SCO Development Bank: Prospects of the SCO development bank
The organization is known for its joint political and security work, but another topic that's been discussed over the years is setting up an SCO development bank. Could it happen? Mi Jiayi has more.
The Shanghai Cooperation Organization expanded its membership from six to eight last year, focusing on developments in central and south Asia. At first, the SCO focused on security issues, but China has been advocating an expansion into other areas, including trade and finance and, perhaps, the creation of an SCO free trade zone. In 2010, China first mentioned the establishment of a development bank under the SCO. The topic has been discussed since, but not much progress has been made. One expert says not all member countries are as keen on the idea as China is.
LIU JUNMEI, PROFESSOR SCHOOL OF ECONOMICS, FUDAN UNIVERSITY "For example, Russia has always focused on security collaboration within the SCO. It doesn't want economic cooperation so much. And many member countries are worried that if a free trade zone were to to be set up within the region, it could hurt their economic interests because their economic power is not as strong as China's."
Liu says setting up a development bank means that the members would have to carefully coordinate their influence on, and contributions to, the bank, and that is complicated for any international organization. What's more, the setting up of the Asian Infrastructure Investment Bank and the New Development Bank has helped fill a large part of the gap in development funding within the region.
LIU JUNMEI, PROFESSOR SCHOOL OF ECONOMICS, FUDAN UNIVERSITY "In terms of funding, Russia for one, has funding needs especially after sanctions from Western countries. So it is looking for funding support from east Asia. China of course can provide funding support, but now Russia can get funds through the BRICS bank and other financial organizations. So an SCO development bank is not an urgent option for it.
But that doesn't necessarily mean that there is no room for the SCO to have its own development bank. Analysts say other member countries also have huge funding needs to support their local development. Should the SCO set up its own bank, it could learn a lot from other recently established development banks.
SHAO YU, CHIEF ECONOMIST ORIENT SECURITIES "For example, when the AIIB was founded, it got significant support from developed economies. It has a very clear structure, but the building of that structure was a rather slow process. The New Development Bank would also be a successful case for a new bank to learn from."
Chinese President Xi Jinping will chair the SCO Summit, which is scheduled for Saturday and Sunday this week. Leaders of the SCO member states and four observer states will attend the meetings.