Speaking yesterday at the opening of the Shanghai Cooperation Organization summit, Xi exhorted the leaders of more than 20 nations to “oppose cold war mentality, bloc confrontation, and bullying.”
The thinly veiled pushback to Western sanctions and Donald Trump’s tariffs signaled China’s ambitions to lead an alternative, more welcoming international order. For attending leaders from states like Russia, Iran and Myanmar—all struggling under the weight of punitive economic sanctions imposed by the U.S. and its allies—it was an appealing message.
Even India’s Narendra Modi, whose relationship with Trump has turned south over the 50-percent tariffs on Indian exports to the U.S. that went into effect last week, made an enthusiastic appearance and met bilaterally with Xi—part of an ongoing reset in historically strained ties between their countries. And as leaders gathered for a group photo, Modi and Xi huddled amiably in front of the cameras with Russia’s Vladimir Putin. It was a moment that seemed almost pre-designed to buttress the message of non-aligned solidarity.
The SCO has historically been more about generating optics like these than about substantive accomplishments. Founded in 2001 by China, Russia and four Central Asian states, its membership has since grown but its focus has remained largely on “counterterrorism” and border security efforts, with occasional joint military exercises among some of its members.
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This year, Xi aimed to put more meat on the bones by announcing a new SCO development bank and 10 billion yuan ($1.4 billion) in new loans for the organization’s members, among other economic measures. While details of the planned development bank are sparse, if realized, it could become another China-led counterweight to development finance alongside the Asian Infrastructure Investment Bank, which Beijing launched in 2014.
Such initiatives can help China achieve its longstanding goal of internationalizing its currency. For heavily sanctioned SCO states like Iran and Russia, it would mean greater progress toward an alternative payment system that reduces their reliance on dollar-denominated transactions. Unsurprisingly, Putin spoke out at the SCO against “discriminatory sanctions” and “the use of finance as an instrument of neocolonialism.”
Domestic political and economic hurdles prevent China from taking policy steps that would position its currency as a truly global alternative to the dollar, as Mark Copelovitch wrote for WPR last month. In the meantime, though, Xi can certainly take smaller steps—like the new development bank—that promote renminbi uptake on a regional basis.
His ability to do that will depend on a variety of factors, including the Trump administration’s ability to provide an attractive alternative through its own economic engagement in the region. But with U.S. allies and partners tangled up in efforts to dodge Trump’s tariffs, that looks unlikely for the near future.
Elliot Waldman is World Politics Review’s editor-in-chief.
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