Infrastructure bank is 'global institution'

China is biggest shareholder of AIIB, but it is just one of 57 members, including Britain, France and Germany, says the bank's vice-president

Sir Danny Alexander believes a lack of infrastructure is holding back the development of the Asian region.

The former senior British politician and now vice-president of the Asian Infrastructure Investment Bank says many whose image of the region is of gleaming skyscrapers do not realize how backward some parts of the continent actually are.

"You know there are still hundreds of millions of people in Asia who don't have access to electricity. In terms of economic and social development, that is massively important," he says.

Sir Danny Alexander, vice-president of the Asian Infrastructure Investment Bank, says the bank has a vital role to play because many underestimate just how important the development of Asian infrastructure is in maintaining global economic growth. Zou Hong / China Daily

Alexander, who was chief secretary to the treasury in David Cameron's coalition government, is speaking at his office in Financial Street in Beijing's Xicheng district, which has panoramic views across the city.

The 44-year-old Scot took up his position at the bank in February last year after losing his parliamentary seat in the general election a year earlier.

He says he is not planning to return to Westminster any time soon, despite Prime Minister Theresa May triggering a snap general election earlier this month.

"Well, I certainly have no immediate plans to return to UK politics," he laughs.

"Look, I mean this work is fascinating, the opportunity to be part of setting up and shaping a new institution is an extraordinary opportunity and, you know, I'm very fortunate to have that chance."

Some in China were said to be initially disappointed by Alexander's appointment because it was said he lacked a background in international finance or banking, but he has now become one of the bank's most public faces.

"My role is part of the senior management and corporate secretary responsible for governance in the bank. I think I am well suited for that role," he says.

"I was one of the four most senior ministers in the government taking key political decisions for the UK. I was also involved in strengthening and improving the UK's economic relationships, you know, in Asia, with China and India."

Alexander believes the bank has a vital role to play because many underestimate just how important the development of Asian infrastructure is in maintaining global economic growth.

According to a recent report by the Asian Development Bank, Asia needs $1.7 trillion of investment every year until 2030 just to maintain its current growth momentum. Current actual spending is only around half that at $881 billion.

"It is massively important. Asia is the fastest-growing part of the world economy. Infrastructure is not just important to Asian countries. That is why I think you have so many non-Asian countries who have joined the bank."

The AIIB is a Chinese initiative that was proposed by President Xi Jinping in a speech in Jakarta in October 2013.

It was launched in January 2016 with 57 founding members. A further 13 new members were approved in March.

Although China remains the largest shareholder of the bank with a 26 percent holding, Alexander is clear it is now a multilateral institution.

"The AIIB is an international institution. It is owned by all of its shareholders and we are answerable to all of our shareholders. China is the biggest but it is one out of 57," he says.

Alexander says it is wrong also to see the bank just as the financial arm of China's Belt and Road Initiative.

"I think it is worth saying that the AIIB and Belt and Road are separate initiatives. Belt and Road is an initiative of the Chinese Government. The AIIB is an international financial institution, whose existence was proposed by the Chinese government but is now owned by many countries, including the UK, Russia, France, Germany and so on."

He agrees, however, that the AIIB and Belt and Road share similar goals.

"There is a lot of commonality between the two initiatives in the sense that we are a bank that is focused on investing in infrastructure in Asia. Belt and Road is about how it (China) can improve connectivity among its neighbors in Asia."

Alexander, who read philosophy, politics and economics at Oxford University, was head of communications for the Cairngorms National Park Authority in Scotland before he was elected a Liberal Democrat member of parliament in 2005.

He went on to have a meteoric rise becoming a senior cabinet minister just five years later.

He was, however, a high profile casualty of the UK's 2015 general election, losing his Scottish parliamentary seat to the Scottish National Party, which won 56 of the 59 seats in Scotland.

He is now settling in to what for him is a completely new life in China.

"I am enjoying it very much. I like living in Beijing. It is a fascinating city. It is a great jumping off point to explore China and Asia as well."

He says his 9-year-old elder daughter has made far greater progress with learning Chinese than he has.

"I was with my kids at their school this morning, They were having a sort of open day for parents and listening to my older daughter speak Chinese was wonderful. She is learning fast and it was a sort of admonition of myself for the lack of progress I have made in comparison."

Alexander believes the bank's work is vital for preserving the planet for his children's generation and beyond.

Some 1.5 billion people are set to move to cities in Asia over the next 25 years and if the necessary infrastructure is not built in an environmentally sustainable way there could be huge damage to the planet.

"Sustainable infrastructure is a massive priority for us. All our members have made major commitments under the Paris process to reduce their emissions or to help bring global emissions under control.

"And, you know, this period of the next 20 years, is the absolutely crucial period for the world, determining whether or not we are going to be sustainable in keeping global temperature rises under control. We have to have more sustainable infrastructure, we have to have more sustainable cities."

Alexander's involvement with the AIIB predates him taking his current post. When he was a UK cabinet minister he played a key role in the UK becoming a member in the AIIB, much to the chagrin of the United States which refused to participate.

As a result of Britain's decision, other European countries, including France and Germany, also signed up.

"George Osborne (former UK chancellor of the exchequer) and myself and other colleagues worked hard to ensure that the UK was one of the early adapters of this idea," he says.

"We were, I think it is fair to say, one of the first major European countries to join and then many others followed."

He also says it is still not too late for the US to change its mind and join.

"Whether or not the US ever decides to join is a matter for their administration and they know that the door is open should they wish to.

"They can see on the basis of the first year and a bit of the bank's work that it meets very high standards. It is not trying to lower standards. It is a bank that is working closely and collaborating with other institutions like the World Bank. It is not seeking to undermine them."

Alexander is keen to stress that the AIIB is not about creating a China-led alternative to the post-World War II US-led Bretton Woods system of global governance and has so far collaborated in projects with the World Bank and the Asian Development Bank, which was created as a Japanese initiative in 1966. The president of the bank, Jin Liqun is, in fact, a former director of the World Bank and vice-president of the ADB.

"We are working very cooperatively with those institutions. It's a great benefit to us that we can do so. There is more than enough work for all our institutions and much more besides in the Asia region."

Alexander, however, insists as the new kid on the block the AIIB has the necessary tools at its disposal to make a difference.

"We have plenty of financial firepower and we are still in the early stages of developing how we use that."

andrewmoody@chinadaily.com.cn