London Vies to be Home to China-Backed Development Bank’s European Hub
London is emerging as a strong contender to host a European office for the Beijing-headquartered Asian Infrastructure Investment Bank (AIIB), according to the bank’s president, Jin Liqun.
Speaking ahead of the OMFIF’s China-UK Investor Forum in London on December 4th, Liqun praised London’s enduring strength as a global financial hub, even in light of the UK’s departure from the European Union.
"The financial services sector represents the UK’s enduring competitiveness," Liqun noted. "Brexit certainly poses a challenge to the UK in handling its relationship with continental Europe," he acknowledged. However, he sees "no indication" that major financial institutions are fleeing London or that the city’s relevance to global development banks like the AIIB is waning.
While other major cities are developing their financial services capabilities, "we do not see any sign of the possible waning of the UK’s competitive advantage as a country of robust financial services," Liqun reassured.
Although the AIIB is still deliberating on the location of its European base, with Frankfurt and Paris also in the running, Jin held discussions two months ago with UK Chancellor of the Exchequer Rachel Reeves regarding the prospect of establishing a London office.
A final decision hinges on negotiations with all the competing cities, Liqun explained. This development comes amid warming relations between the UK and China under the Labour government, which took office in July.
The AIIB: A Challenger on the Global Stage?
The AIIB and another China-backed development bank, the New Development Bank, have sometimes been viewed as challengers to the established order represented by the US-led Bretton Woods institutions – the International Monetary Fund and the World Bank. The Bretton Woods system, set up in 1944, was initially dominated by the US and UK, with other nations playing a more limited role. "The negotiation of the Bretton Woods system was mainly the drama played out by the UK and US. Other countries were back-benchers and had little role to play,” Liqun observed.
But the world has changed significantly since then.
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Now, China and other developing countries are coming to the fore. ‘The emerging market economies are already carrying more weight in a global economy, and back-benchers are moving to the front seats, to the front-benches. This does not feel comfortable, but people will have to face the reality, and both sides need to take a constructive stance in managing the process’," Liqun stated.
Liqun lauded the crucial role played by the UK and other developed nations in the AIIB’s founding and growth. He pointed out that the UK’s early commitment to the AIIB encouraged other European nations to follow suit.
"At that time, I said that, once again, the Chinese saw the great power of Great Britain. The power of a country is not just its economic might. Rather, it’s the soft power. It’s the leading role in promoting an initiative which is expected to serve the broad interest of the members of the international community."
Liqun acknowledges the complexities and challenges in the UK-China relationship, but he remains optimistic about the numerous potential areas for cooperation.
"This is not something that can be overlooked. The difficult part is there for everyone to see, but it makes sense to look at the upside, not just the downside. When attention is focused on areas of co-operation, it is not hard to identify vast scope," he stated.
Jin Liqun’s full remarks will be presented at the OMFIF’s China-UK investor forum. You can watch the conversation here: [link to YouTube video]
