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New Zealand - China Relations

Greater China includes China, Taiwan and Hong Kong. New Zealand and China have a relationship that started in the 1840’s. Since New Zealand and China established diplomatic relations in December 1972, the relationship has developed rapidly, particularly in recent years. The first Chinese immigrant to New Zealand is thought to have been Appo Hocton, who arrived in Nelson in 1842. The first large scale influx of Chinese to New Zealand occurred in the 1860s, initially for gold-mining. Official contact began in 1912 with trade, missionary, immigration and other links but this came to a standstill in 1949, when the People’s Republic of China was formed. Today tens of thousands of Chinese students and hundreds of thousands of Chinese tourists come to New Zealand each year, and visits between political leaders and heads of state take place regularly.

Huawei, trade, cyber security and regional defence and security were just some of the delicate issues Jacinda Ardern broached with Premier Li Keqiang and President Xi Jinping in her one-day visit 01 April 2019. Ardern travelled to Beijing for meetings with President Xi Jinping and Premier Li Keqiang and will also be formally open the New Zealand Embassy there. The stakes were high as New Zealand looked to put to rest any speculation about the state of its relationship with a key trading partner and a global power player. "China is a friend", said Ms Ardern - speaking before she left New Zealand. "And despite our different perspectives, on some issues, our relationship, I believe, it is a mature and resilient one." In 1997 New Zealand became the first country to agree to China’s accession to the WTO by concluding the bilateral negotiations component of that process. New Zealand was the first country to recognise China as a market economy in 2004. In other negotiations, New Zealand had to be nimble and play its cards carefully. Its basic problem was that it held few cards, having already given China what it most wanted -- recognition by an OECD country that it is a market economy. New Zealand thereby agreed not to use anti-dumping and safeguard rules against China, as allowed under Beijing's WTO accession agreement.

After signing a cooperation agreement with China on the Belt and Road Initiative (BRI) in 2017, New Zealand has recently indicated its readiness to proactively expand and extend its participation in trade and infrastructure projects under the BRI's auspices. The New Zealand–China Free Trade Agreement (FTA) signed in 2008 was China's first FTA with a developed country. "New Zealand's free trade agreement with China is about more than reducing tariffs - it is also a strategic move that acknowledges that the emerging superpower will become the world's biggest economy," said Prime Minister Helen Clark on the eve of her departure for an overseas trip that concluded with the signing ceremony in Beijing in April 2008.

The Greens have said they will oppose the deal and publicly denounced Chinese actions in Tibet. The Maori Party caucus also confirmed that they will oppose the free trade agreement with China. "There are many reasons why we oppose it," said foreign affairs spokesperson Hone Harawira, "but I guess you could sum it up by saying we support fair trade, rather than free trade." Winston Peters and his New Zealand First Party had long relied on an anti-Asian and anti-immigrant platform to win votes from xenophobic conservative New Zealanders. With the national election about six months away, they returned to tired rhetoric.

In the first five FTA negotiating rounds, starting in December 2004, the two sides discussed process and procedure and exchanged information. Beijing pitted New Zealand against Australia, trying to hold New Zealand hostage to whatever advantage China extracts from Australia in separate free-trade negotiations. Also, Beijing warned New Zealand that if it did not accept China's terms for an agreement, bigger and more important countries could jump the queue, leaving New Zealand behind. New Zealand viewed an FTA as part of an effort to form a comprehensive relationship with China.

New Zealand’s goods and services exports are dominated by three key countries, led by China, then Australia and the United States. China is New Zealand’s single-biggest export market, accounting for around one in every five dollars of sales of goods and services overseas, according to data first released by Stats NZ in December 2018. New Zealand’s exports of all goods and services to China were worth $16.6 billion for the year ended September 2018, $2.6 billion more than Australia and almost double the sales to the United States. Since the year ended September 2016, China has consistently been New Zealand’s top goods export partner. In the past, Australia had almost always been the top goods export partner, only overtaken by China in the year ended December 2013. If the European Union is excluded (because of uncertainty around Brexit), the United States becomes New Zealand’s third-largest export market.

China was New Zealand’s top export market for major exports including dairy products ($4.0 billion), logs and wood ($2.9 billion), and meat ($1.9 billion), for the year ended September 2018. The value of these sales has mostly risen over the previous three years. Travel was our largest services export to China – spending by Chinese visitors contributed $1.6 billion to the New Zealand economy. This was followed by Chinese students who studied in New Zealand ($1.3 billion) and transportation services ($225 million).

China was also a key source of electrical goods, such as cell phones. Imports of electrical machinery and equipment were worth $2.3 billion, and mechanical machinery and equipment $2.0 billion in the year ended September 2018. Over 40 percent of the total electrical machinery and equipment, and about a quarter of all mechanical machinery and equipment imported into New Zealand came from China.

Among the more general difficulties that New Zealand officials have experienced dealing with their Chinese counterparts is contending with China's centralized decision-making process. New Zealand often has had to ask for higher-level participants in negotiations.

New Zealand's revised new Pacific policy, labeled the Pacific Reset, is seen as a collaborative effort in conjunction with Australia, the US and a number of other Western countries with the professed objective to defy, offset and frustrate Chinese aid and development programs in the Pacific. In 2018, prime minister Jacinda Ardern raised the issue of "vocational education and training centers" in Northwest China's Xinjiang Uyghur Autonomous Region.

New Zealand's Defence Strategic Policy Statement, issued in 2018, singled out China's sovereignty claims in the South China Sea and outlined the threats that China poses to the international order. While New Zealand itself is not a claimant country in the South China Sea, it has joined the cacophony with the US, Australia and some other Western allies to foment dissension and instigate confrontation in the region, much to the exasperation of China, which has in fact achieved significantly positive outcomes to attain peace and stability through proactive and constructive negotiations with other claimant countries.

New Zealand has made allegations against China, on issues such as China's aid and infrastructure projects in South Pacific countries and Chinese high-tech company Huawei's participation in the 5G network upgrade of Spark, New Zealand's major telecommunications provider. Its first proposal was rejected by the electronic spy agency, the GCSB, citing security concerns. Spark and the GCSB are in "ongoing discussions" but the telecoms company has not yet gone back with a revised plan.

New Zealand is keeping a wary eye on its actions in the Pacific and the broader region; the exertion of soft power through aid and development money and loans, and its expansionist military approach. Under the heading "An increasingly confident China" New Zealand's 2018 Strategic Defence Policy talks about that country using a "broad set of levers in pursuit of its own external interests". "Notably" it goes on to describe China's creation and extension of artificial island features in the South China sea, on which it has built bases, providing China with the "ability to quickly deploy a range of additional capabilities in and around key international shipping lanes".

New Zealand has maintained a neutral, if subtly pointed, position Ms Ardern said would not change. "We want to see all territorial issues in the region resolved peacefully and in accordance with international law, that's been our consistent position." On broader defence and foreign policy she said there had been "changes in approach" from China over a number of years.

Before her time China's foreign policy was "less engaged" than it was now. "That of course doesn't mean that there isn't a constructive relationship still to be built, even if the foreign policy posture has changed", said Ms Ardern. "They are more outward facing, but so are we." It was about finding areas of mutual interest, she said, including "upholding for international rules based order" and having a "predictability" about the institutions both China and New Zealand engage with.

New Zealand is re-setting its policies towards the Pacific: there is scope to work with China to improve the quality of aid delivery and to address some long-term development challenges in New Zealand's immediate neighborhood.