From Sunday, 31 August, to Monday, 1 September 2025, the Shanghai Cooperation Organisation (SCO) convened its 25th heads-of-state Summit in Tianjin, its largest gathering to date. While the organisation is often dismissed as a purely symbolic one, its Tianjin meeting was much more. The optics alone were striking: Xi Jinping, Vladimir Putin, and Narendra Modi clasping hands, a singular moment hinting at an imminent recalibration of global power shifts.
The SCO was founded in 2001 as a security forum for China, Russia, Kazakhstan, Kyrgyzstan, and Tajikistan to address border instability. It has since expanded in membership and scope, but the organisation never truly shook the reputation of being a ‘talk shop.’ However, in Tianjin, the SCO made its boldest attempt yet to redefine itself as a platform shaping global governance. Institutional overhaul, new financial tools, and a tentatively thawing relationship between China and India have reinvigorated a body that has historically been overshadowed by other institutions, like the World Bank and the International Monetary Fund (IMF).
Development Bank and the ‘Electro-Yuan’
The most concrete step was Xi Jinping’s announcement of a new SCO Development Bank, underpinned by roughly 260 million EUR in grants and 1.3 billion EUR in loans. For smaller Member States, this represents a rare opportunity for concessional finance outside IMF or World Bank channels. For China, it embeds the SCO within its broader Belt and Road Initiative (BRI) financing architecture.
Xi’s call for greater reliance on local currencies is equally important. The proposed ‘electro-yuan,’ a digital framework for settling energy and infrastructure transactions, directly challenges US dollar dominance. Even partial adoption could reduce the effectiveness of US sanctions, while gradually shifting the gravity of financial governance toward the Indo-Pacific. By facilitating cross-border transactions in renminbi and potentially in other local currencies, the SCO could create alternative payment channels that reduce dependency on Western-controlled financial systems, such as SWIFT, CHIPS, and Fedwire, which currently enable the United States and the European Union to enforce sanctions and control high-value cross-border transactions. Beyond immediate economic effects, the move signals China’s broader ambition to reshape global monetary standards.
Tech Cooperation and Digital Alternatives
Tianjin also showcased the SCO’s pivot to technology. Members were invited to join platforms for AI, green energy, and digital economy cooperation, with access to China’s BeiDou satellite system offered as an alternative to the US-controlled Global Positioning System (GPS). This constituted a notable strategic gesture on China’s part, positioning BeiDou as a credible alternative to the US-controlled GPS. For many SCO Members—particularly those seeking to reduce reliance on Western infrastructure—BeiDou provides both technical advantages, such as higher regional precision in Asia and geopolitical insulation from potential US restrictions. These moves signal not only enhanced economic integration and the building of parallel technological ecosystems, but also China’s spearheading of a push for a redrafted multilateral economic order.
The China–India Rapprochement
India has been a central pillar in the US strategy in the Indo-Pacific, long viewed by Washington as a democratic counterweight to China’s influence. Militarily and economically, India’s rise has offered the US a way to diversify supply chains, deepen technology and defense partnerships, and reduce overreliance on China. India’s presence at the Summit thus presented a symbolic moment. Modi had not visited China in seven years, and his decision to do so came swiftly after Washington imposed new tariffs on Indian exports and criticised New Delhi’s discounted purchases of Russian oil, leaving many wondering if India-China relations may be thawing.
In the past year, China and India agreed to new patrolling guidelines along their disputed border, reopened direct flights, and resumed the Kailash Mansarovar pilgrimage route. Simultaneously, however, structural mistrust between both parties remains. A geopolitical atmosphere conducive to Indo-Chinese alignment does not necessitate best friendship. Their shared borders have been a long-term flashpoint. Moreover, India continues to worry about cheap Chinese imports undermining its domestic industries. Nevertheless, the SCO framework has provided both sides with tools to compartmentalise disputes and collaborate in areas of mutual interest.
BRICS and the SCO: Mutually Reinforcing
The SCO’s institutional reinvention came less than two months after the BRICS Summit in Rio de Janeiro, where Modi outlined a renewed vision and called for an amplified voice of the Global South. While BRICS already operates the New Development Bank (NDB), the proposed SCO Development Bank would provide a more regionally anchored financing mechanism. Rather than duplicating efforts, the two groupings could operate in tandem: BRICS acts as a global economic platform, presenting itself as an alternative to Western-led institutions through tools such as the NDB and the 2014 Contingent Reserve Arrangement (CRA), which promote development lending and local-currency settlements. The SCO, by contrast, operates as a regional security and political forum, coordinating counterterrorism, border management, and diplomatic dialogue. In recent years, it has increasingly become a venue for practical cooperation on infrastructure, energy connectivity, and digital networks—allowing BRICS’ broader financial ambitions to be translated into tangible regional projects.
Particularly, the Trans-Caspian Transport Corridor (TCTC), linking China to Europe via Central Asia and the Greater Caspian Region, has gained prominence as an alternative to the currently disrupted Russian transit route, or ‘Northern Corridor.’ The SCO’s inclusion of logistics, energy corridors, and digital networks positions it as a coordinator of these emerging routes through the Corridor. Infrastructure-led multilateralism could thus become the Indo-Pacific’s signature contribution to global governance.
Multilateralism vs. Dollar Dominance
By promoting the renminbi and other local currencies, the SCO is advancing de-dollarisation, a structural challenge to US financial leverage. Dollar dominance allows Washington to control global payment flows, impose sanctions, and influence international trade. SCO-backed mechanisms—like the proposed Development Bank or digital payment platforms—could give Member States greater insulation from such coercion, enabling more autonomy in trade and financing.
This autonomy is particularly valuable as US tariffs are increasingly heavy-handed and unpredictable. Beyond currency politics, de-dollarisation reflects a broader shift toward multilateral financial frameworks, allowing SCO Members to diversify options, stabilise cross-border transactions, and reduce reliance on Western-led systems while retaining flexibility to pursue independent economic and strategic agendas.
Uncertain Multipolar Future
The Tianjin Summit spoke volumes, marking itself a pivotal moment in multilateralism and signaling the SCO’s evolution to serve as a vehicle for financial, technological, and strategic alignment. Nevertheless, the SCO still faces the same threats that have long limited its efficacy. Sino-Indian mistrust is not resolved: border disputes remain alive, and trade asymmetries are a sensitive topic. The NDB is promising, but its actual operationalisation is uncertain for now. Its coordination with BRICS and push for de-dollarisation suggest the possibility of a more multipolar world order. Yet, that order and how it will emerge remain speculative. Prime Minister Modi was not present at the virtual BRICS Summit on 8 September 2025. Conversely, Presidents Xi and Putin both participated, leaving many wondering if India is having second thoughts about its new alignments. Deep mistrust, institutional fragility, and geopolitical backlash may threaten to limit the SCO’s impact.
Furthermore, Washington and its allies are unlikely to stand still. In the wake of the SCO Summit, President Trump reacted on social media by suggesting that India and Russia had effectively aligned themselves with China. Arguably, India’s participation indicates the fragility of US–India ties. While defense and technology cooperation remain intact, the tariff war and disputes over Russia have strained relations. Modi’s fraternisation with Beijing and Moscow complicates Washington’s Asia strategy, which had historically banked heavily on Indian allyship.
The European Union: Recalibration and Opportunity
For the European Union, recalibration in response to evolving non-Western political and economic institutions is increasingly urgent. The future of global governance may be shaped not only in Washington or Brussels, but also in Tianjin and Rio de Janeiro. To remain relevant and influential, the EU will need to engage these emerging platforms with both pragmatism and strategic purpose.
The SCO’s transformation presents a mixed picture for the European Union. Enhanced Europe-Asia connectivity could reduce trade costs and open access to Asian markets. Yet, if these routes, technologies, and financial systems develop outside Western-led frameworks, the EU risks marginalisation. Pursuing ‘strategic autonomy’ will require careful balancing—engaging Eurasian projects where beneficial, while avoiding over-dependence on single country-led mechanisms. At the same time, the EU has opportunities to assert influence through pragmatic engagement. Infrastructure and energy cooperation under the Global Gateway initiative offer avenues to integrate the European Union into the region’s evolving order. By thoughtfully navigating this landscape, the EU can both safeguard its interests and contribute constructively to a more interconnected, multipolar world.
Author: Eva Eapen, EIAS Junior Researcher
Photo Credits: Wikimedia Commons
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