‘Eastern NATO’? China’s real SCO strategy

At the recent Shanghai Cooperation Organisation (SCO) summit in Kyrgyzstan, leaders of the ten-member bloc comprising China, Russia, Iran, India, Pakistan, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan and Belarus gathered. On its 25th anniversary, this meeting reflects the organisation’s expanding reach and China’s growing determination to turn the political weight of the Global South into international influence.

Chinese diplomats increasingly describe the SCO as a platform for developing countries to coordinate policy and deepen economic ties, as its members and dialogue partners now stretch across much of Eurasia and the Middle East, providing Beijing a stage on which to present China as the architect of a new multipolar order. 

The recent Gulf crisis provides new urgency to that ambition, and it is no coincidence that at the summit, President Xi Jinping called on the SCO to assume a greater global role in shaping both technological development and international security.

Today’s disruptions to maritime trade underscore the importance of overland corridors connecting SCO economies and carrying goods and energy across Eurasia. More significantly, the crisis has revived projects long championed by Beijing: an SCO development bank capable of financing infrastructure and trade beyond the reach of the traditional Western financial system and an SCO economic cooperation centre based in the port city of Tianjin.

The summit also demonstrates China’s growing geopolitical leverage. As the US redirects military resources from Asia and Europe toward the conflict involving Iran, Beijing sees greater room to manoeuvre in the Indo-Pacific and growing influence over Russia and Iran, both increasingly dependent on Chinese trade and finance.

From a security standpoint, describing the SCO as an “Eastern NATO”, as some Western observers have done, is misleading. The organisation conducts military exercises, particularly involving China and Russia, but it is neither a formal alliance nor a system of collective defence. Yet dismissing it as a paper tiger is equally mistaken, as the SCO’s ambitions now extend well beyond military cooperation. It is evolving into a political, logistical and economic platform intended to offer an alternative to an international order its members repeatedly portray as Western-dominated and in decline. 

For Beijing, the more consequential objective is economic: an SCO bank that could finance infrastructure, stimulate trade within the bloc and gradually reduce dependence on the dollar-based financial system. In recent months, member governments have accelerated negotiations, holding consultations in Beijing, Xi’an and Bishkek over the proposed institution’s capital, governance and investment priorities, while India and Russia have, again, resisted a final agreement, wary of allowing Beijing to dominate another multilateral institution. The Bishkek summit therefore stopped short of transforming the SCO from a diplomatic forum into a genuine instrument of economic power, but the negotiations themselves revealed how profoundly the organisation is changing.

Founded in 2001 by China, Russia and several former Soviet republics in Central Asia, the SCO initially concentrated on borders, water security and counterterrorism; it has since expanded both geographically and politically. Iran is now a full member, while Afghanistan retains observer status. Countries such as Saudi Arabia and Egypt have become dialogue partners, while Turkey continues to signal its interest in eventual membership.

Increasingly, the organisation connects Central Asia with the Middle East, while Beijing portrays the SCO as a possible model of global governance. Its symbolism is almost as important: at a moment when Washington’s relations with allies from South Korea to Europe are under strain, the summit allowed Xi to show that China has friends and options.

The message from Bishkek is clear: the bloc would not be easily intimidated by US President Trump’s threat to impose an “economic D-Day” on countries keeping Iran afloat. Xi used the summit to keep pushing the narrative of China at the helm of the Global South, challenging American hegemony ahead of his expected meeting with Trump in the US.

Still, China is proceeding carefully. Beijing wants to keep Russia and Iran economically viable without provoking a confrontation with Washington, from which there may be no easy retreat. Also, the meeting showcased how India is attempting a similarly delicate balance. Prime Minister Narendra Modi continues to cultivate close ties with the US even as India purchases Russian oil and, according to reports, supplies jet fuel to Moscow at a moment when Ukrainian long-range drone strikes have repeatedly targeted Russian energy infrastructure.

The summit also provided a setting for bilateral diplomacy. The meeting between Xi and Putin showcased what the two leaders described as the increasingly promising prospects for Sino-Russian relations, ranging from a pilot programme for visa-free travel to growing cooperation in the Arctic, including the first scheduled voyage of a Chinese container ship through the Northern Sea Route in mid-August.

At the same time, the presence of Iran’s President Masoud Pezeshkian in Bishkek illustrates one of the SCO’s principal attractions for Tehran: political backing from a bloc that rejects Western sanctions and promises access to vast markets, new transport corridors and alternative financial networks. For now, however, many of those promises remain more visible in summit declarations than in everyday Iranian economic life.

Nevertheless, the organisation’s internal contradictions have not disappeared. India and Pakistan remain strategic rivals; Afghanistan’s observer status remains in limbo under the Taliban; and Central Asian governments, unsettled by Russia’s invasion of Ukraine, increasingly fear Moscow’s territorial ambitions and are anxious about China’s economic weight that dwarfs that of nearly every other member. Similarly, the unresolved border dispute between India and China continues to hang like the sword of Damocles over their already fragile relationship.

Still, over the past 25 years, the SCO has grown from a narrowly focused Central Asian border-security forum into an institution with far wider regional ambitions, with Beijing using it to promote the its own vision of multipolarity, a message that resonates across parts of the Global South, where governments are searching for alternatives to Western-led institutions in a time when the US continues to burn bridges even with its own allies.

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