China 2.0 and the challenge it poses to New Zealand

by Anne-Marie Brady / 08 November, 2018

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New Zealand-China Relations in the Xi Jinping era and beyond

China's importance to New Zealand reached a new milestone when it topped our list of trading partners. As this article by Anne-Marie Brady shows, relations between the two countries have always ebbed and flowed on changing political tides. Now, with Xi Jinping in charge, China is seeking to cement a global leadership role - and that means New Zealand is left to navigate the changing tide again. How does a country of not quite 5 million negotiate the needs and wants of a trading partner of 1.3 billion?

In 2017 the People’s Republic of China (PRC) became New Zealand’s largest trading partner. New Zealand’s economic prosperity is now closely linked to China, and the same goes for New Zealand’s other major trading partners Australia, the USA, and Japan.

Yet New Zealand-China relations have been under pressure in recent years, as have New Zealand-US relations. This has been the case particularly since 2012 when CCP General Secretary Xi Jinping came to power. Under Xi, the PRC has adopted an assertive foreign policy that poses strategic challenges to New Zealand—as well as its traditional allies.

China’s new foreign policy impinges on New Zealand’s national interests in a peaceful environment in Antarctica, the South Pacific, and the Indo-Asia-Pacific. Meanwhile, the China policies of the Trump administration are also posing difficulties for New Zealand-US relations. In 2013, New Zealand’s Minister of Defence, Dr Jonathan Coleman, admitted that New Zealand was currently “walking this path between the US and China.” 

The New Zealand government has to try to balance its economic security against security interests and sovereignty—but if national security is seriously challenged, then economic security becomes a secondary concern. In a time of global economic uncertainty and geopolitical flux, getting the China—and US—relationship right is one of the biggest challenges in New Zealand foreign policy.
Xi Jinping.

New Zealand's relationship with China under Xi Jinping faces challenges. Photo / Getty Images

Why does New Zealand interest China?

New Zealand has often been described as having a “special relationship” with China, and officials have frequently tried to analyse the basis for this. Apart from New Zealand’s own longstanding efforts to build goodwill with the CCP government ever since diplomatic relations were established in 1972, New Zealand is of interest to Xi’s China for a number of significant reasons.

The New Zealand government is responsible for the defence and foreign affairs of three other territories in the South Pacific: the Cook Islands, Niue, and Tokelau—which potentially means four votes for China at international organisations, and is important in terms of China’s growing South Pacific interests.

New Zealand is a claimant state in Antarctica and one of the closest access points there; the CCP government has a long-term strategic agenda in Antarctica that will require the cooperation of established Antarctic states such as New Zealand. New Zealand has cheap arable land and a sparse population and the CCP government is seeking to access foreign arable land to improve its food safety.

New Zealand supplies 90 per cent of China's foreign milk powder, and China is the biggest foreign investor in New Zealand’s dairy sector. New Zealand is useful for near-space research; which is an important new area of research for the PLA as it expands its long-range precision missiles. New Zealand has unexplored oil and gas resources. In 2016, New Zealand was described as being “at the heart” of global money laundering. The Cook Islands, Niue, and Tokelau are well-known as tax havens and money laundering nations.

New Zealand is also a member of the UKUSA intelligence agreement, the Five Power Defence Arrangement, and the unofficial ABCA grouping of militaries, as well as a NATO partner state. Extricating New Zealand from these military groupings and away from its traditional partners, or at least getting New Zealand to agree to stop spying on the PRC for the Five Eyes, would be a major coup for the Xi Government’s strategic goal of turning China into a global great power.

New Zealand’s economic, political, and military relationship with China is seen by Beijing as a model to Australia, the small island nations in the South Pacific, and more broadly, other Western states. New Zealand is also a potential strategic site for the PLA-Navy’s Southern Hemisphere naval facilities and a future Beidou ground station—there are already several of these in Antarctica. All of these reasons make New Zealand of considerable interest to China under Xi Jinping.

Chinese miners in New Zealand.

Miners with Alexander Don (far left) at Kyeburn Diggings in Otago, 1902. Courtesy of Alexander Turnbull Library

How NZ-China relations evolved

New Zealand has a long and complex relationship with China, one that dates back as far as 1792 when a London firm contracting to the East India Company culled thousands of kekeno (New Zealand fur seal) to swap on the China market for tea. From 1865, several thousands of Chinese men joined the New Zealand gold rush and some of them settled in New Zealand. Parliamentary acts in 1881 and 1896 were passed to restrict Chinese immigration into New Zealand and impose a poll tax. The poll tax was waived from 1934, but not repealed until 1944.

New Zealand missionaries and aid workers also set up schools and hospitals in Republican China. One of them, Arnolis Hayman, was captured and held for eighteen months on the Chinese Communist Party’s (CCP) Long March. Springfield-born Rewi Alley helped to launch the Chinese Industrial Cooperative movement during WWII and after 1949 became one of China’s most well-known foreigners. Another famous New Zealander, James Bertram, interviewed Mao Zedong in Yan’an and his excerpted interview was reproduced in the famous Little Red Book. From 1937-1941 New Zealand welcomed 493 women and children from China as war refugees. New Zealand and China were allies in both World War I and World War II. 
Rewi Alley meeting with Mao Zedong. Photo / Anne-Marie Brady

New Zealand’s diplomatic relationship with China dates from 1909 when the Imperial Chinese Government established a Chinese Consulate in Wellington. In 1938, under the government of the Republic of China (ROC) it was upgraded to a Consulate-General, then in 1961 to an embassy. But the 1947-1949 Chinese Civil War and its aftermath disrupted New Zealand’s relations with China, and ultimately, had an impact on the development of New Zealand’s independent foreign policy.

On 1 October 1949, Mao Zedong announced the founding of the PRC from the podium of the Gate of Heavenly Peace in Tiananmen Square. The Chinese Communist Party (CCP) had fought a long civil war against the Republican government, interrupted by WWII when they joined in a temporary alliance against the Axis powers and culminating in a final struggle for power between 1947 and 1949. In 1949, New Zealand diplomats recommended New Zealand should recognise the PRC, in accordance with the principle of recognising the “government in control”. But recognition was postponed because civil war was still ongoing in many parts of China. New Zealand, along with many other diplomatic partners of the ROC, decided to wait until the situation became clear. The New Zealand National Party government, led by Sidney Holland, was also strongly anti-communist and was unwilling to compromise that by recognising the PRC.

Then in October 1950, the CCP sent a 300,000 strong military force to support the Korean Workers Party in their attacks against the Republic of Korea. The question of New Zealand’s diplomatic recognition of the PRC was then put on hold indefinitely. The USA vetoed allies from establishing diplomatic relations with the PRC, and also ordered a trade blockade which lasted twenty years. New Zealand was part of the 16-nation international military forces sent by the UN to defend the Republic of Korea.

Vic Wilcox, President of the NZ Communist Party, meeting with Mao Zedong on a visit to China in the late 1960s. Photo / Anne-Marie Brady

From 1949 to 1972, a 37-folder file on the topic of the recognition of the PRC built up in the New Zealand foreign ministry archives. But New Zealand exporters broke the trade embargo in 1957 and began exporting wool to China. Throughout those years, New Zealand diplomats and politicians of both main political parties came to agree that New Zealand must acknowledge the reality that the CCP was the government in control of China. But they could only wait for the US to change its policy on the PRC.

A 70s change in attitude

The situation changed very dramatically in 1971. First of all, US Secretary of State Henry Kissinger returned from a secret diplomatic visit to Beijing. Soon after the PRC gained the China seat at the UN following a vote in the General Assembly. Then in February 1972, US President Nixon visited China. The US and China joined in a quasi-alliance against the USSR, the so-called “Strategic Triangle”.

Henry Kissinger with Mao Zedong. Photo / Wiki Commons

New Zealand voted in support of the PRC taking up the China seat at the UN in 1971, after years of voting against the motion. In 1970 New Zealand had even proposed a “two China” approach, whereby both the ROC and PRC would be recognised internationally. But the proposal was rejected by both the ROC and PRC, a serious tactical error on the part of the ROC. One of the first actions of the Kirk Labour government (1972-1973) was to initiate diplomatic negotiations with the PRC. Diplomatic relations were established with Beijing on December 21, 1972, and the New Zealand government dis-established formal relations with Taipei soon after.

The Labour government was initially very cautious in exploring how the relationship might develop with the PRC beyond formal contacts. In the early 1970s, the PRC was still in the grip of the Cultural Revolution and there was considerable internal disagreement on foreign policy issues. In these early years, New Zealand and the PRC had little in common beyond a shared opposition towards the encroachment of Soviet power into the Asia-Pacific and the fact that both countries shared a tactical alliance with the United States. Both New Zealand and PRC diplomats described the relationship as essentially “political”. New Zealand set up an extensive programme of cultural, sporting and economic exchanges to enhance awareness about New Zealand among Chinese political leaders and the Chinese people.

In time, trade links would overshadow the political relationship. Yet politics were never far from the expansion, or reduction, of trade. In the year that New Zealand established diplomatic recognition of the PRC, Chinese traders had virtually stopped buying from New Zealand. In 1971 New Zealand’s exports to China were a mere NZ$1.7 million. In the late 1960s, the CCP government punished New Zealand for making critical statements at the United Nations about its activities in Tibet and India, and restricted trade. Yet only 18 months after diplomatic recognition, the PRC came close to becoming New Zealand’s second most important market in Asia, with exports of $17.4 million. New Zealand’s opportunity to trade with the PRC soon came to be regarded by many diplomats in New Zealand as totally dependent on the attitude of the New Zealand government to the CCP and its strategic preoccupations.

In 1975 New Zealand officials argued that it was necessary to “stimulate [the] interest of China in New Zealand from time to time, in order to keep up [the] expansion of trade.” This is now standard wisdom on New Zealand-China relations, repeated in report after report. In 1978, New Zealand was the first country to accord China “developing country” status for trading purposes. This meant that Chinese imports received special lower tariff rates aimed at helping to ease the trade imbalance between the two countries, which was overwhelmingly in New Zealand’s favour in the 1970s and 1980s. It was the first of many economic “firsts” that would be a feature of New Zealand-China relations in the years to come, but not one which would later be celebrated as it did not suit the subsequent narrative of promoting China’s “market economy” status.

Muldoon and Mao

Rob Muldoon meets with Mao Zedong in Beijing. Photo / Getty Images

Mr Muldoon goes to Beijing

In 1976 Robert Muldoon became the first New Zealand prime minister to visit the PRC. He was also the last Western leader to meet Mao Zedong before his death on September 9, 1976. Muldoon visited the PRC a second time in 1980 and his talks focused on the spread of Soviet influence in the Asia-Pacific region. Prime Minister Muldoon told Deng Xiaoping “any support China could give to the island states of the [Pacific] Forum, whether political or economic, would help maintain political stability in the South Pacific and make it very difficult for Soviet penetration to take place". Muldoon’s invitation to Beijing to extend its diplomatic and strategic rivalries into New Zealand’s geographic region helped set a pattern for the PRC’s interactions in the South Pacific region.

With the election of the fourth Labour government in 1984, the pace of New Zealand-PRC relations stepped up, as the new government saw hope for expanding export markets in the rapidly expanding Chinese economy. The Fourth Labour government (1984-1990) made trade the focus of its foreign policy. Asia, and in particular the PRC, was seen as an obvious market for New Zealand products.

Talk of a “special relationship” between New Zealand and the PRC was common during the Fourth Labour government. There was euphoria in government circles at the amount of attention the PRC seemed to be paying to New Zealand. It was in the PRC’s interest as much as it was in New Zealand’s to maintain the idea that there was a “special relationship” between the two countries. What New Zealanders dealing with the PRC did not seem to realise at the time, was that in the 1980s, the CCP government claimed a “special relationship” with virtually every country it had diplomatic relations with. Not only that, the much vaunted “friendship” between the two peoples was a standard term in the CCP’s diplomatic vocabulary.

By 1985, the PRC was New Zealand’s largest buyer for wool and the sixth-largest export market overall; exports had grown to $298.2 million. In 1986, the New Zealand Parliament’s Foreign Affairs and Defence Committee, chaired by Helen Clark, predicted that the long-term prospects for expansion of commercial and other links were extremely good.

An interdepartmental committee led by the Department of Trade and Industry developed a China strategy for New Zealand, aimed at increasing New Zealand exports to China. In 1987, New Zealand and China signed a Science and Technology Cooperation Agreement, so that New Zealand could gain better market access through technology transfer.

The late 1980s was a period of enormous optimism about the potential for expanding New Zealand-PRC economic relations. In 1986 the New Zealand Chinese community was 18,000 strong; many were descendants of the Cantonese who arrived in New Zealand during the gold rush years.

But in that year New Zealand adjusted its migration policies, and the numbers of migrants from China, Taiwan, and Hong Kong would expand tenfold over the following decades.

Tiananmen reality check

The events of April-June 1989—the pro-democracy movement that culminated in the violent crackdown of June 4, 1989—had a significant impact on popular and official impressions of the relationship between New Zealand and China. New Zealand joined with other Western governments in making strong statements criticising the CCP government’s actions.

The unknown protester known as Tank Man, June 5 1989. Photo / Wiki Commons

In Auckland and Wellington thousands of New Zealanders took part in protest marches against the June 4 violence. Commentators criticised the New Zealand government for being blinded by the “special relationship” rhetoric and not looking more critically at problems and differences between the two countries. In August 1989 a discussion paper on New Zealand-PRC relations concluded, “The violent reaction from outside comes from the fact that the last ten years created an image of a good China. Then suddenly it turned bad. If we are honest, wishful thinking about China let us down.”

The events of 1989 restored New Zealand-PRC official relations to a more pragmatic basis than had been the case during the “China fever” of the 1980s. The change of government to the National Party (1990-1999) was a factor in this more pragmatic approach. Around the same time, the ROC began to adopt a more realistic foreign policy and was willing to establish “substantive relations” short of diplomatic recognition, with nations who recognised the PRC. In 1990 New Zealand set up a representative office in Taipei with personnel seconded from the New Zealand foreign ministry and the ROC set up a Taipei Economic and Cultural Office in Wellington.

The end of the Cold War in Eastern Europe led to a dramatic shift in Western perceptions of China. In the years after 1989 the PRC was treated as an international pariah, no longer seen as a quasi-ally of the West, and, after the Soviet coup of 1991, no longer needed as a quasi-ally of the West. The general assumption among New Zealand’s closest allies was that the CCP government was doomed to fall. A 1992 report from the New Zealand Beijing embassy speculated that “the chances of weak politicians such as Jiang Zemin and Li Peng remaining in power for long in the post-Deng succession struggle period must be very small.” A report from New Zealand’s Washington embassy concluded that “Deng is betting against history.”

Yet in public, the New Zealand government adopted a positive attitude towards the PRC and made a point of distinguishing itself from the US and Australia who were more openly critical. As in the 1970s, diplomats stressed that “we cannot get to first base economically if we do not get the political relationship right.” New Zealand-PRC trade gradually grew, and educational and other ties continued to expand. But the ROC continued to be more important to New Zealand in trade and investment terms and as a source of tourists and migrants. In 1995 Taiwan was New Zealand’s sixth most important trading partner, while the PRC came seventh.

Breaking with tradition

New Zealand-PRC relations have always been influenced by the state of US-PRC relations. In 1995, US-PRC relations were at an all-time low. The US Congress had facilitated ROC President Lee Teng-hui’s visit to the US, and the PRC made strong objections. New Zealand-PRC relations became noticeably warmer from this period on. New Zealand took a critical view of US policies towards the PRC and sought then, and subsequently, to clearly distance itself from these policies in the eyes of the CCP government. In the Cold War years, New Zealand’s relationship with the PRC had been set by the US, but by the 1990s some New Zealand diplomats wanted to break with that restriction. A 1995 report asserted, “US policy towards China lacks consistency. To a large extent, it is being driven by domestic political imperatives. New Zealand does not face the same constraints, and will not necessarily find it an advantage to pursue its interests in China in close association with the US.” New Zealand diplomats argued that China was very important to New Zealand and in the future, would likely become more important to New Zealand than the US and the UK.

From the mid-1990s the PRC became a major source of new migrants to New Zealand. From late 1997 large numbers of Chinese students began coming to study in New Zealand on short-term visas. In the same year, New Zealand was the first Western country to sign off on the bilateral paperwork that led to China being accepted into the WTO. In 1999, China’s National Tourism Administration made New Zealand an approved tourism destination for Chinese tour groups.

With the election of the Clark Labour government (1999-2008), New Zealand found common ground with the PRC on opposition to the US invasion of Iraq. But in 2003, New Zealand Prime Minister Helen Clark revealed apprehension about the PRC’s rise when she stated that she opposed the Iraq war because it set a precedent of large powers ignoring the United Nations and international law. She said: “This is a century which is going to see China emerge as the largest economy, and usually with economic power comes military clout. In the world we are constructing, we want to know [that the system] will work whoever is the biggest and the most powerful.” From the perspective of a small nation such as New Zealand, a strong international system and respect for international law are the best means to secure regional security and global peace. 

New Zealand’s trade, education, and tourism links with China expanded dramatically under the Clark government. In 2003 New Zealand signed a Comprehensive Cooperative Relationship Agreement with the PRC. In the same year, New Zealand and the PRC updated their Science and Technology Cooperation Agreement. In 2004, New Zealand and China began negotiations to develop a Free Trade Agreement (FTA). Prime Minister Clark told People’s Daily New Zealand was “the first developed country to conclude a bilateral market access agreement with China for its entry to the World Trade Organization; the first to recognize China's status as a market economy and the first country to enter FTA negotiations with China”. Ms Clark said New Zealand was hoping to conclude a fourth first, to be the first developed country to conclude an FTA agreement with China.

Also in 2004, the Ministry of Foreign Affairs and Trade released an update on New Zealand’s most important diplomatic relationships. Six countries or territories were designated as “bedrock” relationships for New Zealand, meaning that they were the most important. The first five were unremarkable: Australia, the US, Japan, the European Union, and the South Pacific Forum countries; but adding China to the list was a significant change.

The growing importance of the PRC internationally and the strength of the China market meant that it was now more essential than ever before that New Zealand maintained a positive and dynamic relationship with that country. It did not imply a turning away from New Zealand’s traditional allies, but it did suggest that New Zealand’s politicians and diplomats believed that the global system followed a very different order from that of the Cold War years. In April 2008, Prime Minister Clark and CCP General Secretary Hu Jintao signed the New Zealand-China FTA. It was China’s first with any Western nation.

John Key with Chinese Premier Li Keqiang. Photo / Getty

John Key with Chinese Premier Li Keqiang during a five day visit to China in 2016. Photo / Getty Images

The ties that bind

The 2008-2017 National Party government (led by John Key from 2008-2016 and Bill English from 2016-2017) continued the China policies of the Clark government and built on the economic opportunities offered by the signing of the FTA. The expansion of New Zealand-China trade was commonly believed to have cushioned New Zealand from the worst effects of the Global Financial Crisis of 2008. The dairying industry particularly benefited. By 2016, 90% of China’s imports of whole milk powder came from New Zealand and 11% of all infant formula imports.

With strong government encouragement, New Zealand-China scientific, economic and strategic links continued to expand. The New Zealand-China Strategic Research Alliance (SRA) was set up in 2010. The goal of the SRA was to increase New Zealand-China scientific research partnerships and increase commercialisation of science. China is now New Zealand’s sixth largest foreign scientific research partner.

In 2014, New Zealand and China signed an agreement to become “Comprehensive Strategic Partners”, one of a series of such agreements which the PRC has signed with partners around the world. A 2014 report by the former head of the New Zealand Defence Force’s International Department recommended New Zealand develop military links with the PRC as part of “diversification” of military links. New Zealand’s defence cooperation with China now extends through high-level visits, defence consultation, joint military exercises, humanitarian and disaster relief cooperation, as well as training and officer exchanges.

In 2015 New Zealand was the first Western country to join China’s Asian Infrastructure and Investment Bank (AIIB). Then in 2017, New Zealand was also the first Western government to sign a Memorandum of Agreement with the PRC’s Belt and Road Initiative (BRI/OBOR), Xi Jinping’s signature policy. New Zealand hoped to benefit as a broker for infrastructure projects between China in the South Pacific and into South America. Under the Key-English National Government, New Zealand expanded relations with China beyond trade, to finance, telecommunications, forestry, food safety and security, education, science and technology, tourism, climate change and Antarctic cooperation. But this broadening of relations did have some risks, as hinted at by National’s Minister of Defence, Jonathan Coleman’s comments in 2015 about the “tightrope”.  

The Key-English National Party government followed two main principles on China: 1. The “no surprises” policy, which appeared to mean avoiding the New Zealand government or its officials or anyone affiliated with government activities saying or doing anything that might offend the PRC government; and 2. Upholding the long-standing emphasis on “getting the political relationship right”, which under National came to mean developing extensive and intimate political links with CCP local and national leaders and their representatives and affiliated actors in New Zealand. According to the Minister of Foreign Affairs from 2008-2017, Murray McCully, getting the China relationship right was the “top priority” of his government.

This cautiousness not to rock the boat over New Zealand-China relations due to economic interests lay behind New Zealand's reluctance to join the USA and Australia in criticising China's military-base building activities on disputed islands in the South China Sea; activities which threatened New Zealand’s sea lanes of communication and reliance on a rules-based international order for protecting its interests.

Following massive pressure from Australia and the US, Prime Minister Key and other ministers made a series of muted remarks in 2015 and 2016, but it was far from what New Zealand's allies had hoped for, who accused the National government of being soft on China—and some of them may have muttered under their breath about New Zealand as the “soft underbelly” of the Five Eyes. The Key-English National government's reticence to speak out on the South China Sea, despite the fact New Zealand has the fourth largest maritime territory in the world and relies on respect for international norms for the protection of its rights, was in contrast to the New Zealand Lange government’s outspokenness in 1989, following the Chinese government’s crackdown on the student protest movement.

By 2018 there were 200,000 Chinese New Zealanders and just over half of them were recent migrants from the PRC. The New Zealand Chinese population has become a significant voting population. 

The numbers of tourists and students visiting New Zealand has also grown substantially. In 2012 China became New Zealand’s second largest tourism market, 447,000 Chinese tourists visited New Zealand in 2017. China has been New Zealand’s largest education market for nearly twenty years, although overall enrolment figures have dropped since the peak years. In 2003 there were 115, 000 Chinese students studying in New Zealand, while in 2017, 40,000 student visas were granted to Chinese students to study here.

Jian Yang.

Dr Yang Jian confirmed he taught 'spies' in China, but denied being one. Photo / RNZ

The impact of the Yang Jian revelations

In September 2017 an investigative report broke the news that a National Party MP, Dr Yang Jian had worked in Chinese military intelligence for 15 years and that he was a member of the CCP, but had erased this history from his residency applications and job records in New Zealand. In New Zealand, unlike Australia, the topic of the CCP’s foreign political interference activities had never before been raised publicly—although New Zealand intelligence officials did mention concerns about such activities at a Five Eyes meeting in June 2017. Soon after, my research paper, “Magic Weapons: China’s Political Influence Activities under Xi Jinping” was made public, which outlined the CCP’s political interference activities in New Zealand. The paper aroused intense international interest in how New Zealand would handle this situation.

Change of government, change of direction?

New Zealand held national elections in September 2017. After six weeks of negotiations, in October 2017 a Labour-New Zealand First-Greens coalition government was formed. The new government early on demonstrated it was aware of the need for adjustments in New Zealand’s China policy. Foreign Minister Winston Peters stated that, under the Labour-New Zealand First-Greens government, “New Zealand is no longer for sale”.

Prime Minister Ardern highlighted her concern that New Zealand maintain its reputation as a nation that is free from corruption. She said under her government, New Zealand would remain outward-facing, while still looking after its own interests.

James Shaw, leader of the Greens, has made few foreign policy statements, but his party is a strong advocate of an independent foreign policy for New Zealand and had previously been critical of the CCP’s policy on Tibet, Falungong, and New Zealand’s agreement to work with Huawei for the rollout of 5G. In an unusual step, the Coalition government’s national security briefings were released to the public. A section on espionage featured a discussion about foreign hacking attacks and “attempts to unduly influence expatriate communities”. The briefing advised the PM to “openly provide information about public security issues to the public."

Yet, as the previous government did, the Ardern government has continued to send its ministers to high profile events in New Zealand organised by CCP proxy groups and the agencies who promote the Belt Road Initiative in New Zealand. Ardern has, however, made a number of statements acknowledging that New Zealand “must not be naïve” and that New Zealand was indeed experiencing “foreign interference activities”. In February 2018 the Ardern-Peters government announced a new Pacific-focused foreign policy, one which many interpreted as responding to concerns about China’s growing dominance in the South Pacific.

In June 2018, Defence Minister Ron Mark launched the Strategic Defence Policy Paper which highlighted concerns about China’s activities in the South China Sea and human rights abuses, and featured a discussion about “foreign political interference” activities, without naming names. It was clear, that New Zealand’s China strategy was undergoing a correction, setting a direction somewhat different to that which had been followed for at least the last thirty years and reflecting the major changes to the security environment brought about by the PRC government’s more assertive foreign policy under Xi Jinping.

Winston Peters meets with his Chinese counterpart Wang Yi in Beijing, May 25, 2018. Photo / Getty Images

Xi Jinping's Globalisation 2.0

Under Deng Xiaoping, Jiang Zemin, and Hu Jintao, China tried to make friends with neighbouring states and promoted a peaceful global foreign policy. But since Xi Jinping came to power in 2012, China has followed a policy designed to defend its sovereignty. It is no longer afraid of conflict and is willing to face up to any threats to its sovereignty and national security. Following the 2008 global financial crisis, the CCP foreign policy line became increasingly assertive in protecting China’s rights. However, the PRC was then loath to be seen as taking on a global leadership role, preferring instead to see itself as a “partner” with other nations. Xi Jinping’s administration has taken CCP foreign policy to a new level. The PRC is now claiming a leadership role in global affairs and pursuing an assertive foreign policy. During the 1960s, Mao Zedong’s China was promoted as the centre of world revolution. But under Xi Jinping, the PRC aims to lead Globalisation 2.0, via a China-centred economic order; a new economic and strategic bloc known as One Belt One Road. Xi’s foreign policy. China is now on the path of becoming a global great power and is seeking change in the global order.

Xi Jinping’s assertive foreign policy includes the expansion of CCP political influence activities (known in China as united front work). United front work has now taken on a level of importance not seen in China since the years before 1949 when the CCP was in opposition. The CCP’s foreign interference activities incorporate co-opting elites, information management, persuasion, and accessing strategic information and resources. They have also frequently been a means of facilitating espionage. One of the key goals of CCP foreign interference activities is to influence the decision-making of foreign governments and societies in China’s favour. New Zealand has been a target of these political interference activities, as have many other states.

In 2015, the CCP government identified the polar regions, the deep seabed, and outer space as China’s new strategic frontiers, noting that they are ripe with opportunities and open to all states with the capacity to exploit them. As China’s comprehensive national power grows, the government is taking advantage of every available opportunity in these three zones.

The PRC has built a series of military-bases on disputed islands in the South China Sea and declared an ADIZ over the disputed Senkaku/Diaoyu islands and Sokota Rock (held by Korea) in the East China Sea; had a series of spats with the Philippines over territorial issues; rebuffed the ruling of the Permanent Court of Arbitration on the question of its claims on the South China Sea; and been increasingly assertive toward foreign military air and sea activities in the South China Sea, East China Sea, and North Pacific. All of these actions are aimed at regaining sea and air control in China’s near seas, a crucial element of China’s emerging maritime strategy. At the same time, under Xi Jinping, China is affirming its commitment to supporting the interests of the developing world, offering loans, preferential trade, and scholarships, and vowing to support their interests in the international system.

South Pacific, China style

The CCP has stepped up its military activities in the South Pacific. Papua New Guinea, Fiji, Tonga, and Vanuatu all receive military aid from China. Chinese companies have been negotiating for access to strategic ports and airfields in the island states. In 2018, mining company China Tianrui Group took over the massive military airfield at Hao Atoll formerly used by the French military.

Satellite interests are an important aspect to China’s surge into the South Pacific In 2018, China launched 18 BeiDou-3 satellites into space. Beidou-3 is China’s indigenous GPS, it provides missile positioning and timing and enhanced C4ISR capabilities for the Chinese military, as well as navigation services to more than 60 countries along the Belt and Road, including in Oceania. China’s mobile satellite station receiving station vessels regularly dock in Papeete and Suva, as do other quasi-military boats such as the Peace Ark and China’s polar research vessels.

China’s strategic and military interests in the South Pacific build on longstanding links and fill the vacuum left by receding US and French power projection in the region, as well as Australia and New Zealand’s neglect of key relationships in the region. China is now acknowledged by many Pacific leaders as the dominant power in the region.

While Pacific leaders will continue to work with traditional partners, they will not back down on their expanding relations with China. China has offered to them what the US and its allies cannot, massive sums of money for development projects that promise jobs and economic independence. The Cook Islands, Fiji, and Samoa all have levels of debt to China in excess of 30 per cent of their GDP, while Tonga’s debt is nearing 50 per cent of GDP, and it does not have the means to pay it back. Many are speculating that the PRC will seek the repayment of its loans in the South Pacific via long-term leases to strategic ports, or else resource swaps.    

China is close to meeting all the measures of what defines a global great power: political, economic, and military might with a global reach. China wants to restore its international status to one where it is a “rich country, with a strong army” (fuguo qiang bing), a traditional Chinese saying for describing a great power. If Chinese ambitions are successful, the inevitable outcome is a new Sino-centric world that will make China the core node in a new globalised economic order.

The Xi administration’s aggressive hard-power projection has raised questions about China’s peaceful intent. Meanwhile, the dire human rights situation in China under Xi’s leadership is also attracting international concern and attention. Since Xi became the leader in 2012 pressure has been brought to bear on public intellectuals, university teachers and students, non-governmental organisations, trade unionists, and the regional trouble spots of Tibet and Xinjiang. An estimated ten per cent of the Uighur population is now in detention, as are their children. The system of controls used in Xinjiang is now being used in other provinces in China. The government has also strengthened China’s “internet sovereignty” by reining in virtual private networks. Only the likes of Iran, North Korea and Saudi Arabia have a comparable level of internet censorship. In 2018, the PRC’s rubber-stamp National People’s Congress abolished the two-term limit on Xi Jinping’s role as State President, which will enable him to stay in power indefinitely. 

We need to talk about China

China’s new status as a major Pacific power and its potential to become the dominant power in the region as well as globally, poses a challenge for New Zealand. Unlike in the past when New Zealand worked with Great Britain and the US as the dominant powers, New Zealand does not have a framework of shared values with the PRC to draw upon in developing a subsidiary relationship with that country.

Nor does New Zealand have a shared allied structure to work out differences behind closed doors while retaining outward unity on common goals. The PRC and New Zealand have been moulded by very different political cultures, and the role of “loyal opposition” does not yet have a place in the Chinese polity. But New Zealand must face up to the new challenges of the changed global order. With careful diplomacy, a clear-headed strategy and leadership, and strategic investments in capacity, New Zealand can better manage its economic and political relationship with China.

...and Trump

The balancing act that Jonathan Coleman described in 2015 has become even more acute for New Zealand with the Trump presidency in power. The USA is consumed by the daily drama of President Trump, and Trump has been more hostile to traditional allies than he has to those nations his own defence policy describes as strategic threats. Meanwhile, the PRC’s global interests steadily grow. The 2018 US-China trade war not only affects the relationship between these two states, there is a corresponding impact on New Zealand’s exports to China as the renminbi drops in value.

In April 2018, Foreign Minister Peters talked of the international system being at an inflection point. New Zealand is now facing up to the new challenges of the emerging global order. The US-centred hub and spoke model of security alliances and one international treaty may no longer be sufficient to protect New Zealand’s interests in a peaceful Asia Pacific and Antarctica.  New Zealand can do more to partner with other like-minded states in the Asia Pacific, to protect its interests both looking North and looking South. New Zealand can find ways to work with the ROC on Taiwan, which under President Tsai Ying-wen (2016-) has adopted a proactive southbound foreign policy. New Zealand must continue to partner with China on areas where it can partner to mutual benefit, but should draw the line on aspects which endanger New Zealand’s national interests such as political interference activities.

It has often been said in the past that New Zealand is not important to China and that if New Zealand offends the Chinese government, New Zealand will risk our trade with them. So far, despite the Ardern-Peters government quietly raising the issue of foreign interference activities and speaking up against China’s activities in the South China Sea and the Pacific, and human rights abuses in Xinjiang, there has been no impact on New Zealand’s trade relations with China. It is simply not true that New Zealand is not important to China. When New Zealand’s national interests may be threatened, the government should be prepared to weather temporary short-term blowback, for long-term political and economic gains. 

Chinese diplomacy has a saying from the PRC’s first Foreign Minister, Zhou Enlai, which provides a model for this new approach: “seek common points while facing up to differences”. The saying matches the key Xi era diplomatic phrase: that China must be “proactive” in its foreign policy.

In the current changing global order, New Zealand too must be proactive. If a proudly independent democratic country like New Zealand cannot find a way to protect its own sovereign interests while maintaining a productive and respectful relationship with a great power like China, then we have most certainly entered a new and dangerous era in global politics.

About the author:

Professor Anne-Marie Brady is based at the University of Canterbury. She is a fluent Mandarin speaker who researches Chinese domestic, foreign and polar politics. She has published 10 books and more than 40 academic papers on a number of issues, including China's strategic interests in the Arctic and Antarctic, New Zealand's relations with China, and China's modernised propaganda system. She is a Global Fellow at the Woodrow Wilson Centre in Washington DC and in 2014 was appointed to a two-year term on the World Economic Forum's Global Action Council on the Arctic.

 

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