Uzbekistan Blocks Yuan's Path to Becoming SCO's Primary Currency

The Shanghai Cooperation Organization (SCO) is increasingly preoccupied with a singular structural shift: the move toward national currencies in trade and investment. While the official rhetoric emphasizes a collective drift away from the US dollar, a deeper analysis of member states' positions reveals a quiet but firm resistance to replacing one hegemony with another. Specifically, the push to establish the Chinese yuan as the dominant settlement currency remains a Chinese ambition rather than an SCO consensus.

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Yuan notes

The Geometry of Influence

Beijing views the internationalization of the yuan not merely as a trade convenience, but as a tool for constructing an alternative global financial architecture. From Xi Jinping’s call for digital currency cooperation to the drive for an SCO Development Bank, China is attempting to bake the yuan into the region's financial plumbing.

The responses across the bloc are split by economic necessity and geopolitical caution:

• Russia: Following Western sanctions, Moscow has functionally accepted the yuan as the most liquid regional alternative to the dollar, viewing it as a survival mechanism for external trade.
• Central Asia (Kazakhstan, Kyrgyzstan, Tajikistan): These states follow a pragmatic path. They increase yuan usage because Chinese credit and investment are flowing into their territories, but they stop short of officially endorsing the yuan as the bloc's primary currency.
• India: New Delhi is the primary structural brake on China's ambition. While India supports diversification away from the dollar, it explicitly rejects any model that grants the yuan monopoly power, advocating instead for a multipolar currency system.

Uzbekistan: Strategic Multivectorism

Tashkent’s approach provides a clear case study in economic balancing. Analysis of President Shavkat Mirziyoyev’s speeches and official government directives shows a disciplined adherence to the phrase "national currencies" (plural), avoiding any commitment to a yuan-exclusive system.

Uzbekistan’s reluctance to pivot fully toward the yuan is a calculated move to preserve its financial flexibility. By maintaining a multi-currency model, Tashkent avoids creating a new point of systemic dependency, allowing it to keep doors open to the EU, US, Turkey, South Korea, and the Gulf states.

The evidence lies in the focus of Uzbekistan's recent SCO summits. While other members debated currency shifts, Tashkent consistently pivoted the conversation toward tangible industrial cooperation, transport connectivity, and digitalization. For Uzbekistan, the priority is measurable output—industrialization and infrastructure—rather than financial symbolism.

From Swaps to Institutions

Uzbekistan is not averse to Chinese financial tools, but it treats them as tactical instruments rather than strategic shifts. The 2011 currency swap agreement with China (700 million yuan) was a mechanism for liquidity and trade facilitation, not a policy shift toward yuanization. This mirrors China's broader strategy of creating a network of bilateral swaps across the region to gradually normalize the yuan's presence.

Where Tashkent is aggressive is in the creation of the SCO Development Bank. Uzbekistan views a multilateral financial institution as a superior alternative to relying on a single nation's currency. A bank provides a structured mechanism for financing energy and transport projects while distributing risk and influence among all member states.

The Verdict: Evolution, Not Revolution

The September 2025 Tianjin Declaration confirms that the SCO is sticking to a gradualist path. The decision to finally establish the SCO Development Bank is a victory for those favoring multilateralism over bilateral dependence.

What this means for the international observer: The yuan's share in SCO trade will naturally grow—not because of a political decree, but because China is the region's largest economy and creditor. However, the transition from "dollar-dependent" to "yuan-dominated" is being blocked by a coalition of pragmatists and rivals. Uzbekistan, by positioning itself as a proponent of a multi-currency system and a multilateral bank, is ensuring that its economic integration with China does not come at the cost of its financial sovereignty.