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China’s SCO Challenges

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China Power

China’s SCO Challenges

Despite a strong speech from Li Keqiang, practical cooperation within the organization remains elusive.

China’s Prime Minister Li Keqiang visited Uzbekistan on November 28 and 29 for the annual Shanghai Cooperation Organization (SCO) Prime Minister’s Meeting. Li spoke at the meeting about the need for practical cooperation between SCO members. However, as with many previous gatherings, serious multilateral cooperation between members (China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan and Uzbekistan) proved elusive.

Perhaps the biggest surprise was the inability of members to sign an agreement on international road transport facilitation. Prior to the meeting, a senior Chinese official had been rather bullish about the prospects for a deal.  However, the signing did not take place because a member state failed to have the documents ready, according to Uzbek Prime Minister Shavkat Mirziyoev. After the meeting the prime ministers released a joint declaration stating that the road transport agreement is a priority. It should be noted that negotiations on this agreement have already dragged on for nine years.

The absence of practical outcomes from the SCO meeting wasn’t for want of effort on China’s part. Li Keqiang addressed the meeting using clear and straightforward language. He laid out six points for enhanced cooperation. Each point contained specific goals for the organization, such as the establishment of an SCO development bank, expanding the SCO’s anti-terror organization to include an anti-drug function, simplifying procedures for customs clearance, lowering trade tariffs, eliminating trade barriers and signing an agreement on international road transport facilitation.

Li’s speech points to the kind of organization China might want the SCO to become: an organization primarily focused on economic cooperation that also has a security component concentrated on combating terrorism and drug trafficking. This vision is not overly ambitious and practical measures such as an agreement on road transport facilitation are not too lofty. Yet competition between members is proving a significant barrier to many collaborative initiatives.

First, Russia is concerned about China’s growing presence in the region. According to reports Moscow is wary about the establishment of an SCO development bank. In terms of regional economic integration, Russia has established a customs union with Kazakhstan and Belarus that charges higher tariffs for goods from countries outside the union. Economic pressure is also being applied to persuade Kyrgyzstan and Tajikistan to join the union.

Second, friction between Central Asian nations will likely continue to make it very difficult for them to cooperate with each other. There is disagreement in the region over the sharing and supply of gas, oil, electricity and water resources, which Uzbekistan has said could lead to war. Tensions exist in border regions, including clashes along the Kyrgyzstan-Uzbekistan border. There is also deep mistrust and animosity between long-serving autocratic leaders in the region.

To overcome this multilateral stasis, China in the past has focused on funding and building bilateral infrastructure and resource projects. Even when China has pursued projects that traverse multiple countries, such as gas pipelines, the negotiations have been conducted individually with each country involved. And it seems Chinese President Xi Jinping and Prime Minister Li Keqiang will continue to focus on bilateral relationships. Li’s two-day trip stands in stark contrast to Xi’s September journey to Central Asia. Xi spent more than a week visiting capitals across the region and inked tens of billions of dollars’ worth of bilateral deals.

Despite the bilateral focus of China and divergent interests of other SCO members, the organization does have some achievements, such as demarcation of borders, establishment of a joint anti-terrorism center, joint military exercises, as well as improved transport links financed by the SCO (although numerous projects have been implemented bilaterally). The SCO also provides a forum for small Central Asian nations to meet regularly with leaders from China and Russia.

While Beijing will likely continue to devote more energy to the bilateral relationships, Li Keqiang would appear to have greater aspirations for the SCO than its current modest performance. He has in fairly clear language elaborated Beijing’s agenda for the organization. The ability of Beijing to finalize a deal on the road transport facilitation agreement will be a good first test of whether the Chinese leadership can move the SCO beyond its existing achievements.

Dirk van der Kley is a Research Associate with the East Asia Program at the Lowy Institute.