China may OK $10b to bloc nations

By Zhang Haizhou (China Daily)
Updated: 2009-10-14 07:45

The Chinese government may finalize its pledge today to loan $10 billion to the Shanghai Cooperation Organization (SCO), a security and economic bloc between China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, and Uzbekistan.

The loan could be approved at the SCO's 8th prime ministers' meeting in Beijing and will be used by the member states to shore up their economies amid the global economic crisis.

Economy is set to top the meeting's agenda, which will also include regional peace, analysts said yesterday.

Chen Yurong, director of the SCO Research Center of the Institute of International Studies, said the prime ministers' meeting will be used to implement decisions recently reached upon by SCO's state leaders.

Chen added that representatives of each nation will discuss how to cash the loan at today's meeting, but on a condition that the money can only be used on projects "within the SCO framework."

At the organization's summit in June at Yekaterinburg in Russia, President Hu Jintao first indicated that China would provide a $10 billion credit loan to the SCO member states.

Foreign Ministry spokesman Ma Zhaoxu said yesterday that China hopes to "implement the Yekaterinburg Declaration", which aims to further boost regional cooperation in the areas of politics, security, economy and culture.

Chen said the key to enhance economic relations is "to make cross-border trade and investment more convenient".

"This is a meeting point for all SCO countries, whose economic interests are all vastly different due to varying levels of economic development," she said.

The GDP of Kazakhstan, with a population of nearly 16 million, reached $132 billion last year, according to the World Bank. But the GDP of Uzbekistan, with more 27 million people, was about $28 billion.

Wu Hongwei, an analyst at the Institute of Russian, East European & Central Asian Studies of the Chinese Academy of Social Sciences said having Pakistan, Afghanistan, and Iran as observers at the discussion means today's meeting will also involve regional peace.

"Apart from economy, security has always been an important issue for the SCO, especially when Central Asia and China's Xinjiang are faced with terrorist threats," Wu said.

Security was the original reason why the SCO was founded, Wu said.

The Shanghai Five group, the SCO's predecessor, was created in 1996 by the heads of states from Kazakhstan, China, Kyrgyzstan, Russia and Tajikistan. Uzbekistan joined the SCO in 2002.

Though Wu said prime ministers of Pakistan and Afghanistan are set to raise the anti-terror issue at today's meeting, another expert said there's little hope for the SCO to engage with the pair of nations.

"The relationship between NATO (leading fighting forces in Afghanistan) and the SCO is still awkward," said Ye Hailin, an expert on Asian studies at the Chinese Academy of Social Sciences.