Analysis by Geoffrey Miller – Democracy Project (https://democracyproject.nz)
Timing is everything. And from China’s perspective, this week’s visit by its foreign minister to New Zealand could be coming at just the right moment. The visit by Wang Yi to Wellington will be his first since 2017.
Anniversaries are important to Beijing. It is more than just a happy coincidence that the visit is taking place during the tenth anniversary year of the signing of a Comprehensive Strategic Partnership between China and New Zealand.
That agreement, signed during a visit to Wellington by Xi Jinping in November 2014, marked the start of glory days for bilateral trade. New Zealand’s exports to China have roughly doubled in value since Xi’s visit. They now stand at nearly $NZ21 billion annually. Imports are not far behind, but there is still a trade surplus of some $NZ3 billion in New Zealand’s favour.
Indeed, China has been New Zealand’s biggest two-way trading partner since 2017. A consistent flow of agricultural exports to China – especially milk powder and meat – helped to keep New Zealand afloat during the Covid-19 pandemic while both countries’ borders were closed.
However, New Zealand’s exports to China fell last year for the first time (except for covid-affected 2020) since the 2014 pact was signed. Goods exports took a particular tumble, falling $NZ1.7 billion from 2022 levels in the year to December 2023. Only a post-pandemic recovery in services exports, driven by travel, was able to mask a greater fall. But it was not enough to prevent a $NZ500 million drop overall.
The removal of China’s last remaining tariffs on New Zealand dairy products at the start of 2024 may provide some hope for improvement this year.
But forecasts for China’s economy are mixed and a bumpy post-Covid 19 recovery seems likely. After an expansion of 5.2 per cent in 2023, the International Monetary Fund (IMF) predicts China’s economy will grow by only 4.6 per cent this year and 4.1 per cent in 2025.
Given its food-focused exports, New Zealand is particularly vulnerable to sluggish Chinese economic growth. Tourism is also affected: visitor numbers from China for November 2023 were just 52 per cent of those seen during the same month four years earlier, before the pandemic.
A visit by Wang Yi cannot solve these wider macroeconomic problems. But it will put New Zealand’s crucial relationship with China in the spotlight.
There is every chance the trip could set the stage for an anniversary year visit to Wellington by Xi Jinping later in 2024.
However, whether this occurs will be highly dependent on New Zealand’s next steps in relation to Aukus.
It can be taken as read that Wang will have strong words for Winston Peters, his New Zealand counterpart, about Wellington’s apparent enthusiasm to entertain joining ‘Pillar II’ of the new pact.
The tea leaves are still being read after Labour lost power in the October 2023 election and a new three-way, centre-right coalition led by the National Party’s Christopher Luxon took office the following month.
A joint statement issued by Australia and New Zealand after the countries’ foreign and defence ministers met in Melbourne in early February claimed Aukus was making ‘a positive contribution toward maintaining peace, security and prosperity in the Indo-Pacific.’
Reaction from the Chinese Embassy in Wellington to the text was typically furious. In an apparent reference to another section of the joint statement which expressed ‘grave concerns about human rights violations in Xinjiang’, a spokesperson argued that ‘groundless accusations have been made on China’s internal affairs’.
Meanwhile, on Aukus, the Embassy asserted that the pact ran counter to ‘the common interests of regional countries pursuing peace, stability and common security’. The spokesperson asked ‘relevant countries’ to ‘cherish the hard-won environment for peace and stability in the Asia-Pacific region, and be prudent with their words and action to maintain peace, stability and development’.
An indirect, yet ultimately harder-hitting rebuke came from the Chinese Ambassador to New Zealand himself, Wang Xiaolong. Lamenting a lack of options after a last-minute cancellation of a flight to Auckland the day after the joint statement was issued, the Ambassador posted on X: ‘Stuck at Wellington airport clueless as to what to do due to the cancellation of my flight to Auckland and the lack of alternatives. Right now, I am really missing the high-speed trains back in China.’
The displeasure could not be clearer.
Earlier, New Zealand’s new government had sought to move swiftly on Aukus, particularly after Labour itself had laid the groundwork for the new Government by issuing a set of three hawkish defence blueprints just months before the election.
In December, Judith Collins, the defence minister, said that a failure to join Aukus in some form was ‘a real opportunity lost by the previous government’. Christopher Luxon then appeared to back her, telling media: ‘we’re interested in exploring Pillar II, particularly in Aukus, and the new technologies and the opportunities that may mean for New Zealand’. Meanwhile, Winston Peters called for greater NZ-US cooperation in the Pacific, saying ‘we will not achieve our shared ambitions if we allow time to drift’.
However, the Aukus tide may be turning.
Bonnie Jenkins, the US Under Secretary for Arms Control and International Security, visited New Zealand in early March and told media: ‘we’re still in the process of having discussions about additional partners’, adding ‘that’s not where we’re at right now’.
Speech notes for an address to be given by Jenkins also seemed restrained.
The lack of a concrete Aukus membership offer is not a new argument. In May 2023, New Zealand’s then Labour Prime Minister Chris Hipkins called the idea of joining ‘purely hypothetical’.
However, gradual shifts in language since then – culminating with Luxon’s comments in December – had suggested that a more specific proposal was afoot.
A looming US election was also a logical reason for New Zealand to act on Aukus sooner rather than later.
But perhaps nothing had ever really changed. A new government in Wellington might have been getting ahead of itself.
Alternatively, it could be that a rethink is now going on in Canberra, London and Washington over the merits of asking Wellington – or others – to become involved with Aukus at all.
In New Zealand itself, opposition to the deal also appears to be increasing in intensity. Labour is appearing to back away from its ‘open to conversations’ approach to Aukus that was set by former Prime Minister Chris Hipkins during a visit by Anthony Blinken to New Zealand in July.
In February, Phil Twyford, the party’s associate foreign affairs spokesperson, described Aukus as an ‘offensive warfighting alliance against China’. And David Parker, Labour’s main spokesperson, said ‘we’re not convinced we should be positioning China as a foe’.
The same month, high-profile former Labour Prime Minister Helen Clark co-wrote an opinion piece in the New Zealand Herald newspaper with Don Brash, a former right-wing rival. The strongly-worded article called on Luxon to ‘reassert New Zealand’s independent foreign policy by making it clear that we want no part of Aukus’.
Finally, questions are being asked in Australia about the future of the original purpose of Aukus – to give Canberra nuclear-powered submarines – following a US decision to cut production of ‘Virginia’ class submarines in half from 2025.
Adding to the uncertainty is Donald Trump’s presumptive nominee status in the US presidential election campaign. A survey conducted in August 2023 found 37 per cent of Australians thought Canberra should pull out of the wider Anzus alliance if Trump wins in November. Meanwhile, Trump’s own stance on the Aukus deal remains unknown.
If all is not well with ‘Pillar I’ of Aukus, it is hard to see an expansion to ‘Pillar II’ in the short-term.
For China’s Wang Yi, the potential wavering over Aukus is an opportunity.
The clock is certainly ticking, but no final decisions have been made.
There is still time for Beijing to make its case to Wellington.
Geoffrey Miller is the Democracy Project’s geopolitical analyst and writes on current New Zealand foreign policy and related geopolitical issues. He has lived in Germany and the Middle East and is a learner of Arabic and Russian. He is currently working on a PhD at the University of Otago on New Zealand’s relations with the Gulf states.
This article can be republished for free under a Creative Commons copyright-free license. Attributions should include a link to the Democracy Project (https://democracyproject.nz)
