The Prime Minister leaves for China and then Europe today on what is likely to be a trip that defines his government’s foreign policy.
Since the coalition was formed in 2023, there have been mixed messages from the Beehive on foreign policy.
They have been noticed in Beijing.
Writing in the December Quarterly Report for the New Zealand Business Roundtable in China, the long-time China-based investment manager, David Mahon, said, “Over the past year, New Zealand companies in China have been watching Wellington grapple with its relationship with Beijing with disquiet and increasing alarm.
“A few influential politicians and bureaucrats appear to want to take the country back to a time of greater social and cultural certainty – one existing only in their selective imaginations.”
Those politicians are Winston Peters and Judith Collins who Luxon has seemed to leave alone to define foreign policy. In frequent statements and speeches they have consistently referred to the threat posed to the Asia-Pacific region by an un-named power which is obviously China.
But now that he is about to go face to face with China’s top three leaders Luxon will have to speak for himself and define where New Zealand stands vis a vis China.
Certainly, things have changed since 2017 when we were China’s closest western friend.
Then the former Treasury Secretary, John Whitehead, was encouraged by then-Prime Minister Bill English to play a lead role in assisting China in the establishment of the Asia Infrastructure Investment Bank.
The Ministry of Foreign Affairs and Trade also began an exploration into how New Zealand might participate in China’s Belt and Road programme.
Peters criticised the Belt and Road proposal when he was foreign minister during the first term of the Ardern government and nothing much more has been heard of it here since.
Ardern herself had a positive trip to Beijing and meetings with the Chinese leadership, including President Xi Jinping, in 2019.
He told her the China-New Zealand relationship had become one of the closest between China and Western countries.”
Her successor, Chris Hipkins, received a similarly warm welcome from Xi in 2023, though his response was somewhat more cautious.
This time, Xi said the relationship had remained “robust and strong” and had brought tangible benefits to people in our two countries and contributed to regional peace, stability and prosperity.
“China always views New Zealand as a friend and a partner,” he said.
But Hipkins was less sure about the strength of the relationship when he met New Zealand media after the 40-minute meeting with Xi.
Asked if he would use the same language and describe China as a friend and partner, his reply was enigmatic.
“I would describe the relationship between New Zealand and China as an incredibly important one,” he said.
“We cooperate.
“We work together on areas where it’s in our interests to do that.”
Those in New Zealand who watch the relationship closely believe that there has been a slow shift over the past eight years in New Zealand’s views of China sparked in part by the increasing tensions between the United States and Australia on the one hand and China on the other.
They also see a more assertive role being played by New Zealand’s intelligence services recycling material from our Five Eyes partners, particularly the United States.
China’s perceptive and highly articulate Ambassador in Wellington, Wang Xiaolong, noticed the shift back in 2023.
“In China, we believe that the path a country chooses for its development cannot and should not be divorced from its own history and tradition; otherwise, it will lose its roots and thus its identity and direction,” he told the New Zealand China Business Summit that year.
“Equally importantly, it must keep abreast of the trends of the times.
“While staying in the bubbles of a bygone era might give people a false sense of comfort or security, it will not solve their problems, nor will it enable them to grasp the opportunities of the present, let alone to embrace the future.”
Luxon, at times, has seemed to want to try and define the China relationship as primarily an economic one.
But it is not that simple.
China is the dominant power now in East Asia. Its economy directly influences most of the South East Asian economies.
This year’s annual survey of people in ASEAN countries by Singapore’s ISEAS Yushok Ishak Institute found that an overwhelming majority, 56.4%, believed China was the most influential economic power in the region and 37.9% (more than any other major power) believed it was the most influential political and strategic power in the region.
Fonterra CEO Miles Hurrell told last year’s China Business Summit that we needed to keep an eye on the geopolitical situation.
China has shown that it is willing to use trade sanctions and barriers to achieve political ends.
Australia found that out after Prime Minister Scott Morrison called for an inquiry in 2020 into China’s role in allowing the spread of Covid.
China responded with restrictions on Australian coal imports.
But New Zealand is vulnerable.
Fonterra is New Zealand’s largest exporter to China, which is by far New Zealand’s largest overall export market.
Thirty-one per cent of all Fonterra’s exports go to China.
Mahon argues that New Zealand is in a much more vulnerable position than Australia.
“New Zealand does not have the economic or political agency of Australia, and the government would be mistaken to believe China would not consider taking punitive trade measures against it,” he said.
That, however, is speculative.
What appears to be happening at present is that China believes it can conscript the business community to support a closer and better relationship.
Last week, China’s Consul in Auckland, Chen Shijie, at his own initiative, spoke to the Northern Employers and Manufacturers Association (EMA) members and reminded them of the importance of China to the New Zealand economy.
“We have remained New Zealand’s largest trading partner, export market, and source of imports for 11 consecutive years,” he said.
“This robust bilateral trade has underpinned New Zealand’s economic growth. “
And he called for their support.
“I look forward to EMA continuing to serve as a vital bridge, contributing further to win-win cooperation between China and New Zealand,” he said.
The Prime Minister is thus caught in the middle between business, which needs China, and New Zealand’s traditional international friends in the Anglo-sphere, who regard it as a threat to world peace.
The question on this trip will be whether he seeks to balance those two competing interests, and if so, how.
In a media conference last Friday called to discuss the trip, it seemed he was moderating his stance.
“We’ve got a lot of opportunitied with the relationship with China,” he said.
“It’s a long-standing mature relationship.
“There are huge areas of cooperation that I know we both want to advance further.
“Obviously, like all of our mature relationships, we have differences too, but I think there’s a tremendous amount of opportunities.”
He suggested the relationship was about more than trade.
“I think China is a key actor and a key player in the global geopolitical landscape,” he said.
“You’ve got the second most populous country; you’ve got the biggest economy in the world. They are a key act.
“And so I’m sure there will be a good discussion of regional and international issues as well as obviously our bilateral relations. “
That sounds much like Hipkins in 2023.
But it doesn’t sound like Peters.
This may be the trip where Luxon stamps his authority on the foreign affairs portfolio and, therefore, over Peters at the same time.
We shall see.
