Eyes open to China ties, but challenges ahead

Prime Minister Jacinda Ardern is revving up engagement between New Zealand and China - but it may not all be smooth sailing. Photo: Lynn Grieveson.

Prime Minister Jacinda Ardern has signalled her government will ramp up its engagement with China. Yet a conference designed to tout the benefits of doing business with Beijing also highlighted the obstacles, as Sam Sachdeva reports.

When the China Business Summit was looking around for an appropriate tagline, borrowing from Winston Peters must have seemed like a shrewd means of ingratiation.

However, its use of “Eyes Wide Open” appeared subtly different to the Foreign Affairs Minister’s choice of the term for his Lowy Institute speech in March.

While Peters appeared primarily concerned about New Zealand’s eyes being wide open to threats, the summit organisers’ focus was on being open to the opportunities available to Kiwi businesses.

Speaking to the summit on Monday, Prime Minister Jacinda Ardern indicated the latter would be of elevated importance the coming months.

Touting an increased tempo of engagement between the two countries, Ardern described ties with China as “one of our most important and far-reaching international relationships”.

She said Peters was off to Beijing in “the very near future” - believed to be before the end of the month.

Climate Change Minister James Shaw and Trade and Export Growth Minister David Parker are set to follow before the end of the year, while Ardern herself may even make a trip if circumstances allow.

FTA talks top of list

Near the top of Peters’ to-do list will be ensuring negotiations remain on track for an upgrade of the 2008 FTA, which has almost tripled two-way trade.

Discussions about the upgrade were formally launched in late 2016, and while Parker spoke about the importance of addressing e-commerce there has been little sign of a conclusion in the near future.

Stephen Jacobi, from the NZ China Council, said while he tried to be “relentlessly optimistic” about the prospects of successful negotiations, the reality was there was “a rather large mountain to climb”.

“We have a very large list of issues on the New Zealand side, and a rather small list on the Chinese side, and on both those lists are things that are quite complicated...I think it’s going to take longer than maybe we would like.”

Critical to negotiations, Jacobi said, would be New Zealand taking a more active interest in the Belt and Road Initiative, China’s multi-billion-dollar initiative to link up the superpower with the rest of the world.

“If we don’t choose to be involved, then others will be.”

The last National government put pen to paper on a “memorandum of agreement” with China, agreeing to work together on how New Zealand could be involved.

Yet its successor has shown no burning desire to carry on that work: at his Lowy speech, Peters lashed out at the decision to sign the agreement so quickly and suggested the new government should not feel bound by the deal.

Ardern was less critical on Monday, acknowledging the Belt and Road was a priority for China, but hardly appeared to be overflowing with enthusiasm as she said New Zealand was still considering how it wanted to engage.

“What we signed is a very principle-based, indicative agreement, so really it is about what that next step looks like.”

However, Jacobi said New Zealand “cannot afford to stand aside from” Belt and Road if it was to keep pace with other countries moving ahead with their own China FTA negotiations.

“If we don’t choose to be involved, then others will be.”

Addressing Chinese influence

Another obstacle which Peters must overcome is how to address concern among some Western countries about perceived interference by China in their politics, as raised by Hillary Clinton during her time in New Zealand.

Ardern has been consistent in shying away from naming China directly, saying she was “not singling out any one state agent” in the conversation around foreign interference.

Peters himself was unusually reticent when asked about whether he would raise the topic in Beijing, saying he was “naturally a tactful person so I won’t be raising those issues in the way you’ve put them, no”.

China’s new ambassador to New Zealand, Wu Xi, also appeared to warn against any heavy-handed approach in a speech pledging to uphold the international order and support multilateralism.

“It is one of China’s fundamental principles of foreign policy that China does not interfere into any other country’s internal affairs, likewise we do not want to see any other country interfere into that of ours.”

“We need to rally hard against it [racist rhetoric] and I will call it out where I see it."

Then there was a pointed question from the floor for Ardern about discrimination against the Chinese community in New Zealand, perhaps spurred by Phil Twyford’s ill-advised “Chinese-sounding names” debacle in opposition.

Asked to stand up for the contributions of Chinese in New Zealand who were exposed to “hatred and contempt” and blamed for strains on the housing market, infrastructure and the jobs market, Ardern said migration in New Zealand was “self-evidently incredibly important”.

“We need to rally hard against it [racist rhetoric] and I will call it out where I see it,” she said.

Peters may be called upon to rally hard against the rhetoric while in Beijing, a difficult position given his previous history on the issue.

Having copped flak in recent months for failing to engage with China, Ardern will see the upcoming suite of ministerial visits as an opportunity to build on the relationship.

But her government’s eyes must remain open to the potential pitfalls as they move ahead.