SCO expands economic agenda as Central Asia gains global weight

BAKU, Azerbaijan, August 30. The Shanghai
Cooperation Organization (SCO) is becoming an increasingly
important platform for Central Asian countries as they seek to
expand regional connectivity, attract investment and strengthen
cooperation in transport, energy, finance and digitalization. With
the SCO summit approaching in Bishkek, the organization's growing
economic agenda is gaining particular relevance for the region,
whose economies are undergoing rapid expansion and deeper
integration with major markets.

In recent years, SCO cooperation with its Central Asian members
has increasingly focused on practical economic priorities alongside
security issues. Discussions on transport corridors, energy
cooperation, financial mechanisms and digital infrastructure have
gained momentum, while individual countries have simultaneously
expanded economic partnerships with China, Russia, Azerbaijan and
other external partners.

This trend reflects a broader transformation in Central Asia's
economic position. The region is strengthening its role in Eurasian
trade and transit while attracting investment into energy,
industry, infrastructure and technology. Against this backdrop, the
SCO has the potential to provide an additional framework for
coordinating cross-border projects and facilitating economic
cooperation among its members.

Against this backdrop, the Bishkek summit is expected to further
develop the SCO's economic agenda, with particular attention to
transport connectivity, energy cooperation, investment and
financial mechanisms.

Finance could become a new pillar of SCO
cooperation

One of the most significant developments is the continuing work
on an SCO Development Bank.

SCO Deputy Secretary-General Sohail Khan said in May that
consultations on the institution had begun and that the proposed
bank could become a key mechanism for financing joint projects and
strengthening the organization's financial architecture.

The issue remained on the agenda at the July meeting of SCO
foreign ministers in Cholpon-Ata, where member states noted
progress in consultations on the bank, particularly in relation to
joint investment, infrastructure and transport and logistics
projects.

For Central Asian economies, the potential significance is
substantial.

The region is entering a period of intensive infrastructure
development, requiring large amounts of capital for railways,
roads, energy generation, electricity transmission, industrial
facilities and digital infrastructure. An SCO financial
institution, if established and adequately capitalized, could
provide an additional source of long-term financing for projects
involving several member states.

The proposed institution could also complement existing
financing channels rather than replace them. Central Asian
governments already work with the World Bank, Asian Development
Bank, European financial institutions, Chinese policy banks and
national development institutions.

This makes the SCO Development Bank potentially more useful as
an additional instrument for cross-border projects than as a
substitute for existing international financial institutions.

The same logic applies to discussions on increasing the use of
national currencies in mutual settlements. Greater use of local
currencies could gradually reduce transaction costs and exposure to
fluctuations in third-country currencies, although the scale of
such a shift will depend on the development of financial markets
and mechanisms for converting and settling those currencies.

Transport connectivity offers the most immediate
opportunity

Transport is arguably the area where SCO cooperation could
produce the most visible benefits for Central Asia.

At a meeting of SCO transport ministers in Bishkek in April,
members discussed the development of transport corridors, digital
solutions and measures to improve connectivity.

For Central Asian countries, the objective is broader than
simply increasing transit volumes. Kazakhstan, Uzbekistan,
Kyrgyzstan and Tajikistan are seeking to reduce logistical costs,
diversify export routes and strengthen connections with China,
Russia, the Caspian Sea, South Asia and Europe.

The China-Kyrgyzstan-Uzbekistan railway is particularly relevant
in this context. Once developed, the project could strengthen
China's connection with Central Asia while providing Uzbekistan and
Kyrgyzstan with an additional east-west transport route.

At the western end of this emerging network lies the Caspian Sea
and the Middle Corridor.

During Kyrgyz President Sadyr Japarov's July meeting with
Azerbaijani President Ilham Aliyev, Japarov highlighted
Azerbaijan's role as a key link in the Middle Corridor connecting
Central Asia with European markets. This illustrates an important
point: Central Asian connectivity is not developing along a single
axis. The region is simultaneously strengthening links with China
to the east and the Caspian, South Caucasus and Europe to the
west.

"Your role in the development of ties between Central Asia and
the South Caucasus is of particular importance. Azerbaijan's
participation in the Consultative Meetings of the Heads of State of
Central Asia opens up new opportunities for expanding cooperation
in the trade, economic, transport, and energy spheres," Japarov
said.

The SCO could contribute to the integration of existing
transport initiatives by promoting greater coordination across the
region. Harmonizing customs procedures, digital documentation,
logistics operations, border-crossing processes and transportation
standards could improve the efficiency of individual infrastructure
projects and strengthen their contribution to regional
connectivity.

Energy cooperation could link the region's complementary
resources

Energy is another area where SCO cooperation could have a
long-term impact.

At the June meeting of SCO energy ministers in Bishkek, member
states discussed energy security, energy efficiency, infrastructure
protection, the energy transition and renewable energy. They also
continued discussions on the possible creation of an SCO Energy
Consortium.

The idea is particularly relevant to Central Asia because the
region's energy resources are complementary.

Among the SCO's Central Asian members, Kazakhstan and Uzbekistan
have substantial oil and gas resources, while Kyrgyzstan and
Tajikistan possess significant hydropower potential. At the same
time, solar and wind capacity is expanding across the region as
electricity demand rises. Turkmenistan, although not an SCO member,
is also an important part of the region's wider energy landscape,
particularly through its extensive natural gas cooperation with
China.

Recent China-Central Asia projects demonstrate the scale
of investment already entering the sector.

Tajikistan has discussed with Chinese companies the
implementation of the 160-megawatt Ayni and 100-MW Yavan hydropower
projects, as well as a 200-MW solar power plant. Turkmenistan
continues to deepen its energy partnership with China. In April,
Turkmengas and China National Petroleum Corporation signed an
agreement on the fourth phase of development of the Galkynysh gas
field, a project valued at about $5.1 billion.

These projects are bilateral rather than SCO projects. However,
they demonstrate the broader economic environment in which the
organization is attempting to expand energy cooperation.

If an SCO Energy Consortium eventually moves beyond
consultations and develops concrete projects, its potential value
could lie in coordinating investment, infrastructure and energy
flows across countries with different but complementary
resources.

Digitalization is emerging as a new area of
cooperation

The recent engagement between Uzbekistan and the SCO Business
Council suggests that the organization's economic agenda is also
moving beyond traditional infrastructure. At an August 13 meeting,
the sides discussed potential investment in Uzbek IT startups as
well as cooperation in digital infrastructure, data centers and
research and development.

The discussions included electronic mapping, government
information platforms, transportation and healthcare information
systems, while participants also examined integrated projects
combining computing capacity, energy supply and operational
infrastructure. The development is significant because Central
Asia's next phase of economic growth will increasingly depend on
productivity and technological capabilities rather than
infrastructure alone.

Kazakhstan is pursuing a similar strategy. During his July visit
to Shanghai, President Kassym-Jomart Tokayev proposed a
Kazakhstan-China Digital Bridge initiative and emphasized the
importance of developing domestic human capital, digital
infrastructure and institutional capacity.

The trend suggests that the economic relationship between China
and Central Asia is evolving from infrastructure and commodities
toward technology, industrial localization and digital services.
For the SCO, this creates an opportunity to expand its economic
agenda into artificial intelligence, data infrastructure, research
and development and technology investment.

China's growing role raises the value of multilateral
coordination

China's expanding economic role in Central Asia is an important
factor behind the region's growing interest in connectivity and
investment mechanisms.

China was Uzbekistan's largest trading partner in January-May
2026, with bilateral trade reaching $7.7 billion. Trade with
Kyrgyzstan reached $2.09 billion during the same period, accounting
for 33.4% of Kyrgyzstan's total foreign trade.

Tajikistan's trade with China reached $1.4 billion in the first
five months of the year, while China remains a major market for
Turkmenistan's gas exports.

Kazakhstan is also deepening its economic relationship with
Beijing. During President Kassym-Jomart Tokayev's July visit to
Shanghai, the two sides signed more than 70 commercial agreements
worth over $15 billion, while new projects in industrial production
and renewable energy were subsequently announced.

These developments demonstrate that China's economic presence in
Central Asia is already extensive. The role of the SCO, therefore,
is unlikely to be about creating China's economic presence in the
region. Instead, it could provide a broader multilateral framework
through which Central Asian countries seek to maximize the benefits
of their economic relationships with major powers. This is
particularly important because Central Asian states continue to
pursue multi-vector economic policies.

They maintain extensive relations with China and Russia while
simultaneously developing partnerships with the European Union,
Türkiye, the Gulf states, South Korea, India and countries in the
South Caucasus. The SCO is consequently more likely to function as
one component of this architecture than as an exclusive economic
bloc.

Central Asia could benefit from a more practical
SCO

The interests of the region's Central Asian members largely
converge around several objectives: attracting investment,
improving transport infrastructure, strengthening energy security,
expanding trade and developing new sources of economic growth.

The SCO can potentially contribute to each of these areas.

For Kazakhstan, improved transport connectivity can strengthen
its position as a major Eurasian transit hub.

For Uzbekistan, expanded investment and regional connectivity
can support industrialization, exports and the development of its
technology sector.

For Kyrgyzstan and Tajikistan, better transport and energy
connectivity can help unlock their geographic and hydropower
potential.

For Turkmenistan, deeper energy cooperation provides
opportunities to strengthen its role as a major regional energy
supplier.

At the same time, regional cooperation can create benefits that
individual bilateral agreements cannot always provide.

A railway crossing several countries, for example, requires
coordination between customs authorities, logistics companies,
infrastructure operators and governments. Similarly, regional
electricity projects require compatible infrastructure and
coordinated energy policies. This is where multilateral mechanisms
could provide practical value.

Bishkek will test whether the SCO can move from
declarations to implementation

The success of the September summit will ultimately depend on
the extent to which existing initiatives advance toward
implementation and produce tangible economic and institutional
outcomes.

Four areas will be particularly important.

First, members could provide greater clarity on the future of
the SCO Development Bank and its institutional structure.

Second, the proposed SCO Energy Consortium could receive
additional political support or move toward concrete areas of
cooperation.

Third, transport discussions could produce practical measures
aimed at reducing logistical and customs barriers.

Fourth, the growing emphasis on digitalization could become a
more established part of the organization's economic agenda.

None of these developments would immediately transform the SCO
into an integrated economic bloc. The organization includes
countries with substantially different economic structures and
geopolitical interests, making deep institutional integration
difficult. The more realistic scenario is the gradual expansion of
project-based cooperation. Countries do not need to share identical
foreign-policy priorities to cooperate on a railway, an energy
project, a financial mechanism or digital infrastructure. This
flexibility could ultimately become one of the SCO's greatest
advantages.

The outlook: a platform rather than an economic
bloc

For Central Asia, the SCO's future economic relevance will
depend on whether it can complement — rather than duplicate — the
growing number of regional and international cooperation
formats.

The region is already becoming part of an increasingly complex
economic network connecting China, Russia, the Caspian Sea, South
Asia, the Middle East and Europe. The China-Central Asia mechanism,
the Middle Corridor, the Eurasian Economic Union, international
financial institutions and bilateral partnerships all play
different roles in this architecture.

The SCO can complement these mechanisms by providing an
additional platform for coordinating cooperation across a broad
group of countries. Its future role could increasingly focus on
facilitating practical collaboration in areas such as transport,
energy, finance and digitalization.

If the Development Bank becomes operational, energy cooperation
acquires an institutional framework, and transport and digital
initiatives produce measurable improvements, the SCO could become
considerably more relevant to Central Asia's economic development.
The Bishkek summit therefore represents less a turning point in the
region's external relations than a test of the SCO's ability to
become more practical.

For Central Asia, the real measure of success will be whether
the organization can convert its growing economic agenda into
capital, infrastructure, connectivity and technology. If it does,
the SCO could emerge not as a replacement for the region's other
partnerships, but as another important layer of Central Asia's
increasingly interconnected and multi-vector economic
architecture.