The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

By Ka Sing Chan

HONG KONG, Sept 3 (Reuters Breakingviews) - The picture of China's President Xi Jinping, Russia's President Vladimir Putin and India's Prime Minister Narendra Modi huddled together laughing on Monday makes a big show of power politics. But the real substance to the Shanghai Cooperation Organisation $(SCO)$ summit may be China's growing ties with Central Asia.

In his keynote speech, Xi laid out a vision for a more inclusive and multilateral economic order for the "Global South" – a direct challenge to the United States and the West. Central to this is greater cooperation, particularly in energy and infrastructure, among the SCO, a regional security bloc founded by China, Russia and four Central Asian states. Notably, Xi vowed to help those countries increase their renewable energy capacity.

The unusually specific pledge showcases Beijing's green power ambitions in Central Asia, where countries like Kazakhstan boast vast amounts of land ideal for generating solar and wind energy. Chinese firms like the state-owned Southern Power Grid and polysilicon giant GCL 3800.HK have been ramping up new projects there. The long-term bet is that a "green energy corridor" can transmit cheap electricity produced in resource-rich regions such as Tibet and Uzbekistan to power-hungry markets like the European Union or even Southeast Asia.

There's still a long way to go, but Xi has been paving the way for closer economic relations. China’s total trade with the five Central Asian countries grew 10.4% year-on-year in the first five months of 2025 to reach a record $40 billion. Of that, Chinese exports, spanning machinery and electric vehicles, topped $26 billion. Moreover, Xi on Monday called for the creation of a new SCO development bank, through which Beijing is offering to provide 2 billion yuan ($280 million) of free aid to member states this year.

Ultimately, these Chinese-led energy projects and a new development bank might help accelerate Xi's ambitions of eroding the dominance of the U.S. dollar.

In 2023, a Chinese firm invested in a 500-megawatt wind power project in Uzbekistan, which notably used the renminbi to settle power contracts. As electric vehicles and artificial intelligence drive up power demand in the region, yuan-based settlements could become more common. That in turn could fuel the rise of the "electro-yuan", akin to the petrodollar. Rising crude-oil exports in the 1970s were settled in U.S. dollars, helping cement the greenback's dominance in global trade and finance. A yuan-denominated green electricity trade could pave the way for more usage of the Chinese currency as the world transitions to a net-zero energy system. That would arguably be Xi's biggest win against the West.

CONTEXT NEWS

Leaders from more than 20 countries, including Russia's President Vladimir Putin and India's Prime Minister Narendra Modi, attended a summit of the Shanghai Cooperation Organisation (SCO) on September 1 in the Chinese port city of Tianjin hosted by President Xi Jinping.

China will establish three major platforms for cooperation with SCO members in energy, green industry and the digital economy. "We will work with fellow SCO countries to increase the installed capacity of photovoltaic and wind power each by 10 million kilowatts in the next five years," Xi said in his keynote speech.

Xi also called for the creation of a new SCO development bank.

(Editing by Robyn Mak; Production by Ujjaini Dutta)

((For previous columns by the author, Reuters customers can click on CHAN/ KaSing.Chan@thomsonreuters.com))