The former Foreign Minister, Murray McCully, has come out in defence of his Government’s relationship with China.

McCully, who has said virtually nothing in public since he retired at the last election, spoke to the New Zealand Food and Grocery Council conference in Brisbane on Friday.

And there are now questions in New Zealand about whether the relationship with China has been damaged by the criticism of it in the Defence Policy Statement earlier this year.

Those who believe this to be the case cite the apparent stalling of talks over an upgrade of the Free Trade Agreement and the failure of Trade Minister David Parker to meet his Chinese counterpart during his trip last week to China.

Meanwhile, there is also still no confirmation of a proposed visit by the Prime Minister to Beijing in December.

Whether that is a political matter or just simply because China has so many more important relationships to deal with is unclear.

McCully is an advocate of keeping private any tough talk with China.

“We need to understand that China is an emerging superpower that is assertively going to pursue its own interests,” he told the conference..

“That is a reason for us to manage the relationship with good judgement and skill and with our eyes wide open.

“And like any other business, we should be working hard to ensure that we have balanced our trade portfolio relationships rather than being too dependent on one market.”


McCully said that if the Chinese wanted to help in the Pacific, then New Zealand should welcome that and work with them.

He cited the example of proposed Chinese aid for Niue which would improve the roads there and thus make the island more attractive for tourism which would be another step on the road to economic sustainability which would be in New Zealand’s interests.

His comments come on the eve of a meeting between President Xi of China and Pacific leaders to be held in Port Moresby as part of the APEC meeting.

Sydney’s Lowy Institute estimates that Chinese aid in the Pacific has grown substantially, with China committing more than US$1.7 billion in aid to eight Pacific Island countries (including Timor-Leste).

“To put this into context, total traditional aid to these countries over the same period was over US$9 billion, with aid from Australia making up almost two-thirds this amount,” said researcher Jonathan Pryke.

Of particular concern to New Zealand is Tonga which has a large Chinese loan it is required to begin repaying next year at $US7.9 million a year which will more than double the country’s debt servicing as a percentage of GDP to 3.8%. (The Tongan Government’s annual budget is around $US30 million a year.)

McCully’s comments reflect the consistent position of the previous Government which was to maintain an independent position on China, separate from the United States and Australia and to keep any criticism to private meetings with the Chinese leadership.

A recent post on the “Point of Order” blog has raised a number of questions about the relationship within the tight-knit Wellington international relations community.

The anonymous post is believed to have been written by someone with a personal connection to the Ministry of Foreign Affairs and Trade.

It read: “A seismic shift is underway in NZ’s geopolitical relationships. Led by Foreign Minister Winston Peters, the Coalition government has eased away from the previous National government’s ready accommodation with China and the presumption that NZ could easily balance the United States and China relations to a more hard-nosed approach.  Several elements have contributed.

“First, a powerful pro-Beijing faction in the Ministry of Foreign Affairs and Trade has lost influence.

“Second, the present government is more attuned to current geopolitical shifts in NZ’s immediate north-west.

“Now there is a new, sharper understanding of the implications of a move by China into contacts with NZ’s immediate Pacific environment such as the Cook Islands.”

The biggest question is whether there has been a change within the Ministry of Foreign Affairs.

The Director of Victoria University’s Centre for Strategic Studies, David Capie, is sceptical but wonders whether there has been a subtle change within the Ministry.


“I’m not convinced about claims of policy changing because of some sort of power struggle inside MFAT,” he told POLITIK.

” A new government always gives officials the chance to recalibrate positions and in Mr Peters they’ve certainly found a supportive minister.

“That said, I don’t think the shift is as black and white as some are suggesting.”

That recalibration looks to be back towards New Zealand’s traditional old ANZUS partners, Australia and the United States.

But while that may be what the Defence Policy Statement and various comments from Winston Peters suggest, one set of facts suggests it remains business as usual with China.

Not only have New Zealand Ministers not rushed to Washington to meet with the Trump administration but Trade Minister David Parker has just  completed a visit to China; Energy –      Minister Megan Woods visited in September as did Regional Economic Minister Shane Jones while Education Minister Chris Hipkins went in July; Climate Change Minister, James Shaw in July and Foreign Minister Winston Peters in May. 

That compares with only two Ministers from the National Government who went last year. Trade Minister Todd McClay did not visit at all. 

A spokesman for Parker said he had “a long and good meeting – more than an hour long” – with Vice Minister Wang Shouwen who is responsible for the bilateral trade relationship and negotiations, and reports directly to Vice Premier Liu He on WTO reform and US-China trade. 

Parker has downplayed the possibility of New Zealand getting increased dairy access to China through the Free Trade Agreement upgrade. 

“In reality, those limits expire in the next three to five years anyway,” he told RNZ. 

“By that point, New Zealand will have the best dairy access into China of any country in the world, so it’s hard for us to do better than that.” 

In a way that is the dilemma that faces New Zealand with its China relationship – it has been one of the best of any developed country. 

But as tensions between China and the US increase the space for New Zealand to sit independently in the middle is contracting.