24.03.2021 Author: Petr Konovalov

New Zealand at a Crossroads: Foreign Policy Challenges in 2021


Recently, Australia and New Zealand have been experiencing considerable difficulties in finding a balance in their relations between the PRC and the United States: two antagonists with whom they both need to maintain political and economic ties. China is vigorously using financial leverage on its South Pacific trading partners to force them to abandon the anti-Chinese rhetoric that the American side is promoting. Consequently, relations between Beijing and Canberra deteriorated considerably in 2020, but the approach taken by Australia’s main ally, New Zealand, toward building relations with China differs significantly from Australia’s.

Even back in 2008, New Zealand became the first well-developed economy to enter into a free trade agreement with the PRC, and later supported China’s commercial One Belt, One Road Initiative. Now, in the very beginning of 2021, Wellington and Beijing have signed a retooled, updated free trade agreement that will give New Zealand goods preferential access to the Chinese market.

The domestic political situation in this island state, with a population of about 5 million people, is fairly stable. New Zealand Prime Minister Jacinda Ardern, and her Labor Party, won the 2020 elections for the second time in a row, with Labor Party members receiving a record 49% of the vote, and 64 seats in the 120-seat parliament. Nobody has managed to garner that kind of majority in the last 25 years.

Despite this landslide victory in the elections, Ardern’s administration faces serious challenges, including the economic consequences stemming from the COVID-19 pandemic. Reviving an economy devastated by the coronavirus is a top priority for New Zealand’s authorities. In the second quarter of 2020, the country’s GDP contracted by a record 12.2%, and Wellington had to allocate 39 billion dollars to help bolster the economy.

Under these conditions, New Zealand has been pragmatic about building relations with its main trading partner, the PRC, without compounding the rhetoric targeted against it: after all, New Zealand’s rather small market makes the country dependent on foreign trade, and more vulnerable to global crises.

Although New Zealand belongs to the “Western” bloc of countries, the course it takes in its relations with the United States is different from that taken by Australia. While Canberra has historically maintained close strategic ties with Washington, Wellington acts more independently, especially after a disagreement it had with the United States over an issue concerning US warships carrying nuclear weapons on board entering New Zealand ports in the 1980s. Trade is more of a priority for Wellington than politics, by virtue of which China’s position on New Zealand’s foreign policy agenda is more stable than it is on Australia’s. In April 2019, Jacinda Ardern paid an official visit to Beijing, and according to Chinese President Xi Jinping this proved New Zealand’s special commitment to its relations with China.

However, this coin has a flip side, which is China’s growing economic influence in the island states across Oceania. It is common knowledge that a large part of Polynesia is the “area of responsibility” for the New Zealand side, and therefore the presence of the PRC there can be perceived as a threat to its national interests. To help mitigate China’s influence in its “area of responsibility”, Wellington developed a plan called the “Pacific Reset”, which includes providing more than 500 million dollars in economic assistance to Oceania’s island states, and expanding New Zealand’s diplomatic staff in the region. PRC’s presence is particularly prominent in the island states of Samoa and Tonga, as well as Kiribati, which refused to diplomatically recognize Taiwan in favor of the PRC at the end of 2019. On the other hand, the diversification of contacts between Oceania and a wider range of countries in the Asia-Pacific region could have a positive impact on the foreign policy they adopt. States in Oceania are gaining access to alternative sources of financial assistance, as well as the ability to ease their dependence on Australia and New Zealand by using more leverage on them.

Founded on a position of more loyalty to China, Wellington has decided not to shy away from the Australian-Chinese standoff. At the height of the Australia-China trade war, in January 2021 New Zealand Trade and Export Growth Minister Damien O’Connor, taking a step towards easing tension in Australia-China relations, invited his Australian counterparts to engage in dialogue with China with “more diplomacy”, “respect”, and “to be careful in the wording” directed towards Beijing. This proposal was met with mixed feelings by the Australian side. In particular, given the fact that New Zealand is involved in the Five Eyes intelligence council, which also includes the United States, Britain, Australia, and Canada, O’Connor’s remark raised concerns among Australian government officials. Wellington previously offered to act as a mediator to help resolve the differences between Canberra and Beijing, but so far attempts made by the New Zealand side have fallen flat.

In either case, New Zealand is much more relaxed about the “Chinese threat” disseminated by Western media outlets than Australia, its closest neighbor in the region. Even in the post-pandemic era, maintaining a balance between ideology and trade is critical for New Zealand, since it aims to rebuild its own economy following the substantial damage inflicted by the global lockdown. Wellington intends to continue working on further fostering mutually beneficial economic relations with China, despite the fact that Beijing intensifying its activities in Oceania will continue to be viewed as a possible threat to New Zealand’s national interests. So far, this small South Pacific state is in no hurry to make any public announcements about the “Chinese threat”, and is trying to benefit from cooperating with the Celestial Empire. For its part, the close nature of relations between the two countries undermines New Zealand’s position in the Five Eyes intelligence council, whose members may consider it to be the “weak link in the chain” most susceptible to Chinese influence. This, in turn, could push New Zealand to even closer cooperation with the Chinese side, which would naturally not miss out on the chance to attract this “plum” country into its sphere of influence.

Petr Konovalov, a political observer, exclusively for the online magazine “New Eastern Outlook”.