40th Anniversary of the Establishment of New Zealand – China Diplomatic Relations

By Brian Lynch

A one-day symposium was held in Wellington on 5 September 2012 to mark the fortieth anniversary of the establishment of diplomatic relations between China and New Zealand. It was a substantial event , co-hosted on the New Zealand side by the Contemporary China Research Centre at Victoria University of Wellington(VUW) and by the New Zealand Institute of International Affairs. Their China partner was the prestigious Chinese Academy of Social Sciences (CASS) based in Beijing. It was an occasion to not only mark a notable anniversary, but to take a serious look at a relationship that has become hugely important to New Zealand. How does New Zealand make the most of the opportunities being offered, including in commercial terms, with a China that has moved back to centre-stage on the world scene? Where do other significant aspects of the relationship fit-cultural, educational, migrational, diplomatic and strategic- that need to be factored in when contemplating the future direction of bilateral ties?

The attractive venue for the occasion was the Legislative Council Chamber in the old parliament building.  In fitting recognition of the significance of the anniversary and the impressive calibre of those in speaking roles close to 250 registered for the symposium and most remained throughout the day. This was  a rare number for such an event and would have been higher had the venue been permitted to accommodate more. It was pleasing for the organisers and the symposium’s eleven sponsors that the attendance was at such a high level.

Following welcoming remarks by the VUW Vice-Chancellor, Prof. Pat Walsh, and the chair of the Research Centre Tony Browne, a former New Zealand Ambassador to China, the keynote address was given by the Prime Minister, Rt Hon John Key. The symposium then took the form of four panel discussions. The first panel offered a reflective look at how the bilateral relationship has evolved. The next two panels had a focus on some specific core aspects of the  relationship. The fourth was  asked to address the question of ‘where to from here’ and to identify challenges ahead for the two partners in their quest to continue to add new breadth and depth to the relationship. There was frequent reference to the unique position New Zealand has established in its relationship with China; having been the first developed economy to have recognised China’s market economy, successfully completed negotiations with China’s over its entry to the World Trade Organisation,  initiated negotiations on a free trade agreement, and successfully concluded a high quality trade agreement .

The twenty lead speakers and panellists were a diverse group. They came from academia in China and New Zealand, the ‘fourth estate’ in New Zealand and elsewhere, research institutes, private enterprise and the political community. They brought a wealth of personal experience and relevant professional perspective to the symposium. The large audience too featured many who had serious former or current engagement in the relationship; they were well-placed and seized the opportunity to contribute to the spirited dialogue that occurred after every panel. Predictably, the health of the bilateral relationship in its many facets dominated the agenda .In retrospect there could have been rather more attention to the useful cooperation and collaboration going on in the multilateral setting, and the planned Beijing meeting might well do this.

Rt Hon John Key’s address traced the growth of bilateral ties from their slim beginnings in the early 1970s to the broad-based relationship that now exists. He described it as one of New Zealand’s most important partnerships. The 2008 free trade agreement (FTA),he said, had unleashed exponential growth that had catapulted China into the position of being  New Zealand’s second-ranked trading partner,  the largest provider of foreign imports to New Zealand and a welcome source of foreign investment. Two-way trade was on track to double by 2015. China is also now New Zealand’s second largest source of migrants and supplies the highest number of foreign students.  Chinese tourists visiting New Zealand are second in number only to those from Australia. Mr Key highlighted solid bilateral cooperation on regional issues including emergency relief and development assistance, very recently a new collaborative venture in the South Pacific , specifically involving a trilateral with the Cook Islands. He noted that the relationship had achieved a level of maturity that allowed the partners to hold differing views on some global and regional issues that could when called for be discussed openly and honestly. The development of a China Strategy, the recent formation of the China Council and his own regular visits to China, demonstrated the importance his government attached to the relationship.

Panel One, convened by the chair of the China Council, Sir Don McKinnon, reflected on forty years of bilateral politics and diplomacy. The opening speaker was Chris Elder, also a former Ambassador to China. He gave a perceptive account of how the Chinese economy and society had been transformed as of course New Zealand’s have; his remarks were embellished with many personal anecdotes. One of the most experienced of New Zealand’s small community of genuine ‘China hands’, Mr Elder pointed out that in the early years the Chinese authorities had held a higher level of ambition for the relationship than their New Zealand counterparts. But it was illusory to speak of New Zealand having a ‘special relationship’ with China, 46 other countries made the claim. With some salutary ‘home truths’ to conclude for his largely New Zealand audience, Mr Elder noted there was no ground for complacency ,  this particular bilateral relationship more than most New Zealand had would always be a work in progress.  The accompanying lead speaker was Dr Han Feng, deputy director of international strategy at CASS. He too welcomed the strengthening of two-way links and emphasised the challenge each country faced in adapting to new regional and global dynamics. China’s priorities he observed would, in addition to domestic stability and reform, ,remain focussed on major power relations, regional security issues, and settling on the most credible among the competing forms of future Asian regional architecture,  where China currently favoured the ‘ASEAN plus One’ and ‘ASEAN plus Three’ options.

The three panellists in the first session were two New Zealand politicians, Hon Phil Goff (Labour) and Dr Jian Yang (National), and Peter Harris, a former Ford Foundation representative in China and the first director of the Asia New Zealand Foundation, Peter Harris. Phil Goff recalled that the FTA had been signed during  his  ministerial term  in the previous Labour administration and he had been intimately involved in the negotiation process. While applauding the trade benefits that had already flowed to New Zealand from the agreement , he highlighted the need for New Zealand to lessen its dependence on commodity exports. He made a point some others did, one being Peter Harris, that managing the twin complexities of relations with China and the USA and the pervasive tensions between them, will call for a deft touch on New Zealand’s part. Dr Yang was one of those who also identified the last point, while noting the strong trust towards New Zealand that he believed existed in China. His plea for the New Zealand public to be better educated about China was echoed by later speakers. No stranger to China, Peter Harris was impressed by the magnitude of the extraordinary change occurring there, and the prevailing confidence and sense of purpose that underpinned it .An especially noteworthy comment from him was that it is not necessary for countries such as New Zealand and the ASEAN members to try to decide China’s ultimate future in order to be prepared for events as they unfold.

Panel Two was chaired by professor Brian Moloughney  (pro-vice chancellor, Otago University and an early graduate of the New Zealand-China exchange programme) .It moved the symposium’s focus to the social context of the relationship; specifically to issues around migration, culture and education. The highly regarded professor of Asian Studies at Auckland University, Dr Manying Ip was the principal speaker. Rightly so she profiled the impressive contribution made by the more than one hundred thousand Chinese resident in New Zealand to the country’s society and economy, especially since the ‘watershed years’ of the mid-eighties. Drawing on personal experience as a Chinese migrant and with considerable force, she pressed the point that cultural diversity needs to be recognised and accepted before it can be truly embraced. Liyang Ma, Auckland Manager for the Asia New Zealand Foundation, had faced a more recent  but not dissimilar experience to that of Professor Ip in first settling in New Zealand; energetic sporting activity had helped open many doors for her.

Michael Stedman is the managing director of Natural History New Zealand. His company has been successfully involved in making over seventy documentaries in China in the past fifteen years.They have been shown in 180 countries but not yet in New Zealand. He reinforced  Dr Yang’s complaint that much domestic media coverage in New Zealand of events in China gives a distorted view .This he felt was  a ‘dangerous space’ for New Zealand to be in.  Another powerful message he gave was that New Zealanders wanting to do business or make a favourable impression in China , need to understand that building ties of real value is not accomplished overnight ,it requires patience and persistence.  Charles Finny has had considerable private and public experience with the China relationship over many years. He took part In the symposium in his capacity as the chair of Education New Zealand.  There are presently over twenty five thousand Chinese students at New Zealand educational institutions .This is not as high a figure as in some past years and  Mr Finny’s  agency has identified the China student market as its top priority

The third panel was chaired by Fran O’Sullivan, much respected for her forensic skills in public commentary. This session had an economic focus, specifically the free trade agreement and ways in which its full potential might be better realised. One of the two lead speakers, BNZ chief economist Tony Alexander, has a close interest in China’s growth record with certain of its partners, not least  Australia and New Zealand. In New Zealand’s case he observed that our exports had increased 134% since the FTA was signed while imports into China from all countries had grown 52%, illustrating how New Zealand’s strong growth had well exceeded natural demand growth out of China. Undeniably these were compelling statistics. But Mr Alexander suggested some caution in attributing the growth in goods and services exports solely or largely to the agreement .Without an FTA Australia had also done very well; clearly there were other factors at play. Starkly evident was that a disproportionate amount of New Zealand’s exports was still in minimally processed primary products. The FTA would show its true worth when New Zealand exporters moved seriously upmarket, ‘beyond milk and trees’. This would take them into the added value territory, and here there were encouraging signs emerging of growth in quality merchandise and processed food items. The second speaker, Dr Ma Tao (CASS), emphasised the early success and comprehensive nature of the FTA, which he termed a ‘win-win’ for both parties and a model for other economies to follow.

Three of the four panellists in session three had current involvement in China. Richard Yan, chief executive of Richina Group , felt New Zealand exporters could do more to ‘leverage’ the advantages of the FTA. His call for small and medium enterprises to have a common ‘platform’ led to an interesting discussion on the elements of a ‘New Zealand brand’, one that went further than the well-worn portrayal of a ‘clean and green’ image. Consideration of how a national ‘brand’ fits with the increased importance of international supply chains was left for another day.John Penno, CEO of Synlait Milk said his company found China a rewarding place in which to do business. His blunt advice was that doing successful business in China was no different from succeeding anywhere else; New Zealand exporters had to make the effort  to get out of the office and concentrate on building productive and long-term business relationships .He and Jamie Tuuta, the  Maori Trustee, had a positive approach to Chinese investment in New Zealand. Mr Tuuta noted that much of the future growth in New Zealand’s high quality food and forestry exports would come from Maori owned and farmed land. The topic of foreign direct investment also featured in the remarks of Girol Karacaoglu, chief economist and Deputy Secretary ,The Treasury; he stressed that positive FDI including from China had a prominent  place in the government’s economic growth agenda. FDI was important for its positive impacts on technology and management behaviour, it was not merely a substitute for other forms of overseas borrowing.

The fourth and final panel was tasked with identifying where the big challenges would lie for the two countries in taking the relationship forward. It was chaired by Tony Browne. What would the key features of the Chinese economy and society be in 2025 , asked Professor Li Xuesong(CASS). He forecast that by then the economy would match the USA and Europe in size although per capita income would still be only one-quarter of that in the US. Growth rates in population and workforce numbers would have declined. Urbanisation would provide the ‘growth engine’ for a continued rise in labour productivity that would sustain the momentum of economic expansion. In another of his typically incisive contributions, political analyst Colin James was in no doubt that New Zealand’s core foreign policy task for the next twenty years was ‘managing China’s management of us’. In response to that challenge, he did not envisage any wavering from the independent policy posture of the past twenty years that could threaten to put New Zealand in the uncomfortable position of having to ‘take sides’. In pursuit of that objective New Zealand would be at one with the countries of south and southeast Asia. Mr James closed with a list of mind-focussing questions for the audience to ponder, on the alternative paths China might take, domestically and externally, that would have implications for New Zealand.

The three panellists in the final session brought a range of perspectives to the discussion. Rowan Callick is the Asia-Pacific Editor of The Australian with very credible credentials as a long- time observer of regional trends and events. Much of the on-going debate in Australia about aspects of the China relationship; for example over the merits of foreign investment, mirrored the discussion in New Zealand, but the prominence of defence links with the USA did not have the same resonance in New Zealand. Some ‘hedging’ would be called for while the new leadership imminent in China settled into place. He predicted that New Zealand would face new and unforseen challenges as its China ties ‘bulked up’. Business leader Rob Morrison cited his exposure to China from being based in Hong Kong as giving reason to be critical of foreign companies, including from New Zealand, who failed to do adequate homework about the ‘big drivers’ at work in Chinese society and economy, before trying to launch their ventures. Like Professor Li he stressed the huge impact in China of rapid urbanisation. He saw a pressing need for a more strategic approach to China on New Zealand’s part, in both business and government. Whether or not a firm exported to China it still needed a China strategy, given that Chinese consumers were now the biggest influence on global trends in prices and volumes of so many items  ,and China’s pervasive presence in so many third country markets of interest to New Zealand.

On the eve of the symposium, Professor Rob Ayson, Director of the VUW Centre for Strategic Studies(CSS), had co-authored with Chris Elder  a thoughtful discussion paper titled “China’s Rise and New Zealand Interests ,a Primer for 2030”. On the panel Dr Ayson raised a fundamental question; whether the relationship could reach a point of becoming almost ‘too close for comfort’ for New Zealand and to advance further might require modifications to other significant ties to which New Zealand attached importance? (DELETE; As Colin Jmaes had..) He concluded that there is unlikely to be such a defining moment confronting New Zealand in the foreseeable future  .This, however, did not rule out the prospect of tension arising around a set of smaller issues which New Zealand could face, and on which the big regional powers, principally China and the USA, had different stances. In summary remarks after the final panel, Professor Zhu Feng (Peking University) ,the current  Kippenberger Professor at CSS ,counselled against allowing any specific and perhaps short-term strategic concerns, to distract attention from the commonality of interest China and New Zealand shared across a wide range of regional and global issues. He spoke of a current dichotomy in China  of ‘strong economics and weak politics’ but felt this would not be enduring. In a final word of advice he suggested a key aspect of New Zealand’s approach to development of stronger ties with China would be through a mutual interest in cultivating ‘material realism’, and collaboration in plurilateral settings rather pursuit of a single-minded focus on bilateral issues.

Concluding Comment

A report of modest length cannot do justice to the wealth of practical experience and personal insight acquired in the China-New Zealand context and brought together for this symposium, nor to the robust discussion around the panel themes. The book of proceedings that is planned will better serve that purpose. As a broad generalisation, however, there was an unsurprising level of satisfaction with the mood and content of the relationship that has emerged after forty years of formal relations. Some relevant statistics, impressive by any measure, were tabled to demonstrate how both parties have drawn benefit from the relationship, notwithstanding the obvious scale differences between them. It was clear from the presentations,  that for each partner there has been value in building and maintaining meaningful ties and continuing to explore new avenues of shared interest. This is so even if the incentives are not all the same on both sides; they very rarely are in any bilateral relationship.

At the same time, the symposium was never envisaged simply as an opportunity for the two partners to engage in self-congratulation. It was always intended as an occasion for a no-holds ‘reality check’, and generally speaking this proved to be the case. In keeping with the theme of openness and honestly referred to by the Prime Minister, there was no reluctance to expose what were perceived to be areas of under-achievement. The most striking of which, probably to the surprise of many present, was captured in the punchy observations from analysts and the New Zealand private sector, that the FTA  still fell well short of fulfilling its promise.

There were pointed comments too about sub-optimal performance on New Zealand’s part in people to people links, notably so in the sensitive areas of migration, education and cultural understanding. Nor could the New Zealand authorities represented have failed to take in another unambiguous message. It was that the new China Strategy launched some months previously with much fanfare, provided a public benchmark against which observers in both countries would assess the worth of future initiatives to lift the relationship to a higher level. That there was this discernible edginess to some of the discussion did not diminish but enhanced the value of the symposium. As befitted the anniversary being recognised it was a timely, thought-filled, focussed and forward-looking event. Preparations are in hand for a reciprocal event hosted by CASS to be held in Beijing towards the end of the year. A book is planned that will provide a permanent record of the two events.

Brian Lynch

Director, NZIIA, 2003-2012

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