SCO, AIIB show China’s evolving world leadership role

The rise of China to the center of the world economy will inevitably influence the shape of the current global order that evolved during the 20th century. To understand how that influence could be deployed, it is instructive to examine some of the significant multilateral measures China has led since it stepped onto the world stage some 40 years ago.

Two meetings this month underline the evolving leadership role of China in the world. The Shanghai Cooperation Organization (SCO) members have gathered for their 18th summit in the city of Qingdao, China. At the end of June, the Asian Infrastructure Investment Bank (AIIB) will hold its third annual meeting in Mumbai, India.

Both institutions are notable for having been launched by China in partnership with a growing number of other countries. Both organizations are defining the model for what Chinese-led multilateralism could become in the future.

The SCO was founded in June 2001 by China, the Republic of Kazakhstan, the Kyrgyz Republic, the Russian Federation, the Republic of Tajikistan and the Republic of Uzbekistan. Its predecessor, the “Shanghai Five”, succeeded in resolving border disputes among China, Kazakhstan, Kyrgyzstan, Russia and Tajikistan. Today, its focus has shifted to uprooting the “three evils” of terrorism, separatism and religious extremism. But its real work is to increase interaction and dialogue among its members in a region rife with political, religious and cultural tensions.

The SCO is audacious and creative, and as such a clear departure from the traditional reserve and caution of Chinese diplomacy. The SCO brings together countries that have at times opposed each other militarily and politically. It has accepted India and Pakistan as full members, as of June 2016, and more recently accepted Turkey, a NATO member, as a dialogue partner.

Another example of China’s constructive spirit of multilateralism is the AIIB, launched in January 2016. The AIIB was greeted by many countries as an attempt to subvert existing multilateral development organizations such as the World Bank, the Asian Development Bank and others. The result is quite the contrary, as the AIIB has rapidly increased its total membership to 86 countries from 6 continents. Its motto of being “l(fā)ean, green and clean” is based on real actions by its leadership to ensure the projects it funds respect rigorous norms for environmental sustainability, transparency and anti-corruption.

It is significant that the bank’s annual meeting will be in India this year, on June 25 and 26. The AIIB is one of the funding engines for China’s Belt and Road Initiative, which is investing trillions of US dollars to build the Silk Roads of the 21st century.

India has been sensitive to the important Belt and Road infrastructure investments being made in its neighbors Pakistan and Sri Lanka. At the same time, India is becoming the biggest recipient of financing from the AIIB. Of the $4.3 billion worth of funding for infrastructure projects around Asia approved by the AIIB, over $1 billion will finance power and transport projects in India.

Once again, China is contributing, through the creation and work of the AIIB, to economic development, political dialogue and stability. It is especially notable that with the growth in AIIB membership and shared voting rights, China has accepted a minority position on the governing body of the AIIB, ceding control of the organization it initiated.

What we consider to be the current “world order” was shaped by the West, with its policies and values, over the last 70 years. In China and in Asia talk today is about developing a system of “international order”, which encompasses the United Nations and its agencies, the World Trade Organization and other multilateral decision forums. Increasingly this vision will include Chinese-inspired organizations such as the SCO and the AIIB, and bold initiatives such as the Belt and Road.

It is clear that neither the old “world order” nor a new “international order” is able to cope adequately with the challenges of the 21st century to ensure world peace, global sustainable development and economic development.

China’s call for a new vision to maintain order in the world is demonstrably based on cooperation and dialogue, rather than economic, political or military power. It is based on models such as the China-inspired SCO and the AIIB. This vision is an enormous change in world affairs and could be a giant step forward in human history.

The author is the executive chairman of the Silk Road Chamber of International Commerce and a senior fellow of the Chongyang Institute at Renmin University.