International politics

Neighbourhood watch
Australia and New Zealand have distinct approaches to foreign policy, especially when it comes to China

When National prime minister John Key and his government were elected in 2008, New Zealand had taken on a businessman who was late to politics – not unlike Australia’s Malcolm Turnbull – and who had a particularly pragmatic view of how his country’s relationship with China would develop.

A relationship with the United States that had developed a distinct chill over nuclear ships in the David Lange era had thawed under Helen Clark as a result of New Zealand’s participation in the war in Afghanistan. Key oversaw New Zealand being formally brought in from the cold with the signing of the Wellington Declaration in 2010, a strategic partnership covering issues from nuclear proliferation to climate change. He also had a warm personal relationship with US president Barack Obama.

But Key’s focus was a trade relationship with China. New Zealand was the first developed country to sign a free trade agreement with China, in 2008, some seven years before Australia. This was one of a number of firsts New Zealand scored with the new economic superpower: in 1997, it became the first developed country to agree to China’s accession to the World Trade Organization; in 2004, it was the first developed country to recognise China as a market economy.

Strategically, the New Zealanders believed the history of their relationship with the United States, and their subsequent projection of themselves as independent multilateralists, gave them a unique position. “Our perceived independence meant we felt we could be an honest broker,” one official told me. “We’d go to both places and they’d ask about the other, whereas Australia was a bit different. It was seen as part of the US camp.”

New Zealand officials believe they played a key role in getting support for the Trans-Pacific Partnership from the Democrats in America by selling the geopolitical significance of the deal. And New Zealand, along with Australia, pushed the “pivot” by the Obama administration to Asia and the Pacific (though that amounted to little).

The Kiwi approach to China stood in marked contrast to the more hawkish view taken by Australia’s new prime minister, Kevin Rudd. The 2009 defence white paper squarely addressed Chinese military expansion, amid rising concern about a wavering commitment of the United States to the Asia-Pacific, noting that “the pace, scope and structure of China’s military modernisation ha[s] the potential to give its neighbours cause for concern if not carefully explained, and if China does not reach out to others to build confidence regarding its military plans.”

To outrage from Beijing, the Australian government also put tougher foreign investment curbs on Chinese state-owned enterprises, a move not pursued in New Zealand.

Analyst Patrick Köllner notes that, by comparison, the New Zealand white paper:

took a fairly benign view of the security implications of China’s rise, noting that the PRC “both benefit[ed] from and contribute[d] to regional stability and prosperity” and that there was “a natural tendency for it to define and pursue its interests in a more forthright way on the back of growing wealth and power”.

New Zealand’s approach to China was beginning to cause alarm in Australia and the United States.

Australia, Canada, New Zealand, the United Kingdom and the United States are parties to a treaty for joint cooperation in signals intelligence known as the Five Eyes. Following New Zealand’s refusal to welcome US nuclear-armed naval vessels, the public posturing of the former ANZUS alliance partners – the US, Australia and New Zealand – had clearly left New Zealand out in the cold. But the reality was that New Zealand kept its connections with the United States and Australia, along with a number of Western allies, as a member of the intelligence alliance. Its geographical location meant it provided a crucial time window around the globe into what has become an increasingly sophisticated global intelligence listening operation. In the words of one Australian security figure, New Zealand was Five Eyes’ “night watchman”.

Former foreign minister Don McKinnon says New Zealand also used its preparedness and usefulness in multilateral operations to gradually win back much of the US intelligence it lost after the nuclear ships decision. For example, in responding to a US request to provide troops for Haiti, and later Somalia and Bosnia-Herzegovina, the argument was put that it was hard to deploy troops to these places when New Zealand had been chopped out of receiving intelligence about them. So New Zealand was able to make the most of its public image as the assertive minnow on the world stage, while still keeping ties with Western allies which made it valuable.

There were some important knock-on effects at home from its foreign policy positions. The country seemed to be spared a lot of the angst Australia went through in the 1980s and ’90s – and beyond – about its relationship with Asia (was it part of it or not?) and about choosing between the United States and China.

Even so, by the time Tony Abbott became prime minister in 2013, there was concern that New Zealand was not pulling its weight in the Five Eyes: that its intelligence budget was focused purely domestically; that it had pulled back from the Pacific. Indeed, it was increasingly referred to as the “soft underbelly” of the alliance.

When Abbott met with Key, the subject of New Zealand’s investment in Five Eyes came up. Abbott responded to Key’s remarks about Five Eyes by observing that the alliance was “more four eyes and a blink.” A rocked Key responded by offering to expand New Zealand’s listening posts in the South Pacific.

Like Turnbull, Key had done business in China and started his prime ministership with that sense of the emerging economic giant. “He never looked at China through any prism other than as a businessman,” one New Zealand official says.

But while Turnbull came to be persuaded by intelligence agencies and advisers of the growing strategic problems China represented, New Zealand continued to see it primarily as a trade partner, and took what Canberra and Washington believed to be a too-benign view of its intentions.

New Zealand’s relationship with China developed further: it became the first developed country to become a prospective founding member of the China-led Asian Infrastructure Investment Bank. There were negotiations to upgrade the FTA, and in April 2017 the two countries signed a “Memorandum of Arrangement on Strengthening Cooperation on China’s Belt and Road Initiative”.

The Belt and Road Initiative is the massive push by China to build sea and land links through the purchase of ports and infrastructure investments in a host of nations, including relatively poor countries in the Pacific. Australia remained dubious about the BRI and China’s potential use of it to get a strategic foothold around the world. But New Zealand authorities, according to Köllner, “decided to be at the table, to try to shape the Initiative in areas where it touches on New Zealand interests, such as the Pacific”.

By now Australia and New Zealand had very different approaches – and politics – when it came to national security and intelligence. These issues had become an almost obsessive focus in Australia in the wake of the terror attacks of 2001. Australia increasingly sent out warning signals across the Tasman, particularly concerned about the BRI, which saw the Chinese invest in areas New Zealand regarded as within its sphere of influence: Polynesia, Samoa, even the Cook Islands. There were also concerns about Wellington’s reluctance to criticise Beijing over incursions in the South China Sea.

New Zealand’s noted China scholar Anne-Marie Brady summed up the concerns when she wrote in late 2018 about why New Zealand was of such interest to China. There was its responsibility for the defence and foreign policy of three other territories: the Cook Islands, Niue and Tokelau, potentially meaning four votes for China at international organisations. There were its links into the South Pacific, as well as its status as a claimant state in Antarctica, where the Chinese government has a long-term strategic agenda.

New Zealand’s cheap arable land and sparse population was attractive to a country seeking to improve its food security. And then there was the Five Eyes alliance. Brady wrote:

Extricating New Zealand from these military groupings and away from its traditional partners, or at least getting New Zealand to agree to stop spying on the PRC for the Five Eyes, would be a major coup for the Xi Government’s strategic goal of turning China into a global great power.

New Zealand’s economic, political, and military relationship with China is seen by Beijing as a model to Australia, the small island nations in the South Pacific, and more broadly, other Western states. New Zealand is also a potential strategic site for the PLA Navy’s Southern Hemisphere naval facilities and a future Beidou ground station – there are already several of these in Antarctica. All of these reasons make New Zealand of considerable interest to China under Xi Jinping.

Concern about Chinese attempts to infiltrate and influence New Zealand domestic politics erupted at the same time it became a major issue in Australia in the controversy over NSW Labor senator Sam Dastyari. In 2017, it emerged that a long-serving New Zealand National MP, Yang Jian, had worked for a Chinese military intelligence school for a number of years and was a member of the Chinese Communist Party, but had failed to mention these facts when applying for residency, citizenship and jobs. The Asia editor of the Financial Times, Jamil Anderlini, noted afterwards that “some of the biggest donors to the main political parties [in New Zealand] are China-based businessmen with close ties to the Communist party.”

Campaign finance legislation rushed through parliament last month has done little to close off the loopholes that allow this kind of influence-buying. Astonishingly, a man who spent at least 15 years working for China’s military intelligence apparatus remains an elected member of parliament, even after admitting he was ordered by the party to conceal his past on his New Zealand immigration application.

Anderlini wrote that a “senior intelligence official from one of [the Five Eyes] countries spoke of New Zealand’s ‘supine’ attitude to China and its ‘compromised political system’”.

Australian officials believe their New Zealand counterparts have belatedly come to see the less benign side of the relationship with China. But the small country is much more economically exposed to the new superpower, both because of its exports and because its largest proportion of international students comes from China. Brady wrote in July 2020 that, since 2017:

the New Zealand government has attempted to make a calculated correction … [But it] has strenuously avoided confronting China directly. Instead, since coming to power in 2017, the Labor–New Zealand First– Greens Coalition government has carefully managed a case-by-case recalibration of the New Zealand–China relationship, all the while claiming any changes were “country agnostic.” Unlike the prime ministers of Australia and the UK, New Zealand Prime Minister Jacinda Ardern avoided New Zealand’s China risk-mitigation policies being associated with herself, or any one minister. Each new policy initiative has been debated publicly and then, if approved, backed up with legislation. As with the previous National-led government, any policy decisions that affected China, such as … the ban on Huawei in 5G, were described as following a proper process, responding to legislative requirements. The COVID-19 pandemic has deepened this quiet recalibration.

I ask the prime minister who had overseen the signing of the free trade deal with China in 2008, Helen Clark, to reflect on how things have developed. “My view is that the question is not whether you engage with China, but how,” she says. “Kevin Rudd had sensible things to say about this: that a megaphone doesn’t work, that you have to work pragmatically.”

The free trade deal was a huge boon for New Zealand, she says, but she is adamant that there has been “enormous naivety” in what has followed since. “It has been too easy for government, trade officials and the business community to think that, having scored the deal, there was no need to bother with other countries. We became too dependent.” There has been a recent attempt to rebalance trade with Japan, Europe and Korea.

What of China’s more assertive approach in the Pacific – the region where New Zealand feels it has a special relationship? Clearly, Australia and New Zealand can’t outspend China. So that means we have to be in relationships more than partnerships, and deliver things that are more useful than just new parliamentary buildings – providing services such as health care, and access to education systems, skills training and work opportunities.

The rise of China poses challenges to a really small country with a history so like Australia’s in many ways. New Zealand’s determination not to join the Australian federation and its competitive rivalry with Australia for Britain’s affection in the early years of the 20th century was replaced by a proud assertion of independence from the new global superpower – the United States – in the late 20th century, after it was abandoned by Britain. But there is now a growing unease in New Zealand that it is once more at the mercy of a global superpower, at least economically.

Australia, with what the eminent foreign policy adviser Allan Gyngell has described as its longstanding “fear of abandonment”, has, by contrast, moved from a close commitment to Britain to an equally great psychological and strategic dependence on the United States.

China now looms not only as an economic superpower over both economies, but as the new bully on the block: a bully that doesn’t just represent a large chunk of our export markets, but one that in the past five years has thrown its weight around in the region, and even within our own countries. This has provoked very different responses from Australia and New Zealand, and as a result has created tensions between our two countries.

We have travelled quite different paths in foreign and defence policy in the half-century since we were set adrift by the UK.


This is an edited extract of Laura Tingle’s Quarterly Essay 80, The High Road: What Australia Can Learn From New Zealand, out now.

Laura Tingle

Laura Tingle is the chief political correspondent for the ABC’s 7.30 program. She is the author of the Quarterly Essays Great Expectations, Political Amnesia and Follow the Leader.

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