[PRIMER] Shanghai Cooperation Organization (SCO) Summit on September 15-16th (UPDATED)

Analysis details (08:55)

OVERVIEW: The Shanghai Cooperation Organisation (SCO) members include China, Russia, India, Kazakhstan, Kyrgyzstan, Pakistan, Tajikistan, Uzbekistan, and Iran (ascended this year). The group accounts for around a third of the world’s land, with exports in the trillions of Dollars. Several themes will be eyed as “anti-West” leaders gather in Uzbekistan, namely the theme of de-dollarisation alongside sideline meetings between Chinese President Xi and Russian President Putin, whilst Iranian bilateral and multilateral talks will also be eyed as its nuclear deal talks with the West have seemingly been less constructive.

AGENDA: An official schedule has not yet been released on the SCO website or the West. NewEurope reports that “Thirty coordinated documents have already been prepared, which are aimed at strengthening the multifaceted interaction of the SCO… the final document that will be issued at the conclusion of the summit and which will reflect the common agreements by all of the SCO countries.”

According to Tass:


DE-DOLLARISATION: The overarching theme of the summit from a market perspective will likely be the process of replacing the USD for trade settlements. Although the theme itself is not surprising and is more of a longer-term setup, it will likely attract attention. In September, a long-term contract was signed for China National Petroleum Corporation (CNPC) payments to Gazprom to be split into CNY and RUB – a 50/50 ratio. According to SGH Macro, China has pressed Saudi and other Gulf countries to follow similar agreements. Citing sources, SGH Macro says “Beijing would be to start trading crude oil and other commodities with RMB quotas, which would be expanded each year until it became the main settlement currency with Riyadh in bilateral trade”, with an initial quota of some USD 15-20bln vs USD 90bln total trade between the two countries last year. Note, in March, WSJ citing sources suggested Saudi is in active talks to price some oil sales in Yuan amid anger with Washington over US’ security commitments to defend the Kingdom.

CHINA-RUSSIA: The two leaders will be meeting in early afternoon (Uzbek time), according to Reuters. One of the main focal points of this summit is the touted meeting between Chinese President Xi and Russian President Putin – the first face-to-face between the leaders since Russia’s invasion of Ukraine. Ties between the nations have been warming, with China refusing to condemn Russia for the commencement of the war, whilst Russia has been increasing its exposure to the Yuan via reserves and gas deals in a bid to circumvent western sanctions. From a military perspective, reports via the Kremlin have also suggested Putin has attended large-scale exercises involving Chinese forces and militaries of several Russian-friendly countries, which comes at a time of heightened tensions between China and Taiwan. The two leaders will likely reaffirm their commitment to deepening ties whilst criticising the West. Interfax released an agenda for the sideline meeting, with no timing. Russian presidential aide Ushakov was asked whether any agreements in the energy sector could be signed with China at this meeting. "I think not. This is a meeting within the framework of an international forum." he said. The topic of Ukraine, Taiwan and trade are expected to be discussed. 


15 Sep 2022 - 08:55- Research Sheet- Source: Newsquawk

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