On Friday, Xi returns to the SCO under markedly different circumstances.
Now more than ever, the Chinese leader will need to solidify ties with allies amid an escalating trade war with President Donald Trump’s administration and a slowing domestic economy.
While it’s reasonable to think Xi will be seeking their endorsement and support, China’s relatively diminished position also increases the bargaining power of the SCO’s other participants.
“It gives all those countries an opportunity to see if they can actually get something out of the Chinese,” said Steve Tsang, director of the China Institute at SOAS University of London.
“They see that Xi Jinping probably feels a bit more vulnerable than he was a year ago.”
Shoring up allies
According to Chinese state media, its eight permanent members — China, Russia, India, Pakistan and four Central Asian states — account for “nearly half the global population, and over 20% of global gross domestic product (GDP).”
As a result, the forum has become a key place for members to thrash out security and economic issues in the region.
“If you have (an economic) decoupling between the US and China in a globalized world, you want to have more allies on your side than on the other side, even if they’re not formal allies but countries that are willing to work with you,” Tsang said.
“The Chinese want to see their economic relationship with India grow, particularly if they could get the Indians to use Huawei technology for their 5G network,” Tsang said. “It would certainly be very useful for the Chinese government in terms of sustaining Huawei as an alternative to the West.”
Unlike in the West where security concerns around Huawei have led to stalled or blocked deals, authorities in India have so far shown little public resistance to the involvement of Chinese tech companies in the country’s 5G infrastructure.
More broadly, Modi has made it known that he is open to foreign companies investing in India’s economy.
One big success story has been the smartphone industry, which has helped drive a boom in India’s digital economy. China’s Xiaomi has tripled the number of smartphone plants it has in India in recent years, and is now on its way to taking top spot in the country’s market.
But although China is India’s largest trading partner, their estimated $84 billion bilateral trade in 2017/18 was a mere fraction of the US-China trade volume, which stood almost $600 billion.
Belt and Road
“It’s the security arm of the Belt and Road,” said Richard McGregor, senior fellow at Sydney’s Lowy Institute. “It’s a vehicle for the Chinese to secure the hinterlands, as it were, to get greater military experience and expand their strategic space.”
The Belt and Road is the massive infrastructure policy, pioneered by Xi, which seeks to build trade corridors through rail, road and ports between China, Europe, the Middle East and the rest of Asia.
A vital component of the land trade route, the “Silk Road Economic Belt,” runs through Central Asia.
Many Central Asian countries have struggled to fully integrate into the global economy following the collapse of the Soviet Union. The promise of large-scale Chinese infrastructure investments — including the creation of massive rail lines connecting Western Europe with China via Central Asia — have helped to strengthen ties and promote China as a dependable regional partner.
Ahead of Friday’s forum, Chinese state media has been keen to trumpet the policy’s achievements.
The Belt and Road also helps to shore up support for China’s policies in Xinjiang — a far western Chinese region that borders several Central Asian countries — where according to the US State Department, up to 2 million ethnic Uyghurs, Kazakhs, Kyrgyzs and other predominantly Muslim minority groups have been held against their will in massive camps.
But China has faced increasing pushback from partner countries around the world over the Belt and Road, including accusations of unreasonable debts and impractical projects.
Tsang said Xi is likely to face complaints behind closed doors at the SCO on Friday and Saturday from Central Asian countries over their dissatisfaction with the cost of Belt and Road projects, and the mountain debt associated with them.
“The Chinese like to say it is ‘win win’ but it could be lose lose for major projects that are not responsible, that the recipient country can’t pay back,” Tsang said.