At the recent Shanghai Cooperation Organisation (SCO) summit in Tianjin, Chinese President Xi Jinping used the platform to issue a clear message: the world must resist “bullying” and reject “Cold War mentalities.” Although he did not name the United States directly, the remarks were widely understood as a critique of Washington’s reliance on sanctions and tariffs as instruments of foreign policy. The timing was deliberate, with tensions high over global trade, energy security, and currency politics.
Xi’s comments did not stand alone. Beijing tabled proposals to strengthen the SCO’s institutional clout, including a development bank, an energy cooperation platform, and expanded lending channels. Taken together, they underscored China’s determination to use multilateral forums to reduce member states’ exposure to Western economic levers.
For India, which shared the stage with both Xi and Russian President Vladimir Putin, the summit highlighted the delicate balancing act it faces as Western sanctions and tariffs cut deeper into its economic options.
Sanctions, Tariffs, and India’s Dilemma
India has long sought to maintain what it calls “strategic autonomy”—a doctrine that allows it to engage Washington through forums like the Quad, manage competition with China, and preserve historic links with Russia. That doctrine is under strain.
Over the past year, U.S. measures have targeted Indian companies tied to Russian and Iranian trade. More than 80 Indian entities have reportedly been affected by U.S. sanctions. At the same time, Washington has raised tariffs on a wide range of Indian exports—up to 50 percent on some goods—as leverage to discourage New Delhi from purchasing discounted Russian oil.
The tariffs alone could shave billions off India’s annual exports to the United States, which remains a key market for Indian textiles, pharmaceuticals, and IT services. For policymakers in New Delhi, the sanctions and tariffs amount to an expensive reminder that the U.S. retains the ability to weaponize access to its financial and trade system.
India’s response has been pragmatic rather than confrontational. Officials defend continued Russian oil imports as essential for energy security and inflation management. At the same time, New Delhi is exploring alternative trade settlements, including rupee-based payment mechanisms with Russia and expanded use of third-party currencies such as the UAE dirham.
Alignment or Hedging?
Do U.S. sanctions and tariffs “force” India to align with Beijing? The answer is more complex.
On one hand, India is not about to abandon its multi-alignment strategy. Security concerns along the Himalayan border, competition in the Indian Ocean, and skepticism about China’s Belt and Road Initiative all limit the possibility of a genuine Sino-Indian alignment. New Delhi continues to deepen its defense and technology ties with Washington, Tokyo, and Canberra through the Quad framework.
On the other hand, sanctions and tariffs increase the costs of leaning too heavily on Western markets. They also make India more receptive to platforms—such as the SCO and BRICS—where it has space to negotiate terms and seek alternatives to dollar-denominated finance. That creates points of overlap with China’s agenda, even if India resists being pulled into Beijing’s orbit.
The optics in Tianjin reflected this nuance. Modi and Xi spoke of partnership rather than rivalry, reopened limited connectivity, and emphasized the need for border stability. These gestures stop well short of alliance but suggest that India is willing to de-escalate with China if it helps broaden its economic options.
Multipolar Finance: Incremental but Real
Xi’s call to resist bullying dovetails with a broader push by China, Russia, and other SCO and BRICS members to build alternative financial architecture. This includes new banks, energy cooperation frameworks, and experiments with local-currency settlement.
Russia, isolated by Western sanctions, has been the most vocal advocate for alternative payment systems, from BRICS clearinghouses to digital currency pilots. China has promoted cross-border digital yuan pilots and expanded currency swap lines. India has experimented with rupee-denominated trade settlement and special vostro accounts to handle Russian transactions.
Progress, however, has been uneven. Russia has been reluctant to hold large rupee balances, citing limited convertibility and investment options. The BRICS New Development Bank, while expanding membership, remains relatively small compared to the World Bank or IMF. And despite repeated declarations, no BRICS or SCO currency has emerged as a credible rival to the dollar.
Still, the direction is notable. Every additional trade deal settled in local currency, every new financial institution outside Western control, and every round of sanctions that forces countries to improvise alternatives adds weight to a slowly shifting balance. The immediate effect is not to dislodge the dollar but to create more optionality for countries like India.
What to Watch Next
The coming year will test how much of the SCO summit’s rhetoric translates into action. Three developments deserve close monitoring:
- Tariff and sanction dynamics: If Washington softens its tariff stance, India will rebalance toward its U.S. trade corridor. If not, expect deeper experimentation with rupee settlements, energy deals with Russia, and participation in SCO or BRICS initiatives.
- Institutional follow-through: The creation of an SCO development bank or functioning payment system would mark a tangible step toward de-risking from the dollar system. Without follow-through, Xi’s “resist bullying” rhetoric remains largely symbolic.
- Sino-Indian border stability: A durable mechanism for managing border tensions would give New Delhi more political space to use SCO and BRICS instruments without being seen as conceding to Beijing. Confidence-building measures here could ripple into economic cooperation.
Strategic Takeaway
Xi Jinping’s call at the SCO summit was more than rhetorical flourish. It reflects China’s long-term project to construct platforms that reduce dependency on the U.S.-dominated financial system. For India, sanctions and tariffs complicate its balancing act but also make non-Western options more attractive.
Rather than a sudden shift to a China-India axis, what is emerging is a world of hedging and overlapping memberships: countries engage with the West where it benefits them but also build parallel pathways to limit vulnerability. This is the essence of multipolarity, not the replacement of one hegemon with another, but the rise of multiple venues, currencies, and alliances that give mid-sized powers more bargaining power.
For global businesses and investors, the message is clear. While the dollar will remain dominant for the foreseeable future, the risk calculus is changing. Firms will increasingly need to track developments in regional payment systems, local-currency trade deals, and multilateral institutions like the SCO and BRICS. In a world of hedging, diversification is no longer just a corporate strategy, it is becoming a geopolitical necessity.