Beyond Europe

By YU YAN

Beyond Europe

By YU YAN

Facing the EU debt crisis, the SCO pushes for regional financial security

Chinese Premier Wen Jiabao’s proposals at a recent meeting of the Shanghai Cooperation Organization (SCO) presented China’s thoughts on the organization’s development in the next decade, said Chinese analysts.

Proposals Wen put forward at the annual SCO prime ministers’ meeting in St. Petersburg, Russia on November 7 included free movement of goods, capital, technology and services between member states, an SCO“seed bank” for agricultural cooperation and joint epidemic prevention.

These practical suggestions, which were based on the current conditions of the 10-yearold organization, addressed its challenges and charted the direction of its future development, said Wang Lijiu, a research fellow with the China Institutes of Contemporary International Relations (CICIR).

Financial alliance

While stressing in-depth financial cooperation, especially currency swaps and settlement cooperation, Wen called on the fnance ministers and central bank governors of SCO member states to coordinate on a regular basis. China is willing to host the Second SCO Finance Ministers and Central Bank Governors Meeting in 2012.

SCO members should continue to expand currency swaps and settlement cooperation, increase fnancing support to regional economic cooperation projects and establish a “multi-level and multichannel financing cooperation system,”Wen said.

In addition, Wen reiterated his proposal of establishing an SCO development bank. He said he hoped other member states can attach importance to this proposal, so as to promote the development of a regional fnancing system. Wen frst raised this idea at the SCO prime ministers’ meeting in Dushanbe, Tajikistan, last year.

In St. Petersburg, Wen urged the SCO to establish an expert panel as soon as possible to study the feasibility of an SCO development bank.

“If the SCO sets up a development bank, it will create huge advantages, especially in mitigating the negative impact caused by the depreciation of the U.S. dollar,” said Ji Zhiye, Vice President of the CICIR.

China’s proposal on promoting SCO fnancial cooperation has been well received by other member states. Both the communiqué and the joint statement issued at the SCO prime ministers’ meeting in St. Petersburg expressed support for the establishment of an SCO special account and an SCO development bank.

During the meeting, the prime ministers also signed the mid-term development strategy for SCO inter-bank union (2012-16).

In the past, large-scale investments were mainly made on the platforms of the Asian Development Bank and the IMF. The proposed SCO special bank account will greatly facilitate investment and trade among SCO members, said Li Lifan, a research fellow with the Shanghai Academy of Social Sciences.

Crisis response

A highlight of the SCO prime ministers’ meeting this year was the joint statement issued at the closing. It was the frst time for SCO prime ministers to issue a joint statement on the economic situation of the world and the SCO region, said Chen Yurong, Director of the Department for SCO Studies at the China Institute of International Studies.

The statement addressed the most sensitive and difficult problem in the world today—the aftermath of the global fnancial crisis, the CICIR’s Wang said.

“If the ongoing European sovereign debt crisis cannot be properly solved, it will cause domino effects,” he said. “Its deterioration will hinder progress in world economic recovery and endanger the economies of China, Russia and other SCO members.”

It was of great signifcance for the organization to clearly express its stance on this issue, Wang said.

The joint statement showed SCO member states realized insufficient financing and lack of supervision were the major reasons for the global fnancial crisis, Chen said.

It was urgent for the SCO to accelerate regional economic integration, strengthen financial cooperation, smooth financing channels and ensure big cooperative projects are adequately funded, she said.

Amid the increasing uncertainties of global markets, SCO member states should further strengthen economic cooperation in a bid to minimize the negative effects of the global crisis on their banking and financial sectors, said the statement.

According to the statement, SCO countries will continue to work with the international community toward realizing the goal of establishing a “just, fair, inclusive and harmonious global fnancial order” that can make all countries beneft from globalization.

Steady progress

Despite the lingering global financial crisis, SCO members have been able to resolve their diffculties quickly and maintain economic growth, the joint statement said.

Since its inception 10 years ago, the SCO has made tangible achievements. These achievements have laid the foundation for member states to work together to tackle the financial crisis and other challenges and safeguard their common interests, Wen said at the St. Petersburg meeting.

Currently, the international situation is undergoing major changes. The SCO needs to seize development opportunities for the benefit of people in the region, Wen said.

Trade between China and other SCO states soared from $12.1 billion in 2001 to $84 billion in 2010, according to Chinese statistics. Over the past decade, China has promised to offer $12 billion in preferential loans to other SCO members. Since 2009, it has sent investment and trade promotion missions to these countries, signing deals worth more than $8 billion.

China, currently holding the rotating presidency of the SCO, is willing to work with other members to devise a new 10-year plan for the organization covering political, economic and cultural areas, he said.

It will also make efforts to achieve the established goals and tasks of the SCO and make new contributions to promoting regional and global peace and development, Wen added.

“If the SCO sets up a development bank, it will create huge advantages, especially in mitigating the negative impact caused by the depreciation of the U.S. dollar.”

—Ji Zhiye, Vice President of the China Institutes of Contemporary International Relations

YAO DAWEI

Shanghai Cooperation Organization

The Shanghai Cooperation Organization (SCO) was founded in Shanghai on June 15, 2001. The SCO groups China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan. The SCO has four observers—Mongolia, Pakistan, Iran and India, and two dialogue partners—Belarus and Sri Lanka.

SCO member states cover a land area of more than 30 million square km, three fifths of the total area of the Eurasian continent. They have a combined population of about 1.5 billion.

When it was founded, the SCO was largely defned as an intergovernmental mutual security organization. But it has since expanded cooperation to other areas, including economy, science, technology and culture.

A regular meeting mechanism among the SCO prime ministers was established in September 2001. The next SCO prime ministers’ meeting will be held in Kyrgyzstan in 2012.