China is trying massively to expand its influence in the South Pacific. Militarily this is a problem for New Zealand. But the island state looks primarily at trade relations – and emphasizes its limited possibilities.
New Zealand Prime Minister Chris Hipkins has been reluctant to criticize China. The People’s Republic is by far New Zealand’s most important trading partner. During his visit to China about a month ago, Hipkins found words of praise. “This visit was incredibly warm and constructive. Our message that New Zealand is open to business was well received here in China.” Hipkins had traveled to China with almost 30 entrepreneurs in tow.
It is worrying how important China has become, says Monique Surges, President of the German Chamber of Commerce Abroad in New Zealand. And that in import and export. More than a quarter of New Zealand’s exports go to China. Australia follows in second place with a share of around twelve percent, followed by the USA in third place.
China is the main buyer of New Zealand wood, milk and meat products. Chinese students are an important source of income for universities, and Chinese vacationers for the tourism industry.
An asymmetrical relationship
New Zealand is dependent on China, concludes political scientist Stephen Noakes from the University of Auckland. “It’s New Zealand’s most important economic relationship that New Zealand needs to nurture and promote. Mainly because New Zealand is a small, very remote island nation.”
It is an asymmetrical relationship in which China is clearly the more powerful partner. The country therefore cannot afford loud criticism – be it of China’s geopolitical influence or human rights violations.
Reception in the Great Hall of the People: Hipkins’ visit to China and his talks with Premier Li were not marred by discord.
“What could New Zealand say?”
Ahead of his China trip, Hipkins was asked by a reporter if he would describe Chinese leader Xi Jinping as a dictator, like US President Joe Biden has done. His answer: no. The form of government is entirely up to the Chinese people.
New Zealand’s attitude is less ideological than that of the US or Europe, says political scientist Noakes. “In a way, that’s understandable. What could New Zealand say that would change anything? From the New Zealand government’s perspective, it would just be a lose-lose situation.”
Despite everything, Hipkins addressed the situation around Taiwan and the Uyghurs during his visit. “New Zealand and China have different views. We don’t share the same democratic traditions as other partners, such as Australia, the UK or the US,” Hipkins said. “But we choose the path of open and honest exchange.”
The problem of Taiwan
New Zealand seeks a balance between China as the most important economic partner and the USA as the most important partner on security issues. In this area, New Zealand also cooperates closely with Great Britain, Australia and Canada – together they form the intelligence alliance Five Eyes.
This is not an easy balancing act for New Zealand, but it can be done, says political scientist Noakes – as long as the conflict over Taiwan does not escalate. “That would make the balancing act between the two great powers very difficult. Simply because the pressure from the Five Eyes partners would increase to take part in any action against China, be it that clearer words could be found in the international arena, or be it that you even show a military presence.”
The importance of the South Pacific region is growing
However, Prime Minister Hipkins only had to admit in early August that New Zealand’s military is not in good shape and not prepared for future challenges. And this at a time when geopolitical conflicts are growing on his doorstep.
China and the western states are currently vying for the favor of the island nations in the South Pacific. Investment packages are passed and embassies opened. Important shipping lines run through the region, and important undersea data cables also run there.
The US and its partners have been particularly restless since the Solomon Islands signed a security agreement with Beijing in April 2022. The exact content of the agreement is still secret today. But one thing is clear: Beijing is gaining influence. The US, New Zealand and Australia have responded and also increased their presence in the region.
“We should cooperate even more”
Cook Islands Prime Minister Mark Brown is pleased with the Chinese investment. He is sitting in his office in a yellow floral shirt. China has helped several countries in the Pacific a lot. “There are concerns from some of our partners about issues like security agreements. But I think we have to understand that our countries have evolved into independent sovereign states. And they can cooperate with whomever they want.”
The aim of the island nations is above all to improve the prosperity of their own people. The Chinese presence doesn’t bother him. “If you should change anything at all, then we should cooperate even more.”
Are there alternative markets?
While Germany is rethinking geopolitical tensions in the South Pacific and the strategy is “diversification and de-risking”, many New Zealand companies also see opportunities in China. Gareth Edgecombe, CEO of T&G Global, says you only have to look at the growing middle class there – “Consumers want quality brands. And the demand is growing every year”.
The New Zealand company exports fruits and vegetables to China. But he and other CEOs were also looking at alternative markets. India and Vietnam are very popular. Mike Walsh, regional head of the German testing company DEKRA, thinks that’s wise. “It is right to consider other options should the geopolitical situation deteriorate.”
More trade with the EU
New Zealand doesn’t have many alternatives. The most recent free trade agreement with the European Union is an attempt to position oneself more broadly. After years of negotiations, representatives of New Zealand and the EU signed the agreement in July. It is scheduled to come into force in 2024.
EU Commission President Ursula von der Leyen said at the signing in Brussels that trade between the two partners could increase by an estimated 30 percent as a result of the agreement. EU investment in New Zealand could increase by up to 80 percent, said EU Commission Vice-President Valdis Dombrovskis. But China’s economic importance to New Zealand is and will remain far more important for the time being.