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[Analytics] New Zealand bans Huawei. China has message for New Zealand

New Zealand Prime Minister Jacinda Ardern

Pan Pacific Agency | COMMUICATION AGENCY FOR PACIFICA REGIONS

Uncertainty over bilateral ties has affected everything from flights to tourism, one of the largest drivers of the Kiwi economy. PM Jacinda Ardern says the relationship is complex – can Beijing and Wellington kiss and make up? Meaghan Tobin specially for the South China Morning Post.

From offering mobile payment services such as WePay and Alipay to hiring front-desk staff proficient in Mandarin, the New Zealand Chinese Travel and Tourism Association was not short of advice for Kiwi tourism operators on how to benefit from an influx of mainland Chinese visitors to New Zealand this year.

“Chinese tourists enjoy spontaneous travel so there are a lot of last minute bookings. For businesses who’d like to attract Chinese tourists, this is the major challenge for them,” association chairman Simon Cheung said in a promotional video.

But preparations for the 2019 China-New Zealand Year of Tourism – a campaign by both governments to strengthen economic and bilateral ties – were cast in doubt when China postponed the launch event, which was expected to take place in Wellington next week.

New Zealand Prime Minister Jacinda Ardern on Tuesday acknowledged that the country’s relationship was complex and not without challenges, but dismissed talk there was a rift. But she revealed that dates for her first official trip to China, planned for the end of last year, still had not been finalised.

“I have been issued with an invitation to visit China, that has not changed. We continue to find dates that would work,” she said.

Her admission fuelled concerns from opposition parties and the media that ties, already tense after Ardern’s government blocked Chinese telecom giant Huawei from the nationwide roll-out of a 5G data network over “significant national security concerns”, were deteriorating further.

Last weekend, an Air New Zealand flight en route to Shanghai was turned back to Auckland, with some reports suggesting it was due to how paperwork on board the plane had referred to Taiwan. According to Bloomberg, the airline said the Boeing 787-9 Dreamliner was not yet certified to fly to China, but had been “unfortunately assigned” the flight.

The Civil Aviation Administration of China last year told foreign firms and airlines not to refer to Taiwan as anything other than a Chinese territory on their websites.

Former New Zealand government trade consultant Robert Scollay said from the point of view of those in the country, China’s latest actions “raised the question of whether this is a temporary expression of displeasure or if it means something more significant”.

After Wellington’s decision on Huawei, which it took in support of its fellow members in the Five Eyes intelligence alliance, there was a debate on whether it had finally chosen a side in its long-running balancing act between the United States and China – its two most important economic partners.

China is a vital source of two of the largest drivers of New Zealand’s economy – tourism and dairy exports.

Last year, nearly 15 per cent of New Zealand’s 3.8 million international tourist arrivals were from mainland China, contributing US$16 billion to the economy. China consumed over a quarter of New Zealand’s dairy exports, which were worth a total of US$15 billion.

Wellington and Beijing have been negotiating an update to their 2008 free-trade agreement (FTA), and New Zealand is part of the China-led Regional Comprehensive Economic Partnership (RCEP), a proposed FTA between 16 countries including the 10 Asean nations.

Hongzhi Gao, associate professor of international business at the Victoria University of Wellington, said the priority in the China-New Zealand relationship had been to create “a successful economic model for China to engage with a Western country”. “This has been a main theme of the relationship over the past 10 years, and that aspect of the relationship hasn’t changed.”

On whether ties could weather the current storm, Gao said the level of demand for New Zealand dairy products in China would help – but New Zealand could help itself further if it was firm on not challenging China on behalf of the US and remained neutral.

“If China is a friend to New Zealand, they can treat New Zealand really well, but if China sees New Zealand as a friend of their enemy, they will start to treat it more harshly,” he said.

Former trade consultant Scollay, now a professor at the University of Auckland, echoed this view. He said China had long viewed Australia as linked with the US over security concerns, but New Zealand had successfully maintained a neutral foreign policy stance.

This changed somewhat when Wellington issued a defence policy statement last July outlining concerns about China’s aggressive defence posture, and how it had not “adopted the governance and values championed by the [international] order’s leaders”.

In a December speech in Washington, New Zealand’s Deputy Prime Minister and Foreign Minister Winston Peters emphasised the US’ importance in countering China’s influence in the Pacific, parroting what some New Zealanders see as a conservative and distinctly American world view that China’s influence has no benefits for the nation.

Peters and opposition leader Simon Bridges have publicly bickered over anti-Chinese remarks made on both sides, and Ardern this week excoriated Bridges for playing politics with New Zealand’s relationship with one of its largest trade partners.

“It is disappointing that in recent times we have seen the politicisation of our relationship, which sits directly in contradiction to our economic interests and our national security interests,” she said.

Beijing-based Kiwi businessman David Mahon this week told The New Zealand Herald he was worried about bilateral ties, and suggested exporters may face challenges.

The New Zealand government had to mend bridges and have a clear stance on foreign investment, he said, also pointing to the country’s move last year to ban most foreigners – except Singaporeans and Australians, due to FTAs – from buying homes.

This came on the back of numerous reports of wealthy Chinese outbidding locals on home purchases, with Chinese real estate website Juwai.com saying mainland Chinese bought US$1.5 billion worth of residential real estate in New Zealand in 2017.

“We have correctly prevented non-residents from buying houses, to reduce speculation. But in general, New Zealand is open for business? Businesses are for sale and we want people to put cash into our country,” Mahon said.

Meanwhile, the bilateral dust-up has precipitated a decline in public opinion about China, according to David Bromwich, national president of the New Zealand China Friendship Society.

“The opportunity China presents to the world is not at all understood,” he said. “It’s a very sensitive area, and the current situation in New Zealand is such that it only needs one spark to ignite a reaction.”

Political observers say media reports that ties are frosty do not help public perceptions.

Global Times , a nationalist tabloid owned by the Chinese Communist Party’s mouthpiece People’s Daily , on Wednesday published a story saying Chinese travellers were wary of visiting New Zealand, leading to questions over whether the government had told citizens not to go there.

But Chinese foreign ministry spokesman Geng Shuang on Friday dismissed the suggestion, saying both countries had a common interest in ensuring healthy and stable ties. “China is willing to work with New Zealand on the basis of mutual respect, equality and mutual benefit to promote the continued development of China-New Zealand relations,” Geng said.

Noakes from the University of Auckland said he was not convinced ties had deteriorated, despite recent events. “The really unlucky thing is that the perceived souring of ties dovetails with commonly held misperceptions of what China is and what engagement with China means for New Zealanders.”

Jason Young, director of New Zealand Contemporary China Research Centre at the Victoria University of Wellington, had a more ominous take.

“This can become a self-fulfilling prophecy,” he said. “We talk ourselves into having a bad relationship with China, and that’s quite dangerous.”

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