Michael Reddell: No political will to tackle Chinese influence

There are few signs that the new government will be any different than the last when it comes to dealing with Chinese influence, Michael Reddell writes.

With news of a burglary at the home of a New Zealand academic investigating China's influence efforts in the country, Michael Reddell says there is no sign from any politician of the will to tackle growing concerns about foreign interference here.

Comment: To their credit, the NZ Herald this week ran a substantial op-ed from Canterbury University professor Anne-Marie Brady on the influence-seeking and interference by the People’s Republic of China (PRC), and the Communist Party that controls the state, in New Zealand.

Brady has been in the headlines in recent days over a burglary at her Christchurch home in which several laptops, phones etc (but nothing else of value) were stolen, the burglary occurring after she had received a letter warning that she was being targeted by the PRC regime.

The media has — rightly — sprung to her defence, suggesting a need to get to the bottom of just what is going on.

Brady’s article ran under the heading ‘We could be the next Albania’, a reference to the reported observation last year by a senior Chinese diplomat that (in Brady’s words) “favourably compared New Zealand-China relations to the closeness China had with Albania in the early 1960s”. Having fallen out with the Soviet Union, Albania sought refuge in ties with the PRC before later also falling out with them.

Brady reports, and presumably is in a position to know, that this “startling and telling analogy…disconcerted New Zealand diplomats”. She perhaps over-eggs the Albania point, arguing that: "In the late 1970s the relationship ruptured over China’s failure to deliver economic development assistance. By the end of the Cold War era, Albania had become one of the poorest, most politically divided, and most corrupt of the former Eastern Bloc states."

Perhaps, but if we look at Angus Maddison’s collection of historical estimates of GDP per capita, Albania had long (well before the Communist era) been one of the poorest of those countries and had not exactly been a byword for political stability either. Their failings were their own.

But I guess the real point — and probably the one the Chinese diplomat was getting at — was that New Zealand was seen from Beijing (with perhaps just a bit of exaggeration for effect) as small, remote (clearly both true), somewhat detached from its former allies, and diplomatically and economically subservient. True or not, the suggestion will have put MFAT noses out of joint.

Not a word of scepticism is ever uttered openly, whether by politicians or by the (mainly government-funded) entities like the New Zealand China Council and the Asia New Zealand Foundation.

Brady goes on:

"Xi Jinping has been emboldened to pursue an increasingly assertive foreign policy and insisting that its strategic partners such as New Zealand fall into line with its interests and policies. Accompanying this more assertive foreign policy has been a massive increase in the CCP’s foreign influence activities. China did not have to pressure New Zealand to accept China’s soft power activities and political influence: Successive New Zealand governments actively courted it. Ever since PRC diplomatic relations were established in 1972, New Zealand governments have sought to attract Beijing’s attention and favour. New Zealand governments have also encouraged China to be active in our region."

And not a word of scepticism is ever uttered openly, whether by politicians or by the (mainly government-funded) entities like the New Zealand China Council and the Asia New Zealand Foundation. No doubt, in most cases they genuinely believe their stance (quiescence) to be in the interests of “New Zealand” – however those interests are defined. In all too many cases, it also appears to have been in the personal economic interests of those involved.

The real point of Brady’s article appears to be to encourage the new government to think seriously about doing things differently. As she highlights, the Australian government is taking these issues much more seriously. For those still sceptical of the significance of these issues, in addition to Brady’s main Magic Weapons paper, various of the submissions on the new Australian legislation make sobering reading – for example, no 20 (by an academic whose new book on the subject – already the subject of PRC threats – is due out next week), or no 33 (from a national security academic at ANU).

Brady appears to think there is a realistic possibility of change:

"In order to deal with the issue it can’t just attack the policies of the previous government, it also has to clean its own house. Significantly, unlike the previous National government, Ardern’s government has not endorsed Xi Jinping’s flagship policy the Belt and Road Initiative, bringing New Zealand back in line with its allies and nearest neighbours.

"It will take strenuous efforts to adjust course on the direction the previous National government set New Zealand. New Zealand has to address the issue, but the Ardern government must find a way to do so that does not invite pressure it cannot bear from the CCP, which is watching closely."

No signs of change on China approach

But is there any sign that this government is any different? I’d like to believe that not having yet endorsed the Belt and Road Initiative (a sprawling massive geopolitical play, designed to extend PRC reach and in some cases load up poor countries with additional debts in ways that further extend PRC political influence) is significant. But the New Zealand China Council — largely taxpayer-funded, and with the Secretary of Foreign Affairs sitting on its Council — was promising late last year that early this year they would have a report out on how New Zealand can engage with the initiative. And senior Labour backbencher and select committee chair Raymond Huo seemed right behind the initiative.

What other straws in the wind are there?

As recently as this week, interviewed on Radio NZ about the Brady break-in and other matters, Ardern refused to express concern at all about PRC influence-seeking and interference in New Zealand. At one level, it is fine to talk about being concerned about any foreign influence from any source (as we all should be), but there is a real and specific issue around the PRC, which needs serious political leadership to address. Instead, there is a void.

It isn’t just Ardern of course. In a post late last year, I highlighted that her minister responsible for the intelligence agencies, Andrew Little, was specifically dismissive of concerns around the PRC activities, saying: “I don’t see evidence of undue influence in New Zealand, whether it’s New Zealand politics, or New Zealand communities generally." It was documented in Brady’s substantive paper, minister, a paper which has had substantial coverage around the world.

Then, of course, there was the Deputy Prime Minister and Foreign Affairs Minister Winston Peters. Out of office Peters had occasionally been heard to express concerns, including around National MP Jian Yang. In office, at a New Zealand event marking 45 years of diplomatic relations with the PRC, he wouldn’t even address the issue, stressing how cordially he would raise (privately) any concerns he ever had, and went on to suggest that, after all, one had to break a few eggs to make a omelette, and really no should get too bothered about human rights issues in China either.

And since the election, Labour president Nigel Haworth — presumably with his leader’s knowledge and approval — has hobnobbed with the Chinese Communist Party itself, effusive in his praise of Xi Jinping and the Chinese regime.

One could add to the mix the stony silence of the Labour Party leadership — pre and post-election — on the succession of revelations around National MP and former PRC intelligence officer Jian Yang. From anything they say (or don’t say) in public, the Labour Party, and their allies in the Greens and New Zealand First, seem quite unbothered about the presence in Parliament of someone who acknowledges misrepresenting his past in his residency and citizenship applications, who is widely regarded by experts in the field as likely to still be a member of the Communist Party, who closely associates with the PRC embassy, and who has never once been heard to criticise the Party-state that is the PRC.

Recall, former diplomat Charles Finny’s line, that he was always very careful what he said around Yang (and Raymond Huo) since both were known to be close to the PRC embassy. But is there any sign that any of this bothers our new government?

The PRC does have the ability to severely adversely affect the fortunes of individual firms/sectors...but it did not make Australia and New Zealand rich and it cannot, whatever unsubtle economic sanctions it attempted, make us poor.

Professor Brady calls for the Government to emulate its 1980s predecessor, seeing parallels between the Fourth Labour Government's stand on the nuclear issue and the possibility of Ardern's doing the same with foreign influence.

In truth, and whether you supported the anti-nuclear stance of not (I didn’t and don’t, and certainly don’t see it as a matter affecting our sovereignty) this one is a great deal harder. For a start, there wasn’t really money at stake around the nuclear-free issue.

I presume one of the issues that will be exercising ministers, and their MFAT officials, will be the negotiations around the proposed upgrade to the preferential trade agreement with China. It would be easy enough for the PRC to put those negotiations on a slow track, or simply halt them altogether. Such agreements might not matter very much taken as a whole, but they might matter quite a lot to a small group of people (with good political connections).

In the Australian context, there already appear to be some signs that the PRC is reacting to the tougher Australian stance and new legislation by damping down the flow of foreign students. We’ve already seen here the apparent ability of the export education industry to see off for now Labour’s promised changes to student work visa arrangements. Those would have mostly affected the lower-level PTEs. But our more prestigious — and government-owned/controlled — universities get a lot of PRC students, and several attract direct PRC funding for their Confucius Institutes. Chancellors and vice-chancellors will be very nervous that if the Government actually looked like taking a stand, their flow of revenue might be disrupted. And then there will be Auckland Airport and the tourism operators too.

I’ve noted previously that during the Cold War it was much easier to maintain a moral clarity. Most Western countries — including New Zealand — didn’t do much trade with the Soviet Union, and so there wasn’t a major self-interested constituency in New Zealand (or the US, or the UK) for simply bending over and letting a hostile regime, practising a completely different set of political values, have its way. I noticed yesterday a recent interview with former Obama-era US Defense Secretary Ash Carter making much the same point.

The PRC does have the ability to severely adversely affect the fortunes of individual firms/sectors (ask the Norwegian salmon industry, or some of the South Korean firms last year), but the PRC did not make Australia and New Zealand rich and it cannot, whatever unsubtle economic sanctions it attempted, make us poor.

Our prosperity, as a whole country, is very largely in our own hands. And the very fact that we can worry about the possibility of such sanctions is perhaps the best case for making a stand now, rather than continuing to roll over, keep quiet, and hope that Beijing is happy.

'Beware of rent seekers'

But perhaps the other piece of economists’ advice might be, in this as in other fields, “beware of rent seekers”, people or institutions who will seek to use governments to advance their own economic interests, at the expense of the values, the freedoms, the self-respect, of the nation as a whole. Governments have a poor track record of doing so, and there is little sign at this point that the current government will be any different. As I wrote earlier, the interests of businesses in countries ruled by evil regimes are not necessarily well aligned to the interests of New Zealanders:

"Selling to China, on government-controlled terms, isn’t much different than, say, selling to the Mafia. There might be money to be made. But in both causes, the sellers are enablers, and then make themselves dependents, quite severely morally compromised."

Brady’s Herald column seemed to build on an earlier and somewhat longer paper she produced shortly after the new government took office on things it could do if it were serious about addressing the PRC political influence activities. I wrote about it here (the original link to the paper itself is no longer working). There she had quite a list of things that could, or should, be done.

What should be done? At an overarching level she says it should "develop an internally-focused resilience strategy that will protect the integrity of our democratic processes and institutions" working with like-minded democracies like Australia and Canada and speaking out publicly on the issue of China's influence activities.

Getting specific, she calls on the government to "instruct their MPs to refuse any further involvement in China’s United Front activities" (that would be Raymond Huo I presume) and "establish a genuine and positive relationship with the New Zealand Chinese community, independent of the United Front organisations authorised by the CCP that are aimed at controlling the Chinese population in New Zealand and controlling Chinese language discourse in New Zealand".

And there is a list of six other specifics:

"-The new Minister of SIS must instruct the SIS to engage in an in-depth investigation of China’s subversion and espionage activities in New Zealand. NZ SIS can draw on the experience of the Australian agency ASIO, which conducted a similar investigation two years ago.
- The Prime Minister should instruct the Department of Prime Minister and Cabinet to follow Australia’s example and engage in an in-depth inquiry into China’s political influence activities in New Zealand.
- The Minister of Commerce and Consumer Affairs should instruct the Commerce Commission to investigate the CCP’s interference in our Chinese language media sector— which breaches our monopoly laws and our democratic requirement for a free and independent media.
- The Attorney General must draft new laws on political donations and foreign influence activities.
-The New Zealand Parliament must pass the long overdue Anti-Money Laundering [AML] and Countering Financing of Terrorism {CFT] legislation.
- The new government can take a leaf out of the previous National government’s book and appoint its own people in strategically important government-organised non-governmental organisations (GONGOs) which help shape and articulate our China policy, such as the NZ China Council and the Asia New Zealand Foundation."

It is the political leaders who can bring forward legislation and can display the leadership and moral standing that say “enough” — whether about Jian Yang, political donations, control of the Chinese-language media, university funding, PRC activities in the South China Sea, or whatever. They could display such leadership, but there is no sign, from any political party, of anyone doing so.

Most of those suggestions look sensible (although I’m no fan of AML/CFT legislation, with all its inane consequences — goodbye iPredict, hello ID cards for 94-year-olds changing banks). There has been no sign of activity on any of these fronts. Quite probably — based on what we saw in their BIMs, and Brady’s mention of a Five Eyes discussion, itself repeated in the New York Times article last year on these issues — our intelligence agencies themselves are worried. But intelligence agencies can only apply the current law.

It is the political leaders who can bring forward legislation (on matters amenable to legislation, which not all of these are) and can display the leadership and moral standing that say “enough” — whether about Jian Yang, political donations, control of the Chinese-language media, university funding, PRC activities in the South China Sea, or whatever. They could display such leadership, but there is no sign, from any political party, of anyone doing so.

I noted the other day that perhaps some journalist could ask the five contenders for the National Party leadership about their attitude to these issues, including but not limited to matters around Jian Yang and political donations. A reader reminded me of Chris Finlayson’s arrogant and dismissive attitude before the election, when he was both Attorney-General and Minister responsible for the GCSB and SIS. Finlayson still sits on the National Party front bench, and is still shadow Attorney-General. Perhaps, five months on, someone could ask him if still thinks there is just nothing there, that Brady is jumping at shadows. Or is it that he just doesn’t want to know?

This commentary was first published at Michael Reddell's blog, Croaking Cassandra. Reddell is an expert in macroeconomic and monetary policy, and financial regulatory matters.