Opinion China wants control, not cooperation

Selling global public goods

First, the initiative adds to Beijing’s growing repertoire of global public goods for the developing world, building on earlier ventures like the Belt and Road Initiative (BRI) and Asian Infrastructure Investment Bank (AIIB). It underlines China’s ambition to position itself as a provider of such goods, challenging US-led initiatives and filling spaces left by the West.

The SCO Development Bank joins a series of alternatives such as BRI, AIIB, New Development Bank (NDB) that Beijing has promoted to rival the Western-dominated Bretton Woods institutions. Already the largest creditor to the developing world since 2017, China’s overseas lending reached US$800 billion by 2023, surpassing the combined lending of the 22-member Paris Club, the World Bank, and the IMF.

Beijing wants control, not just cooperation

Second, the institutional design of the SCO Development Bank remains unclear. Both Xi and foreign minister Wang Yi refrained from disclosing details, leaving room for speculation. Two possible models emerge: One resembling the NDB and the other the AIIB.

The NDB, launched by BRICS in 2015, had equal paid-up capital contributions by its members, ensuring equal voting rights. A similar model under the SCO would give all members equal influence, an arrangement likely preferred by India and Russia but not by China.

Beijing’s preferred template would be the AIIB. A Beijing-led initiative that started operations in 2016 with 57 founding members, the AIIB has China as the largest stakeholder with about 26.5 per cent of voting shares, which offers it an effective veto. Such a structure would allow Beijing to set the agenda and retain leverage.

The manner of the announcement, introduced unilaterally by Xi rather than pre-negotiated among members, suggests a tilt towards the AIIB model. Russia, wary of losing influence, has opposed the plan from the outset, which may explain the lack of specifics in the announcement. Yet given China’s outsized weight within the SCO, it is likely to secure the structure it desires.

A softer, multilateral face

Third, Asia’s infrastructure financing needs remain massive. According to the Asian Development Bank (ADB), the region requires US$1.7 trillion annually to eradicate poverty, sustain growth, and tackle climate change. Current investments fall short by nearly half.

China has sought to bridge this gap but has traditionally relied on bilateral mechanisms. This approach, however, drew sharp criticism for being unilateral and predatory. In response, Beijing has adjusted its strategy. One shift is rhetorical: Xi now emphasises “small and beautiful” projects. Another is structural: a gradual move towards multilateral disbursement through development banks where China retains influence via large voting shares. The SCO Development Bank fits squarely into this recalibrated approach.

Unipolar Asia in the name of multipolarity

Finally, the bank will reinforce Beijing’s ambition to create a unipolar Asia under the veneer of multilateralism. Military and economic power grant coercive capacity, but financing development projects provides structural power, that is, the ability to shape norms and rules.

China already exerts such influence through the AIIB, where its dominant stake effectively determines outcomes. If the SCO Development Bank mirrors this model, and current signals suggest it will, Beijing’s influence will deepen further, especially given the SCO’s expanding membership. While China advocates global multipolarity, its vision for Asia appears decidedly unipolar.

The writer is with Takshashila’s Indo-Pacific Studies programme