India Defies China's De-Dollarization Bid at SCO Summit 2024

At the Shanghai Cooperation Organization Summit 2024, India opposed China's proposal to replace the US dollar with the yuan for trade, despite potential savings. India's stance, driven by distrust of China's economic intentions, could weaken Russia's de-dollarization efforts and hinder a unified BRICS approach on monetary policies. India's choice to favor the dollar in trade may reinforce its dominance in the short term, but long-term consequences are uncertain.

The recent Shanghai Cooperation Organization (SCO) summit in 2024 highlighted a significant rift between India and China, with New Delhi opposing Beijing's proposal to replace the US dollar with the Chinese yuan for trade settlements [1]. India's stance, driven by historical distrust and economic concerns, could have far-reaching implications for the de-dollarization efforts of China and other BRICS nations.

India's reluctance to embrace the Chinese yuan for trade was evident even before the SCO summit, as the Modi administration had already begun to reduce its dependence on Russian oil, which is typically paid for in rubles and yuan [1]. This decision was motivated not only by India's discomfort with China's growing economic influence but also by its desire to maintain its ties with the United States and other Western economies.

Moreover, India's resistance to the yuan at the SCO summit could weaken Russia's de-dollarization efforts, as Moscow had been pushing for the use of local currencies for trade settlements within the organization [1]. A unified BRICS approach on monetary policies, which had been a long-term goal for China and Russia, now appears to be more elusive.

However, India's preference for the US dollar in trade may reinforce its dominance in the short term, as many countries continue to view the dollar as a safe and reliable store of value. That said, the long-term consequences of India's stance are uncertain, as the global currency order continues to evolve, and new players like the Chinese yuan are emerging [2].

In conclusion, the SCO 2024 summit provided a stark reminder of the complex dynamics at play in the global economic arena, as well as the challenges and opportunities associated with the de-dollarization process. As the world continues to grapple with these issues, the role of influential organizations like the SCO, BRICS, and the G20 will be more crucial than ever in shaping the future of the global currency order.

References:
[1] Watcher Guru. (2024, April 18). SCO Summit: India Doesn't Want to Replace US Dollar with Chinese Yuan. Retrieved from https://watcher.guru/news/sco-summit-india-doesnt-want-to-replace-us-dollar-with-chinese-yuan
[2] Georgetown Journal of International Affairs. (2024, April 18). De-Dollarization: The Belt and Road Initiative and the Future of the Chinese Yuan. Retrieved from https://gjia.georgetown.edu/2024/04/18/de-dollarization-the-belt-and-road-initiative-and-the-future-of-the-chinese-yuan/