The Shanghai Cooperation Organization (SCO) is a regional grouping in Central Asia that deals with security issues and politico-military cooperation. It includes the five Central Asian states, Russia and China as its full members and India, Pakistan, Iran and Mongolia as observer members - the US however, has been denied observer status. In August 2008, the SCO will hold its annual summit of heads of states in Dushanbe, Tajikistan.

Over the 12 years since its inception, the SCO has matured into a full-fledged organization. This period has also seen China's expansion in Central Asia. Under the banner of "three evils" of extremism, secessionism and terrorism China was able to get full support of SCO member states in its fight against Uyghur militant groups in its western Xinjiang province, and demilitarize and secure its western frontiers.

The secular Central Asian countries that were facing the danger of religious extremism and terrorism that emanated from Afghanistan and Pakistan were keen to tap Chinese support when Russian help was not forthcoming. China provided Central Asian countries with military equipment and training to bolster their borders which was enthusiastically welcomed by the Central Asian countries. A SCO anti-terror centre was opened in Tashkent Uzbekistan. Thus, China gained increasing access to and the confidence of Central Asian countries.

All along the SCO was a useful tool for China to gain the support of Central Asian countries and for Russia to strengthen its security concerns. Traditionally dominated by Russia, the Central Asian countries welcomed proactive Chinese involvement through the SCO as an opportunity to diversify their foreign policy options and worked within the SCO to ensure geopolitical plurality in their region.

Increasingly, Chinese focus shifted to improving bilateral and multilateral trade and economic cooperation within the framework of SCO. Seeing the vast energy reserves of Central Asia, China saw an opportunity to strengthen its energy security by entering into energy cooperation deals with Central Asian countries. Notable among them was the watershed agreement between Kazakhstan and China on building an oil pipeline to transport Kazakh oil to China. Not long before the death of Turkmen leader, Saparmurad Niyazov, China concluded an agreement to import 30 billion cubic meters of Turkmen gas after 2011, the construction of the pipeline for which has already begun.

At present it is China and not the US that seems to have been successful in breaking Russian monopoly over Central Asian energy resources. The Kazakhstan-China oil pipeline meets 1.4 per cent of China's total petroleum needs, with the amount of oil from Kazakhstan to China likely to increase substantially after the Chinese National Petroleum Company (CNPC) outbid an Indian company and bought the US$4.3 billion Kazakh state oil company, Aktyubinskneft. There are plans to link the newly built pipeline to vast oil fields in the Caspian Sea.

China has also succeeded in gaining access to Turkmen and Uzbek gas reserves with the Turkmenistan-China gas pipeline being expected to start functioning from 2011. These developments indicate that China has been able to make serious incursions into a traditionally Russian sphere of influence. Whereas all US- and EU-backed schemes, including the trans-Afghan pipeline to India, to get Central Asian energy reserves by bypassing Russia have failed or have not yet succeeded, this attests to the shrewd manoeuvring and subtle diplomatic game that China plays with Russia.

If Russia knew all along that China's influence would increase in Central Asia at its expense and did not prevent it from happening, it might be because Russia realised that only if it joined efforts with the Chinese would it be able to counter Western encroachment in the region. Russia even in its resurgent and reinvigorated form is no match for the US in economic and military terms. This effectively means that Russia is not averse to co-dominium with China.

Most probably Russia feels outsmarted by China in Central Asia. There are a number of factors proving this opinion. Russia has been trying to strengthen its military alliance through the Collective Security Treaty Organization (CSTO) which includes all SCO member countries of Central Asia and leaves China out. Within the framework of the CSTO, Russia has a military base in Kyrgyzstan. Russia has also been trying to reinvigorate its economic ties with Central Asian countries through the regional economic organization, EurAsEC which again leaves China out. Most notably Russia has been trying to preserve its monopoly ever Central Asian energy resources by all means, including agreeing to pay "European prices" for Central Asian gas in early 2008.

Meanwhile, SCO member states fully supported and recognized as free and fair, the March 2008 Russian presidential elections and recently also supported China's handling of the protests in Tibet. Both of these came under strong western criticism. More recently, the SCO also issued a statement opposing Taiwan's holding a referendum on UN membership. In support of the Beijing Olympic Games, Kazakh President, Nursultan Nazarbayev, ran with the Olympic torch for 200 meters even as some Western leaders called for boycotting the Beijing Olympics.

Chinese influence is most likely to rise steadily in the future. It may well be that China is a hegemon-in-waiting in Central Asia.