As the Shanghai Cooperation Organisation marks 25 years, rising trade and expanding connectivity are giving the grouping a stronger economic role — but turning commerce into broad-based growth will require easier cross-border trade, better logistics, aligned standards and credible financing.
The Shanghai Cooperation Organisation is entering its 25th year with an economic opportunity that is becoming increasingly difficult to ignore.
What began primarily as a security-focused grouping has developed into a wider platform connecting China, Russia, India and the economies of Central Asia, with cooperation now extending across trade, investment, transport, energy, manufacturing, finance and technology.
The scale of economic activity has expanded sharply. China’s trade with other SCO members reached $523.5 billion in 2025, compared with just $12.1 billion in 2001, according to China’s Ministry of Commerce. Chinese investment in other SCO economies reached $3.3 billion, while more than 30 economic and trade cooperation zones have been established across SCO countries.
But bigger trade numbers do not automatically translate into regional integration.
The harder question for the SCO is whether it can convert expanding commerce into new factories, stronger local businesses, better-paying jobs, resilient supply chains and wider investment opportunities across Eurasia.
From trading more to producing more
The economic relationship between SCO members is already becoming more diverse. Trade increasingly covers energy and agricultural commodities alongside electric vehicles, lithium-ion batteries, solar products and cross-border e-commerce. Chinese investment in member economies spans energy, minerals, infrastructure, new-energy industries, automobiles and chemicals.
More from BusinessThat creates the possibility of a deeper economic network. For Central Asian economies, Chinese capital and infrastructure can open new export routes and help develop manufacturing capacity. China gains access to markets, resources and more diversified supply chains. Russia can develop additional trade channels, particularly as geopolitical tensions reshape its traditional commercial relationships.
But the benefits are not automatically distributed evenly. The SCO brings together economies with very different structures and priorities. China has vast manufacturing capacity and a large consumer market. Russia is a major energy supplier. Central Asian states are looking for infrastructure, investment and access to global markets. India has emphasised supply-chain resilience, export diversification and a rules-based trading system centred on the WTO.
The opportunity lies in connecting those strengths. The difficulty is creating rules that all members are willing to accept.
Connectivity is only the beginning
Eurasia’s geography makes transport infrastructure central to the SCO’s economic ambitions.
Railways, highways, ports and logistics corridors can reduce the distance between producers and consumers. The China-Kyrgyzstan-Uzbekistan railway is one example of efforts to strengthen Central Asian connectivity.
China-Europe rail links are expanding as well. The China-Europe Railway Express operated 13,000 trains during the first seven months of 2026, a 17.6 per cent increase from a year earlier, according to China’s Ministry of Commerce.
Yet physical infrastructure alone cannot create seamless trade. A faster railway can still be slowed by customs checks, incompatible regulations, different product standards and paperwork at national borders.
For businesses, these frictions can be as important as the physical distance itself.
That is why the SCO’s emerging work on regulatory coordination could prove more consequential than some of its larger infrastructure announcements.
The organisation established its first standardisation cooperation mechanism in 2025, covering areas including artificial intelligence and the low-altitude economy. Member states have also been discussing customs cooperation, including electronic certificates of origin and “Single Window” systems.
If roads and railways provide the physical infrastructure of integration, common procedures and standards provide the institutional infrastructure.
The financing gap
The biggest test may ultimately be financial. SCO members agreed in principle at the 2025 Tianjin summit to establish an SCO Development Bank, but the institution is not yet operational. Consultations continued in June 2026 on its structure and next steps.
A regional development bank could potentially help finance infrastructure, energy, industrial and connectivity projects that might otherwise struggle to attract capital.
But establishing such an institution is considerably harder than announcing it.
Members would have to agree on its capital structure, lending rules, governance, risk allocation and relationship with existing international financial institutions. The political question is equally important: who controls the institution and whose priorities determine where its money goes?
Concerns about China’s growing economic weight have already complicated the idea. Russia has historically been wary of excessive Chinese influence in Central Asia, while India has also been cautious about arrangements that could increase Beijing’s economic dominance. Those concerns reflect a broader tension within the SCO: members see value in China’s economic scale but do not necessarily want the organisation to become an instrument of Chinese strategic leadership.
India, China and Russia: cooperation without convergence
The SCO’s economic future will depend heavily on whether its largest members can compartmentalise their strategic differences.
India and China remain important trading partners, but their relationship is complicated by unresolved security and border tensions. Russia and China have moved much closer strategically, yet Moscow has its own concerns about Beijing’s growing economic influence in Central Asia.
That makes the SCO fundamentally different from a conventional economic union.
It is not moving towards an EU-style single market, nor does it have the deep supranational institutions associated with European integration.
Instead, its more realistic model is a network of cooperation in areas where national interests overlap. That may be a limitation, but it can also be an advantage.
Countries do not need to agree on every geopolitical question to cooperate on customs digitisation, railway connections, energy infrastructure, industrial parks or cross-border payments.
Trade growth is not the same as shared growth
This distinction will become increasingly important as the SCO’s economic footprint expands.
Higher intra-group trade can indicate stronger economic ties, but it does not necessarily mean that every member is gaining productive capacity.
The more meaningful questions are whether local companies are entering new supply chains, whether factories are being established, whether workers are gaining new skills, whether infrastructure is creating sustainable commercial activity and whether smaller economies are gaining greater access to markets.
Intra-SCO trade has increased substantially in recent years, although much of the growth is driven by major bilateral relationships rather than bloc-wide integration. One estimate cited by the Australian Strategic Policy Institute put intra-SCO trade at about $725 billion in 2024, up from $463 billion in 2021. That distinction matters.
A collection of bilateral trade deals can increase headline commerce without creating a genuinely integrated regional economy.
For the SCO, the next phase therefore needs to focus on the quality of economic integration, not simply its volume.
Can Eurasia build a complementary economic network?
The SCO does not necessarily need to become a single market to become economically powerful.
A more achievable model would connect the region’s existing economic strengths: Central Asian resources with Chinese manufacturing, Russian energy with Asian markets, Indian demand and services with regional supply chains, and new transport corridors with industrial investment.
That would require three things. First, reduce the cost of moving goods. Customs procedures, documentation and border delays need to become simpler and more predictable. Second, make connectivity commercially viable. Infrastructure must carry sufficient trade to generate sustainable returns rather than remain dependent on political commitments.
Third, broaden investment beyond infrastructure. Industrial parks, technology partnerships, manufacturing supply chains, skills development and local suppliers are essential if investment is to translate into long-term economic gains.
The SCO has already established mechanisms covering many of these areas. The challenge is turning them into functioning regional systems.
