Over the last thirty years the economic rise of China has contributed to a worldwide shift in power. Discussing the current state of New Zealand’s relationship with both China and the United States of America (USA), this essay will outline likely future foreign policy choices. Authors such as Mosher and Krauthammer see the rise of China as a threat to the West that must be contained, a view which is not widely accepted. With reference to New Zealand’s recent economic and strategic success this essay will suggest that future foreign policy must work to deepen relations with both countries. New Zealand must not choose between China nor the USA, instead a broad based approach to trade and international relations should be maintained.
In 2008 New Zealand was the first of the Organisation for Economic Co-operation and Development countries to sign a Free Trade Agreement (FTA) with China. As a result China has overtaken the USA as our second largest trading partner, with exports increasing from NZ$2.3 billion in 2008 to NZ$6.7 billion in 2012. In 2010 New Zealand set the goal of doubling two way trade with China by 2015, a goal which was achieved a full year earlier. Speaking to the New Zealand Institute of International Affairs (NZIIA) in 2010 John Key described New Zealand China relations as “unquestionably and unashamedly an economic relationship”. Without pausing the New Zealand and Chinese governments have been quick to capitalize on this recent economic success. The goal is now to further increase two way trade to NZ$30 billion by 2020. On economic terms at least – New Zealand’s relationship with China can be considered excellent. However, casting the net beyond economic measures there are aspects of the relationship that remain sensitive to the New Zealand public.
Whilst New Zealand has enjoyed an economically successful relationship with China, that success has not been as widely reciprocated in other areas of society. In 2012 Shanghai Pengxin – a Chinese firm – attempted to purchase dairy farms previously owned by New Zealand firm Crafar Farms. The event caused an intense debate within New Zealand, to such an extent that the sale was subject to court order blocking the bid before it was eventually approved four months later. Despite several years of significant economic involvement, defence engagement over the same period has been categorized as modest. Reciprocal ship visits between the Chinese and New Zealand Navy have only been occurring since 2013. This highlights a contrasting picture of New Zealand and Chinese relations. On the one hand a strong economic relationship, yet on the other a cultural and security relationship that is still in its infancy. This is in sharp contrast to New Zealand’s recent re-engagement with the USA.
In the last decade New Zealand’s relationship with the USA has improved significantly. In the 1980’s defence and security ties with the USA were frozen following disputes over nuclear ship visits to New Zealand. In the following twelve years military involvement was minimal with only limited intelligence sharing. New Zealand’s profile in the last decade – characterised by difficult military involvement in Afghanistan – has been conducive to warmer relations with Washington. In addition to New Zealand’s proactive involvement in Afghanistan and the Pacific region, the rise of China has given the USA more impetus to strengthen relations with traditional pacific based allies. New Zealand’s anti-nuclear policy of 1987 remains in force, however both countries now agree this is a part of history and not limiting to future relations. As a result New Zealand has resumed full intelligence sharing and combined military exercises are again in occurrence. New Zealand Naval ships are once again permitted into USA ports and New Zealand is now in attendance at USA lead exercises such as the Rim of the Pacific Exercise (RIMPAC). These improving trends lead former USA Secretary of State Hillary Clinton to refer to New Zealand-USA relations as “the strongest and most productive in 25 years”. Political, diplomatic and defence relations have thus improved significantly since the 1980’s. These improvements, whilst significant in terms regional security and co-operation have not translated into broader economic advancement for New Zealand.
Despite the significant advancement of the Chinese economy, the USA economy still remains strong. The USA is New Zealand’s third largest trade partner and for over a decade a free trade agreement has been sought. A large focus of current trade negotiation is focused on the Trans Pacific Partnership (TPP). This is a twelve nation regional free trade agreement – which includes New Zealand and the USA – reported as bringing New Zealand up to US$4.1 billion in increased exports by 2025. According to the Ministry of Foreign Affairs and Trade the TPP agreement is in its final stages, however these negotiations have been ongoing since 2008. USA concern over intellectual property rights is cited as a reason for negotiation delay. Whilst New Zealand enjoys a healthy economic relationship with the USA, long lasting trade negotiations are stalling future economic potential. Relations with China and the USA are thus contrasting. On the one hand New Zealand enjoys an economic advantage from China, and on the other improved strategic and military ties with the USA. Future foreign policy must seek to maximise both.
Based on the current relationship trends future policy directions can be surmised. New Zealand will wish to continue and build on the success of the economic relationship with China. In pursuing this advancement the issue of trade dependency has been raised. This is with reference to the historical context when New Zealand was largely dependent on trade with the United Kingdom. Risk diversification has therefore been highlighted as a key theme for contemporary trade policies. The TPP for example, involves many different countries and is seen as a way of spreading the risk to guard against potential future economic difficulties. There is widespread agreement that future relations with China should not just be based on trade with little else. Powles for example believes that to truly capitalize on the economic relationship a greater depth of understanding of Chinese culture will be required in order to progress. This is needed because New Zealand does not share the commonalities in history and language that it does with traditional Anglosphere partners. In the past this commonality has given New Zealand a greater voice and understanding despite our relative size and geographic isolation. As the influence of Asia increases in the world, future policy decisions will thus require a greater depth of cultural and historical understanding. In achieving a deeper relationship with China, New Zealand must not jeopardise wider relationships with traditional or emerging partnerships.
Outside of relations with the USA and China, New Zealand enjoys significant economic and diplomatic relations with many other countries. With Australia for example, New Zealand has spent considerable effort enhancing diplomatic relations. Closer Economic Relations (CER) which were both agreed between New Zealand and Australia in the early 1980’s, are an important example of this effort. Australia remains New Zealand’s largest export market. New Zealand has also succeeded in implementing free trade agreements with Hong Kong and Malaysia. In the future these and other relationships will remain necessary in order to improve trade and maintain strategic balance. While current and future foreign policy will work to strengthen relations with both the USA and China, it not must be at the expense of emerging or other traditional relations.
New Zealand enjoys a wide range of international relations as a result of its independent foreign policy. Consensus is that relations with either China or the USA are likely to be strained if New Zealand loses objectivity and in the future New Zealand must continue to be seen as a friend to both but not aligned either. New Zealand’s anti-nuclear stance saw John Key invited President Barrack Obama’s nuclear security summit in Washington – recognition of New Zealand’s ability to maintain its independent voice against larger powers. As the influence of China rises in our area, it is important for New Zealand to maintain an independent approach and ensure our own traditions remain intact.
This essay has discussed the current state of New Zealand’s relationship with both the USA and China, focusing specifically on recent economic and diplomatic relations. Examining in particular the strength of New Zealand’s recent economic success with China, it has been proven that New Zealand will wish this economic advancement to continue. Previous lessons of economic dependence have been learned and future trade policies will seek a wide base. New Zealand’s economic relationship with the USA – whilst surpassed by China – still remains significant and has many potential benefits in the years ahead. Diplomatic and military relations with the USA have largely become normalised again, whilst similar engagements with China are merely just beginning. A lack of cultural and historical understanding of China – compared to that of traditional Anglosphere partners – hampers contemporary involvement. Overall, it is evident that future foreign policy will want to capitalize on the successful aspects of both relations, but not at the expense of other traditional and emerging partners.
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