by the US, China, and, at a distance, Europe, Chinese President Xi Jinping and other SCO heads held out a vision of wider alliances embracing the entire Eurasian continent and beyond.
All of this point to the future emergence of wider markets for goods, services, investments and trading of financial securities.
Alfred Wu, a professor at the National University of Singapore’s Lee Kuan Yew School of Public Policy, was quoted by CGTN Europe, an arm of the China Global Television Network, as saying that Xi is seeking “to provide an alternate world order, because the US-led world order is very much in decline”.
Other attendees at the meeting in Tianjin included Russian President Vladimir Putin and Indian Prime Minister Narendra Modi. North Korean leader Kim Jong Un attended a military parade in Beijing shortly after the summit.
“Genuine multilateralism”
Founded in 2001, the SCO now includes Russia, Belarus, China, India, Iran, Kazakhstan, Kyrgyzstan, Pakistan, Tajikistan and Uzbekistan. Afghanistan and Mongolia are observer states, and 14 other countries, including several from the Middle East, serve as dialogue partners. Laos also joined recently as a partner.
The security forum was originally seen as a counter to US influence in Central Asia, and has grown in size and influence over the years.
In his speech in Tianjin, Xi said the SCO must “promote the democratisation of international relations and enhance representation of developing countries. We must continue to take a clear stand against hegemonism and power politics, and practise true multilateralism”.
He also called for the creation of a new SCO development bank which, according to CGTN Europe, “would be a major step towards the bloc’s long-held aspiration of developing an alternative payment system that circumvents the US dollar”.
Xi said Beijing would provide 2 billion RMB (US$280 million) of free aid to member states this year, and another 10 billion RMB of loans to an SCO banking consortium.
He also said that China plans to set up an international platform for energy cooperation, and that he was opening the way for SCO member states to use China’s BeiDou satellite system, an alternative to the US-controlled GPS system.
Putin, meanwhile, whose country has forged closer ties with China amid fallout from the war in Ukraine, said the SCO had revived “genuine multilateralism” which “lays the political and socio-economic groundwork for the formation of a new system of stability and security in Eurasia”.
