Foreign Affairs

Govt stresses strength of China relationship

Analysis: Politicians and business leaders have taken pains to talk up the depth and strength of the New Zealand-China relationship following a rocky start to the year. Laura Walters was at the annual China Business Summit in Auckland.

New Zealand’s relationship with China is long, it’s honest, it’s respectful, and it’s grown stronger, despite a changing geopolitical environment.

That was the message coming from politicians and business leaders who attended the China Business Summit in Auckland on Monday.

The relationship seems to have warmed following a cold snap earlier this year - though political leaders would have the business community believe there was never anything to worry about.

Prime Minister Jacinda Ardern used her keynote address to talk about the relationship’s ability to withstand geopolitical challenges, and differing views.

“The New Zealand-Chinese relationship is in good shape. Politically we are in close touch; economically we are doing great things together; and our people-to-people links are growing day by day,” she said.

Ardern acknowledged the changing geopolitical environment, saying New Zealand’s foreign policy needed to remain independent, fair and based on the country’s values and best interests.

“We have a strong foundation; it is a difficult and dynamic environment, but as long as our fundamental foundation is good and we’re respectful and open with one another, then we’re moving forward on a good basis.”

That meant New Zealand wouldn’t always see eye to eye with other countries, regardless of size, history or political system.

“But as long as we continue to have a relationship, built on mutual respect and understanding, we can and we will discuss our differences in a mature and respectful manner,” Ardern said.

The speech came a little over a month after her first trip to China, where she met President Xi Jinping and Premier Li Kequiang.

Ardern said her takeaway from the visit was New Zealand shouldn’t shy away from harder discussions, because the world was having to confront harder issues.

“We have a strong foundation; it is a difficult and dynamic environment, but as long as our fundamental foundation is good and we’re respectful and open with one another, then we’re moving forward on a good basis.”

The relationship was important to both parties, and it would not be defined by differences, she said.

China’s ambassador to New Zealand Wu Xi also spoke positively about the relationship, saying it had grown in the past year. It had experienced its challenges, she said.

But the major trading partners – New Zealand’s two-way trade with China recently reached $30 billion - had held the course “and navigated through unchartered waters together”.

Trade Minister David Parker says the relationship between China and New Zealand never cooled, and media over-hyped issues earlier in the year. Photo: Lynn Grieveson

This sentiment was echoed by New Zealand companies doing business in China – again they outlined challenges, but spoke of a generally positive relationship, and their desire to continue to invest and innovate.

Trade Minister David Parker had a similar message: “The New Zealand-China relationship is in good heart.”

It was a deep relationship, and when the countries disagreed, they could work through those issues without imperilling the relationship, he said.

When asked about specific disagreements the relationship has had to withstand, Parker only pointed to Huawei.

He denied there were any other issues hampering the relationship, and said the so-called blip earlier this year was no such thing. He and Ardern both wrote it off to an over-zealous media and Opposition.

While not unsurprising, the strong push to reassure the business community of the health of the relationship was interesting.

Just a couple of months ago a flagship tourism event was postponed by China, an Air NZ plane turned back due to an issue over papers, a salmon shipment was held up, and the Chinese Government issued warnings to tourists about the dangers of travel to New Zealand. This seemed to be a response to New Zealand’s lack of commitment to China’s Belt and Road Initiative, changes to the overseas investment regime, and ongoing Huawei tensions.

It looked like China was sending a warning, couched heavily in plausible deniability, as is the superpower’s modus operandi.

On Monday, Parker pointed to increased trade, said the salmon issue was not a Government hold-up; it was entirely Air NZ’s decision to turn back; and tourism from China was booming.

Nothing to see here.

Movement on Belt and Road

New Zealand’s failure to re-commit to the Belt and Road Initiative (BRI) had become a point of contention.

A memorandum of agreement was signed by the previous government, but the coalition had been stalling.

It saw no advantage in what seemed to be a strategic infrastructure-focused expansion plan.

This position changed following Parker’s visit to China, for the BRI forum, last month.

Following negative coverage and fears about debt and corruption associated with BRI projects, Xi rebranded his flagship policy, talking about a “green” BRI.

This was a plan the Government was comfortable considering.

“It’s important to the Chinese Government that some of these things be looked at from a Belt and Road framing, and we’re happy to consider that.”

Any projects would be “mutually beneficial” – a phrase used repeatedly during the summit - and would not have to be infrastructure-focused. This opened up the possibility of pest control projects, and flight routes through New Zealand linking China and South America.

“I think the fact we’ve taken a little bit of pause as we’ve worked to flesh out that arrangement is no bad thing because Belt and Road has really evolved,” Ardern said.

Parker seemed enthusiastic about the new-look BRI, saying it was a true evolution.

But when asked what “mutually beneficial” projects would be carried out under BRI which couldn’t have been completed under the current FTA, or the future upgraded FTA, Parker just acknowledged there were different ways to cooperate on projects.

“It’s important to the Chinese Government that some of these things be looked at from a Belt and Road framing, and we’re happy to consider that.”

Parker’s comment implied commitment to the new-look BRI was more about improving the political relationship, and it seems to have worked.

Huawei tensions 

But there was one man in the room who did not seem to be singing from the same songbook.

Huawei New Zealand deputy managing director Andrew Bowater used the summit to hit out at the Government, saying the GCSB’s concerns about security of Huawei equipment were not technical, but geopolitical.

"We were blindsided by what happened. We think this could have been handled a lot better," he said, adding that the company’s brand had been damaged.

Huawei New Zealand's Andrew Bowater pulled no punches when airing his frustrations over the handling of the Huawei saga. Photo: Laura Walters

He went so far as to say the concerns raised by the GCSB were “classic fearmongering”.

But when asked whether this would do long-term damage to the relationship, Bowater said no.

“I think it would be overstating things to say we are the be all and end all.”

What’s changed?

Bumps in the China-New Zealand relationship have smoothed following Ardern’s first trip to Beijing about a month ago.

In the words of The Economist Intelligence Unit’s Duncan Innes-Ker, the most important thing was she went, and got that all-important face time.

Ardern used the opportunity to reassure Chinese leaders any changes to overseas investment laws would be applied with an even hand, and would not discriminate against any specific country – a message well-received by Xi and Li.

Parker’s attendance at the BRI Forum and subsequent warming to China’s flagship investment and development plan also made a marked difference to rhetoric around the relationship.

Meanwhile, the two countries are continuing to work towards the FTA upgrade.

Bowater’s address to the summit showed Huawei was still an issue to watch, but it seemed New Zealand is back in China’s good books, while other countries continue to be banished to the naughty seat.

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