London is ‘one of the hopefuls’ under consideration for a European funding and trading hub of the Beijing-headquartered Asian Infrastructure Investment Bank, according to Jin Liqun, the bank’s president. In remarks to be broadcast at OMFIF’s third China-UK investor forum in London on 4 December, Jin provides a ringing endorsement of London’s prowess as an international financial centre. Despite the strains of leaving the European Union, he says, ‘The financial services sector represents the UK’s enduring competitiveness.’
‘Brexit certainly poses a challenge to the UK in handling its relationship with continental Europe.’ But Jin sees ‘no indication’ of large-scale moves of financial institutions from London or that ‘its relevance to development banks such as ours will be eroded’. Although more major cities are developing financial services capability, ‘we do not see any sign of the possible waning of the UK’s competitive advantage as a country of robust financial services’.
Strengthening UK-China relationship
Jin, a former supervisory board chairman of China Investment Corporation, the country’s sovereign fund, has presided over the AIIB since its inception in 2016. A strong internationalist with a fondness for doing business with the Anglo-Saxon world, Jin is about to start the final year of a second five-year mandate, which has seen the bank grow to 110 shareholders, led by China. He is due to step down in January 2026.
Setting up a European office for the bank has been under discussion for several years, with Frankfurt and Paris also in the running. As part of the warming of UK-Chinese ties under the Labour government that took office in July, Jin held talks two months ago with Rachel Reeves, UK chancellor of the exchequer, about setting up a London office. No decision has been taken. ‘The final outcome depends on the negotiation with the competing candidates’ cities,’ Jin says.
The AIIB and another China-based international development bank, the New Development Bank, have often been regarded as challengers to the US-led Bretton Woods system and its institutions. The International Monetary Fund and World Bank were set up as a result of an international conference held in 1944 in New Hampshire. Chinese scholars like to recall that China – under the Nationalist government – sent the third largest set of delegates (after the US and UK) to the conference.
Emerging markets are coming to the fore
In his remarks to the OMFIF meeting, Jin pays tribute to the Bretton Woods institutions as upholding the long-term spirit of multilateralism. ‘Institutionalised co-operation on a global scale to promote peace and prosperity’ still holds sway in spite of the ‘great changes since the end of the second world war’.
‘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’. But now, Jin says, 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.’
Jin extols the role of the UK and other developed countries in helping establishment and growth of the AIIB. ‘The UK’s role was spectacular. After the UK declared its commitment to participating in a negotiation of the articles of agreement, all the other European countries followed 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.’
Turning to general UK-Chinese ties, Jin acknowledged sources of ‘complication, conflict and confusion’ in the bilateral relationship. ‘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.’
David Marsh is Chairman of OMFIF.
This article features comments that will be shared by Jin Liqun at OMFIF’s China-UK investor forum. Watch the full conversation here.
