The 20-year-old has cemented his place in Frank Lampard’s side ahead of Cesar Azpilicueta in recent weeks and has been capped four times by England after making his senior debut last month.
James and Alexander-Arnold are both vying for the same spot in England’s team.
And the Liverpool defender says he welcomes the competition from his Chelsea rival.
‘Chelsea is probably the hardest team to break into as a local lad and as a young English player. For him to be able to do that is a statement itself.
‘He has shown since he came in over the last year or so that he is a good player, solid defensively and good going forward.
‘He is an all-round right-back and probably up there with some of the best in the league.
‘He is still young and has a lot to learn but as for his talent and potential he is a very good player.
‘I think right-back is the most populated position for England, there are a lot of really good players going for one position so it is always going to cause headaches for the manager.
‘I think there are maybe five, six who could easily play that position and do it to a high level. It is tough.’