Namie Yazaki
China’s rapid and continuous growth in the 21st century sets it on a trajectory to surpass regional hegemons politically, militarily, and economically. As China bolsters its global influence, some western nations are not easily influenced and charmed by China’s while other western partners are. Why is it that China’s relationship with certain western powers are considered strategic partners while others are considered strategic competitors? While the United States and their allies such as Australia create new policies countering China’s global influence, nations such as New Zealand have been showing growing support for the Chinese communist Party (CCP). As an example, when China introduces new economic policies in the region, New Zealand is typically the first western power to legitimize these policies by becoming a partner. Because of New Zealand’s positive relationship with China, the CCP has called New Zealand a model for western countries. In contrast, New Zealand's neighbor and strongest ally, Australia, has a relationship that is on course to being as competitive with China to the degree in which the US and China share. This paper will examine the reasons behind China’s growing governmental ties with New Zealand instead of Australia by using an economic approach. My finding is that China's foreign interference activities don’t have much effect on their diplomatic relationship, but rather the economy is a major factor that contributes to New Zealand’s diplomatic relations with China.
Key Words: China, New Zealand, Australia, Diplomatic Relationships, Western Countries
Since the turn of the century, China has been climbing the global ladder from transitioning from a developing nation to being the world's second largest economy. Through this bolstering of capabilities, China has been able to focus a majority of those efforts on enhancing their soft and hard power. Today, it is expected that China’s GDP will surpass the US around 2035 (McCurry & Kollewe, 2011 ; Nye, 2023 ; Saul, 2022). China’s defense budget has become five times higher in the past two decades (CSIS, 2015). China’s growing presence within international organizations is showing a destabilizing factor to the west. Cheng (2021), points out that Western countries consider China as a “threat,” as the national security concerns have increased. Bandow (2021), says China’s expanded capabilities, ambitions, opportunities, and threats urged Washington and Western capitals to create a new policy for China. In the US, for example, the demand for working on China is growing and this brought more opportunities in think tanks (Berris et al. 2021).
Currently, New Zealand has grown to become one of China's closest western allies. Brady (2017), says New Zealand has “strived to always be the first western country to sign up to China’s new external economic policies.” As an example, New Zealand is the first country in the Organization for Economic Cooperation and Development (OECD) to sign a Free Trade Agreement with China in 2008 (Suenaga, 2017). Another example is back in 2017, when New Zealand became the first western developed nation to sign onto the CCP's Belt and Road Initiatives (BRI). New Zealand also signed a “memorandum of arrangement” with Chinese premier Li Keqiang regarding China's BRI in March 2017, which was a proposal for working on the BRI together. (Sachdeva, 2022 ; Suenaga, 2017). This BRI is controversial in western countries, and they have stayed away from it. While western states share this sentiment towards the BRI, New Zealand instead doubled down and extended their agreement for five more years (Sachdeva, 2022). In contrast, Australia, which is a close ally of New Zealand, has an opposite situation with China. While New Zealand shares its strong partnership with China, Australia, on the other hand, is currently enroute to deepen political tensions with China. Since the two nations established diplomatic relations in 1972, it is assessed that their relationship is at their worst. (Okano, 2021). The relationship between the countries started to worsen around 2017, when security and political concerns toward China’s political interference in Australia was increasing. Their relations became even more strained in 2020, when the Australian government declared an individual investigation to find out the origin on Covid-19 (Yoshida, 2022).
This paper will examine why New Zealand has a good relationship with China even though China is a threat for the west. In this analysis, Australia will be used to compare and contrast the reason for regional neighbors with an abundance of similarities and close allies to choose different sides when partnering with China. This paper assesses that CCP’s political influence activities aren’t the main factor of why New Zealand has strong relations with China, but rather economic factors have a great impact on the countries’ diplomatic ties. My argument will focus on the countries’ economic relations with China, with added emphasis on New Zealand due to their positive relationship with China compared to Australia's relationship.
China’s political influence activities might be a possible reason that can explain the gap between Australia and New Zealand’s diplomatic relations with China. China has spent enormous effort on both countries to influence their politics. Searight (2020) describes the Chinese government’s effort to penetrate and influence Australia’s politics and society as “unusual degree.” She also points out that China has been “playing long game” in Australia to cultivate positive images of China, and also been “consistent, patient, and strategic” to build networks of influence. The CCP’s extraordinary effort is because of a security reason, which makes Australia an attractive target for the government: The Chinese government sees Australia to have “strategic value,” since the country is an ally with the US, a nation with significant influence in the Indo-Pacific region where increased territorial disputes exist (Newlin et al.). Newlin et al. (2020) also says Beijing’s ultimate goal for its political influence activities is not only to eliminate Australia from the US alliance, but also to neutralize Australia on some major disputes such as the South China Sea.
It can also be argued that the economy is another incentive for China. It was mentioned before that Australia sees China as a vital trade partner, but China also considered Australia in the same way. Australia is not China’s one of the major trade partners, but China needs Australia due to its rich natural resources, such as Liquified Natural Gas (LNG), steel, and iron ore. China’s demand for commodities has increased due to the rapid urbanization within the nation, and today, China relies heavily on Australia’s mining industries (Roberts et al., 2016). Indeed, the majority of iron ore in China comes from Australia, and it occupies almost 60% of the total goods (Yosihda, 2022). China also signed a long-term contract with Australia to secure LNG, since Beijing was seeking an alternative energy which is renewable and emits low-carbon. However, the import of LNG shrinked in 2015 since the growth of industrial production became slow (Roberts et al., 2016). From these reasons, it can be concluded that the economy, especially maintaining commodity trade with Australia, is another motivation for the CCP to conduct active political influence activities in the country.
In contrast, Beijing’s incentives for its political influence activities in New Zealand are more broad compared to Australia. Since New Zealand is a member of the Five Eyes, the CCP expects that it might be possible to convince New Zealand to stop spying on China for the intelligence alliance. Moreover, there are three territories under New Zealand’s jurisdiction (i.e. providing control of defense and foreign affairs) in the South Pacific region; Cook Islands, Niue, and Tokelau. This possibly means that China can get four votes at international organizations (Brady, 2017). Furthermore, China has been growing more presence in the Pacific region, where New Zealand has some influence. Iati (2021), points out that even though New Zealand has little influence in international relations, it has and operates “considerable influence” in the Pacific region. This implies politically influencing New Zealand can allow China to grow presence even further in the Pacific.
There are some other reasons for the CCP to target New Zealand for influencing politically, such as for China’s scientific research. Since 2005, Beijing has drastically increased its scientific activities in Antarctica and spending on Antarctic affairs. As the CCP is not happy with the current order, the government is planning to take a more leadership role in the affairs (Brady, 2010). China also has a long-term strategic plan on the continent, which will need Antarctic states’ cooperation. Hence, China wants to influence New Zealand since the nation is the claimant of Antarctica, and what is more, where New Zealand is located is one of the closest to the continent (Brady, 2017). Moreover, she also states it is important for the People’s Liberation Army (PLA) to conduct near-space research for expanding its long range precision missiles, and New Zealand is useful for China. China sees New Zealand as an essential country due to where it is located. In other words, New Zealand’s geography is good and important for the CCP for its scientific research.
There are two major tactics used by the CCP for its political influence activities in Australia: One is “buying” political influence, and the other is controlling Chinese diasporas in Australia. The Chinese government has used wealthy businessmen in Australia who are of Chinese descent with strong connections with the CCP to influence political parties and also Australia’s policies with China (Newlin et al., 2020).
However, China’s political influence in Australia can’t be described as successful. The Australian government was aware of China’s growing influence within the country, however, Australia managed to handle it. Australia was extremely concerned about China's accelerated influence activities, and a new law to ban foreign interference was built (Brady, 2017 ; Seairght, 2020).
It doesn’t mean the CCP directly buys political influence, but rather provides money to the Australian parties and important politicians as a donation. About one third of countries legally accept foreign donations in the world, and Australia and New Zealand used to be one of them until recently. Both countries had very active political donations, however, the countries later implemented laws to ban the donations. In contrast, political donations are banned in the US, the UK, and some countries in Europe (Westbrook, 2017). Both Newlin et al. (2020) and Searight (2020) describe China’s buying political influence by using “political donation.” Searight (2020) also uses “CPP-linked money flowing” to refer to Beijing’s buying political influence. On the other hand, Galloway (2022) describes the political donation as “bribery.” Hence, the CCP’s strategy of buying political influence means providing political donations from wealthy businessmen who have Chinese descent and close ties with the government. The donations not only go to politicians and the parties, but also Australian academies and universities (Newlin et al., 2020).
According to Searight (2020), there are two major donors who are property developers and billionaires in Australia: Huang Xiangmo and Chau Chak Wing, both have provided millions of dollars as political donations to both the Labor and Liberal Parties in Australia. In other words, China’s buying political influence was supported largely by the two developers. Chau is anAustralian citizen who is well connected to both Liberal Party and Labor Party, which are the major parties in the country. He was born in China, but became an Australian citizen in the late 1990s. He is also known as a person who often gives generous donations (Galloway, 2022 ; Searight, 2020). He provided AU 2.9M to the Liberal Party and AU1.7M to the Labor Party. He also donated more than AU 35M to a couple universities in Australia. Over the years, he has built strong networks with powerful politicians in Australia, including some former prime ministers. Chau is well connected to Beijing, and he helped several huge deals with Beijing and Australian business, including natural gas export which is worth AU 25B liquified natural gas in 2002 (Searight, 2020). Chau also donated more than $45 million to Australian universities, and because of the amount of donations, he is now one of the most prominent donors in Australian history (Galloway, 2022).
However, Chau’s donations have been controversial in Australia. There have been a number of serious accusations against Chau in the Federal Parliament. Kimberley Kitching, who is the senator of the Labor Party describes him as “puppeteer behind foreign inference plot (Galloway, 2022).” Moreover, there were some suspicious events which were related to Chau. One example can be seen back to 2021, when Nine and Australian Broadcasting Corporation (ABC), which are both Australian media companies, were ordered to pay $590,000 to Chau to compensate the damage for a joint investigation with TV programs that were released in 2017. The media outlets were about Chau’s political donations, saying it was a “bribe.” Moreover, it also said that he carried out the work of the UFWD. The media defended by saying it was a public interest, however it was rejected. After this case, there have been barely any articles about Chau from the media. There are more cases that are similar to the case of Nine and ABC that ended in severe financial loss for media companies (Galloway, 2022).
In contrast, Huang is relatively a newcomer compared to Chau. He arrived in Australia in 2011, with “mysterious” circumstances and Huang soon got permanent residency and political clout, and he also founded a real estate company (McGuirk, 2019 ; Searight, 2020). His legal name is Huang Changran, and he is a resident of Hong Kong. He is also a member of the election committee in Hong Kong, which is an elite group of 1,500 people. The election committee has a right to select the Chief Executive of the city and almost half of the legislature (Needham & Pomfret, 2022). He was a major political donor to both the Labor and Liberal Parties, donating more than AU$1 million to each party between 2012 and 2015. He also donated to a university in Australia to build a new research center. Huang was also chair of the Australian Council for the Promotion of Peaceful Reunification of China (ACPPRC), which is the UFWD’s central organ of the Australian branch, or known as the CPPRC. The CPPRC is known as an independent civic organization, however, the section of leaders and its activities are directed by the Chinese embassy in Canberra (Searight, 2020).
Huang became a controversial figure in Australia, and it forced the Australian government to implement measures. In 2017, scandal of Huang’s relation with a former senator Sam Datsayarai was revealed. This involved not only political donations, but also Australia’s political view. In 2016, Sam held a press conference for the pre-election which was organized by Huang. This press conference, however, was only for Chinese-language media. When a question regarding the South China Sea was asked to Sam at the conference, he gave an answer which showed support for China's viewpoint on the territorial dispute (McGuirk, 2019 ; Searight, 2020). However, what Sam said during the conference contradicted the Labor party’s policy. Sam later denied what he said during the conference, however, an audio was released in 2017 which confirmed his speech during the interview. Sam was forced to resign his role in 2017, after Huang was warned that his phone calls are monitored by the Australian and the US intelligence agencies (Needham & Pomfret, 2022 ; McGuirk, 2019 ; Searight, 2020). In 2018, Huang’s Australian citizenship application was rejected by the Australian government because of security concerns. The government also revoked his permanent residency when he was traveling overseas, which successfully prevented him from reentry (Needham & Pomfret, 2022 ; Searigh, 2020).
In 2022, another one of Huang’s scandals was revealed: Huang made an illegal political donation back in 2015. An Australian corruption investigation found out that Huang had allegedly given secret and illegal political donations to a New South Wales state election, which was $100,000. In 2015, Huang used a plastic shopping bag to deliver the money to the New South Wales (NSW) Labor Party’s general secretary (Needham & Pomfret, 2022). In April 2022, the NSW Independent Commission Against Corruption (ICAC), confirmed that Huang was the true donor of $100,000 to the head office of the NSW Labor (ICAC, 2022).
The situation of political donation in Australia changed in 2017. As concerns of rising Chinese influence within Australia, a new law was introduced in 2017 to ban foreign political donations (Westbrook, 2017 ; Seairght, 2020). In 2019, this law was officially in place, and this law not only bans foreign donations, but also election advertising, campaign phone calls, and election leaflets (Special Minister of States, 2019). It can be said that political donations were very active in Australia, and somehow had impacts which made the government implement a new law. However, the Australian government was resistant to China’s political influence activities. Hence, I conclude China’s political influence by making political donations didn’t have prominent impacts on Australia.
According to Searight (2020), Chinese diaspora in Australia is a natural target for the UFWD, since there are a large number of communities of ethnic Chinese-Australians in the country. For the CCP, Chinese diasporas are important for some elections in Australia. Only 5% of Chinese-Australian citizens make up the total population of Australia, however, potentially higher numbers of them live in cities and suburbs of Melbourne and Sydney, which have some important battleground electoral districts. This means the voting weight becomes higher in the areas, and indeed, 16% of the voting base is represented by Chinese-Australians in the regions. The CCP and the UFWD have worked for decades to build ties between Chinese-Australian communities and Beijing, and this effort recently has shown some good results for China (Searight, 2020).
Searight (2020) says the CCP has greatly succeeded in controlling opinions through local Chinese-language media in Australia. This was achieved by acquiring independent media, commercial pressure, and giving rewards. Individuals who are close to the CCP bought many formerly independent newspapers. By acquiring the newspapers, the individuals can have a right to edit, meaning they can reduce articles which talk about negative perspectives about Beijing. At the same time, however, they also found out that their advertisers, usually Chinese-owned firms or Australian companies, which depend on doing business in China, are pressured by consulate officials to remove their advertisements so they will starve revenue. Furthermore, the CCP also restricts investors or owners of independent media: if they report or publish sensitive topics that are not the CCP’s narrative, they will be excluded from official Chinese government events and media conferences. In contrast, media companies that are friendly to the CCP will be rewarded with income from Chinese state-owned publications. Due to these strategies, there are only a few media channels that are independent in Australia (Searight, 2020).
On the other hand, there are different statements regarding the CCP’s media strategies. Yang (2021) analyzed more than 500 articles from three Chinese-media outlets, and also conducted interviews with senior media professionals. Yang concluded that Chinese language media outlets in Australia do soften or remove critics of China and the CCP, however, the outlets are “more likely to support Australian government policy than Chinese government policy when reporting on tensions in the Australia–China relationship.” This is because most of the Chinese articles are translated predominantly by the same media organizations. Moreover, instead of publishing original contents, these organizations source news articles from Australian outlets. The reason to publish Chinese language contents is not for putting positive images of the CCP, but rather supporting Chinese migrants to engage into Australian society.
However, both Searight (2020) and Yang (2021) point out that due to the heavy censorship by the CCP, self-censorship is necessary for Chinese people in Australia. Searight (2020) says individuals pay extra attention to possible censorships when they use WeChat and Weibo, which are Chinese social media. In addition, politicians are also likely to do self-censorship when they use these platforms. Yang (2021), on the other hand, claims that Chinese media professionals in Australia also do self-censorship when they translate news, since they are worried about possible penalties by Beijing on their employees, their families, and also their media outlets’ revenues. From the arguments from Searight and Yang, it can be said that the heavy censorship and the distortion cultivated fears of penalties to individuals, which enabled the CCP to succeed in controlling opinions. This means the CCP succeeded in controlling diasporas by intense censorship, however, it is not clear if the CCP succeeded in influencing individuals opinions. Moreover, there is little study or statistics about real opinions about the CCP from Chinese in Australia, or how these individuals think about the CCP. Hence further study might be needed.
For the CCP, the political influence activity in New Zealand is considered as “successful.” Brady (2017) points out that the Chinese government sees the relationship with New Zealand as an “exemplar,” which other countries should follow. In 2013, China’s New Zealand ambassador said the two countries’ relationship is “a model to the Western countries.” Moreover, in 2017, after Premier Li Keqiang visited New Zealand a Chinese diplomat favorably mentioned the relation with the country by comparing the level of closeness that China had with Albania in the early 1960s (Brady, 2017). The beginning of China’s growing power in New Zealand can be seen back in the 2010s. The New Zealand government in the years allowed the Chinese government to slowly but surely gain power to shape New Zealand policymaking, by greatly using sharp power (Kurlantzick, 2023).
It can be said one of China's main political influence activities in New Zealand is also political donation - or can be said as buying political influence - like Australia. China has expanded its power by “informant and financial support, and other types of supervision… (Kurlantzick, 2023).” Since 2007, the New Zealand Electoral has made a yearly report about political donations over $1,500, which went to either parties or candidates. However, fundraisers deemed “charity,” such as dinners and auctions, are not included in the scrutiny (Brady, 2017). This implies there can be more financial support which was not considered as political donations but charity. In the 2010s, the links between New Zealand politicians with Chinese donors and Chinese firms have grown. Consequently, by influence of these links, “parroted China’s view of its domestic and foreign policies to domestic and foreign media (Kurlantzick, 2023).” The financial support includes not only political donations, but also the CCP’s investment into companies in New Zealand. Moreover, financial support to overseas political parties is one of the major policies of Xi’s administration for political influence activities. The Xi government encourages overseas Chinese to be more active in politics, mainly by making political donations (Brady, 2017).
Like Huang Xiangmo and Chau Chak Wing, there are also prominent political donors in New Zealand. However, it can be said that the situation of political donation in New Zealand is a little different from Australia. This is because each donor gives a much smaller amount of donations at a time than the donors in Australia. Instead, there are many more donors in New Zealand. In the report by Bradly (2017), she listed 10 donors who have either a strong connection with the CCP, or are members of united front-related organizations. This list was only partial, meaning there are more major donors. Steven Wong, for example, who is also known as a head of the Peaceful Reunification of China Association of New Zealand, donated to the Labour Party two times in 2007, the amount of $19,000 and $23,000. On the other hand, Karl Ye who runs GMP Dairy Ltd, donated NZ $25,338 to the New Zealand National Party (Brady, 2017).
Moreover, political donations in New Zealand are also greatly supported by individuals. Xi’s encouragement resulted in raising a huge amount of political donations in New Zealand. A report says during 2007-2017, $8.7 million was donated to the National party from anonymous donors, which was 83% of the total amount of donation. Meanwhile, $2.8 million was donated to the Labour party from anonymous donors, which occupies 80% of the total donation.
It seems that the National party happened to receive a significant amount of donation, however, there is a tactic behind this. Brady (2017) says the possible reason why the National party received much more donations than the other party is that the party was in the government from 2008. Moreover, when the party was not in power or looked to be less likely to win an election, Auckland mayoral election in 2016, for example, donation shifted to the Labour party. From these activities, it can be said that the CCP’s strategy for political donation in New Zealand is based on likelihood to win the election: the donors - or the CCP - deliberately choses a party which is more likely to win the election to donate.
New Zealand also responded to political donations from overseas by building a new law, but the effectiveness is limited. In other words, the new law can’t prevent China from making political donations. In 2019, New Zealand moved to ban foreign donations due to concerns of growing foreign interference and risks of it in the general election which would be held in 2020 (Roy, 2019). The law banned foreign donations, but still allows the donation only if the amount is less than NZ $50 in cash (Brugen, 2019).
However, some experts point out that the new law doesn’t have much impact
to combat existing donations within the country. Geddis (2019), who is a
professor in the Faculty of Law at the University of Otago, says it is
still possible to make large donations even under the new law. He says
“Unlimited donations to a party or candidate from a New Zealand company or
an unincorporated body based in New Zealand are still allowed, even if that
company is owned by an overseas person or the body has overseas members.”
On the other hand, Edgeler, who is an expert in public law, says “The main
concern has recently been the types of donations that do not count as
foreign donations (Roy, 2019).” For example, there was a $150,000 donation
from Inner Mongolia Rider Horse Industry (NZ) Ltd to the National party.
The owner of the company is restricted to donating only $50 to the party
directly, however, the donation as a company will remain completely legal
(Geddis, 2019). The former prime minister Jacinda Arden criticized the
donation as “against the spirit,” but people can still find an easy loophole
to provide money (Braare, 2019).
These statements imply the CCP can still buy political influence in New
Zealand by donations. It can also be said that New Zealand’s new law
against foreign donation is trivial. Dr Simon Chapple, from Victoria
university’s school of government pointed out the new law can’t prevent
China from influencing New Zealand politics, but the CCP can still
legitimately keep making donations. The CCP does this by using money
connected to the Party to influence politics by infiltrating New Zealand
through individuals who are residents or citizens of New Zealand as well as
through domiciled companies in the state. This creates a situation where
money is flowing non-transparently into New Zealand with little oversight
of where the money is originating from (Roy,2019). Therefore, these
arguments by Geddis and Edgeler imply that New Zealand’s new law to ban
political donation doesn’t have any impact on the CCP.
The CCP also uses media outlets to control Chinese diasporas in New Zealand, and the strategy by the UFWD in New Zealand is similar to Australia’s. Today, Chinese-language media in New Zealand is an outlet of “China’s official messaging.” However, it used to be an independent, and localized medium. This pattern of change is common, and other foreign countries' Chinese-language media also followed the pattern (Brady, 2017).
Local Chinese-language media in New Zealand now have China-related news contents from Xinhua News Service, since they have content corporation agreements Xinhua. Xinhua is China's official news agency, and Walters (2019) says Xinhua provides free content to overseas Chinese-language media to keep “pro-CCP” articles. Brady calls this the “Xinhua Line (Walters, 2019).” Moreover, some media outlets also hired senior staff members who have close ties to the CCP. Since integrating domestic Chinese media and overseas media is a part of Xi’s effort, Chinese media organizations in New Zealand are under the “guidance” of CCP propaganda officials.
For example, the Chinese New Zealand Herald,which is a leading Chinese language paper in Auckland, partners closely with the All-China Federation of Overseas China (Brady, 2017) . Chinese New Zealand Herald is a joint venture of New Zealand Media and Entertainment (NZME), which owns Chinese New Zealand Herald, and The Chinese Herald,which is a long-running Chinese publication (Cooke & Walters, 2019). The Chinese Herald used to be completely independent, however, it has been “harmonizing” with the Chinese media control agency (Brady, 2017). Some editors point out that there is a lack of independence in Chinese-language media in New Zealand, because there is a spectrum that ranges CCP-friendly and Xinhua line, to dissident publications. There are some media outlets in New Zealand, which freely criticize the CCP, such as the Epoch Times and Beijing Spring. However, these platforms suffer from securing advertising money. Beijing Spring was also forced to shut down since it strayed from Xinhua line (Walters, 2019).
The CCP also tries to spread more pro-CCP content by distorting or removing some articles which are against the CCP. It was reported that the Chinese New Zealand Herald had articles which were translated from the New Zealand Herald, but they were edited to be more China-friendly. It also removed entire articles that talk about negative aspects of the CCP. In addition to this, it was also discovered that most of the stories which concern China-New Zealand relationship are not even translated (Cooke & Walters, 2019). Moreover, in 2019, Chinese-language media’s executives and editors joined a state-sponsored conference in China. At the conference, they were told to get overseas media to promote the CCP’s policies including BRI.
Like Australia, the CCP’s strategy to control individual Chinese people is to censor and distort some information which is not good for the CCP. However, I couldn’t find much study about this area, and how effective it is. Hence, it is difficult to say if this strategy is successful or not. On the other hand, the New Zealand Media Council, which is an independent forum for solving complaints such as media contents, is aware and concerned of China’s censorship (Walters, 2019 ; New Zealand Media Council, n.d.). It is not clear whether China’s censorship or media controlling in New Zealand has been an effective strategy, but it has some influence which grows concerns within the country.
The CCP - or the UFWD - actively conducted its political influence activities in Australia and New Zealand. The strategies are similar, however, the effort didn’t pay off well for both countries. However, Australia and New Zealand showed different responses against China’s growing influence. Australia’s response was more aggressive, and it can be seen from the country’s new law, and also the country’s decision to reject one of the major political donors' citizenship. In contrast, New Zealand also responded to China’s political influence activities, but it was superficial. Moreover, New Zealand introduced a new policy in 2018 called pacific reset, and shifted both financial and diplomatic policy. This was introduced after former United States secretary of state Hillary Clinton visited New Zealand and warned of “China’s soft power push in the Pacific.” It is obvious that this reset is meant to be for China’s growing influence, however, New Zealand insisted this is not for China’s activities in the region (Iati, 2021). It seems New Zealand is also concerned about China's growing influence, however, the nation still seems to accept China’s influence. In other words, New Zealand was just pretending to show that the country is against China’s growing political influence. Today, the Australia - China relation has become the worst ever in their diplomatic history (Okano, 2021), but New Zealand has a different approach. Hollingswoth (2021) says New Zealand desperately wants to keep China to save its economy. Moreover, due to the country’s desperate attitude, Australian TV show “60 Minutes' ' called out New Zealand as New “Xi” land (Hollingsworth, 2021). There should be other facts that can explain this gap of why Australia and New Zealand have completely opposite diplomatic relations with China. In other words, what made New Zealand so desperate to be close to China?
I believe this gap can be explained by the economy. As it was mentioned before, both New Zealand and Australia have heavily relied on China for trade, and at the same time, China is the largest partner today in both export and import. However, Australia and New Zealand have different trade situations with China.
For this research, I will use comparative analysis, since New Zealand and Australia share some common points as I listed above. To show how New Zealand and Australia’s relationships with China are, I will use some political events that can demonstrate both the positive and negative outcomes of their relationship over time. I will prove my statement by collecting some cases of both New Zealand and Australia’s economic situations with China, mainly focusing on trade.
Australia signed the FTA with China in 2015 (Yoshida, 2022). In 2001, Australia’s biggest export partner was Japan, and China was the fourth-biggest partner. Today, however, China has become the biggest and the most important export and import partner for Australia. In 2020, more than 40% of Australia’s export was occupied by China (Yoshida, 2020). However, this situation changed drastically due to an event that happened in the same year. In March 2020, Prime Minister Scott Morrison declared an individual investigation to prove the origin of the Covid-19 pandemic was from China. Due to this event, the diplomatic relationship with China worsened, and Okano (2021) says the Australia - China relation is now “one of the worst,” since the establishment of diplomatic relations in 1972. After this declaration, China retaliated against Australia by economic means (Onkano, 2021 ; Yoshida, 2022): the major retaliation was to impose trade sanctions, in May 2020. These sanctions were on a wide range of goods, such as coal, copper ore, beef, barley, wine, and lumber (Okano, 2021 ; Yosihda, 2022). Thisl led to Australia’s economy declining after the sanction, since Australia had greatly relied only on China: Australia’s trade surplus in August 2020 was the smallest in the past 5 months due to the tension with China (Trading Economics, 2020).
China's sanction seems to ruin Australia’s economy, however, the impact of the sanction was not significant. There are two main reasons: 1. Australia succeeded in easing economic dependence on China. 2. China’s continuously strong demand for Australia's iron ore even after the sanction. Australia could find other countries as alternative trade partners. For example, China was one of the major destinations to export coal, and vice versa, Australia was one of the major countries of coal resources: 40% of China’s coal imports were from Australia. The export value of coal went down right after the sanction, however, thanks to the strong global demand for coal, the nation could find other countries to export the goods to. Thanks to the increased global demand, Australia’s export value of coal increased drastically after May, 2021. This also allowed Australia to get back almost the same amount of export value of coal as pre-pandemic. The same trade situation has happened to barley: since 2021, the export value of barley went back to almost the same as the pre-pandemic, thanks to Saudi Arabia’s high demand for the good. In other words, Saudi Arabia’s strong demand for goods supported these industries. Furthermore, the sanction on wine is also limited even though Australia couldn’t find other countries to export, since the country’s drink, alcohol, and vinegar only occupy 0.8% of its total export to China (Yoshida, 2022). Hence, it can be said that China's trade sanctions against Australia don't have much impact on the Australian economy, but are limited.
It can be said that iron ore is a key commodity for Australia in terms of trade with China. For China, Australia is the biggest import partner in energy and mining fields, and these fields play a huge role in Australia-China relations. The demand for raw materials has increased dramatically since the late 2000s, due to the rapid urbanization in China. China’s import of iron ore became three times higher in 2015, compared to 2007 (Roberts et. al., 2016). This trend caused a “mining boom” in Australia, which created jobs and allowed an increase in wages (Schmitz, 2018). Schmitz (2018) states that China’s rise has brought about “profound impact” on the country. However, China’s strong dependence on iron ore would eventually limit the impact of the trade sanctions on Australia. This strong demand for raw materials, especially iron ore, would later protect Australia’s economy. This was due to China not sanctioning Australia’s iron ore (Okano, 2021 ; Yoshida 2022).
China didn’t sanction iron ore, since it is difficult to find other countries from which to import iron ore. For coal, China increased imports from other countries such as Indonesia and Russia to replace Australia. However, it is almost impossible for China to replace Australia when it comes to iron ore. Australia is the biggest iron ore resource for China, and Yoshida (2022) points out that iron ore is a pivotal import, which helps to maintain the relations between both countries. In other words, because of iron ore, both countries keep their relations. About 60% of China’s iron ore’s import is from Australia, and now, it is difficult for China to look for other countries to meet the strong demand for iron ore. This is due to the current international affairs: Brazil was one of the possible alternative countries, but there was a mining accident which made it difficult for China to import the commodity. China’s biggest mining company was on a project of mine development in Guinea, but this was also prevented due to a coup d’etat in 2021. Therefore, China can't stop relying on Australia’s export on iron ore immediately (Yoshida, 2022). Furthermore, the price of iron ore increased after the sanction, which resulted in increasing 10% of exports with China (Nishioka, 2021).
China’s trade sanctions toward Australia brought an opposite result, which made Australia keep showing rivalry to China. Australia’s export value after the sanction has become stronger despite the sanctions. One of the reasons is that China is dependent on Australia’s exports of iron ore, wool, and natural gas (Fields, 2022). Australia’s loss of trade due to the sanction was AUS $54 billion, however, the country also gained AUS $44 billion by making new trade partners from other countries. There is still AUS $10 billion of loss, however, Nishioka (2021) points out that the amount of money is only 0.25% of Australia’s export value.
Australia’s continuous progress in its economy despite China's sanction showed that Australia seizes the initiative in the trade. It can also be argued that China's trade sanctions against Australia were not successful, but rather brought benefits to Australia. According to Nishioka (2021), there is an argument in Australia saying China’s sanctions “completely” failed. Michael Wesley, who is a deputy vice-chancellor international at the University of Melbourne, said the sanctions didn’t work, but ironically, Australia’s economy remained “buoyant” thanks to China’s demand (Fildes, 2022). Nishioka (2021) also points out that Australia seems to have even more rivalry against China after the strong recovery from the sanction.
From these arguments, it can be said that Australia is more advantageous than China in the Australia - China trades. In other words, Australia has more control in this trade situation with China. This is because Australia has abundant iron ore, which China desperately wants and could not afford to sanction. Moreover, replacing China by having new trade partners allowed Australia to ease its heavy economic dependency from China. Therefore, as long as China’s strong demand for iron ore continues, Australia will be more advantageous in this trade.
In contrast, New Zealand’s situation is different from Australia. It is difficult for New Zealand to stop relying on China’s economy. New Zealand has historically relied on China for its economy: Since the mid-1980s China has been a solution for the successive New Zealand governments to compensate for the loss of access to the UK market (Brady, 2017). For New Zealand, China has been an important destination for its economy for about a decade. According to Suenaga (2017), China has significantly contributed to New Zealand’s economy. It can be said that the turning point of New Zealand’s economy was in 2008, which was considered with the turning point of New Zealand - China relations. New Zealand had attempted to build a close relationship with China for a while, and in 2008, Prime Minister John Key at the time signed a FTA with China as the first country from OECD. Since then, New Zealand has kept relying more on China economically. After the agreement and thanks to the Chinese economy, New Zealand’s economy improved dramatically, and the country realized a budget surplus for the first time in seven years (Suenaga, 2017). The FTA with China also allowed New Zealand to mark significant improvements in the country’s economic relation (Australia-China Relations Institutes, hereafter ACRI, 2015). In addition to this, due to these positive consequences that Key brought, Key won sweeping victories at the presidential election in 2011 and 2014 (Suenaga, 2017). In other words, the significant improvements in economy under Key administration allowed Kew to win the next following elections.
However, this heavy economic dependence would eventually trap New Zealand: making it difficult for New Zealand to stay away from China both economically and diplomatically. Hollingsworth (2021), points out that trade is a major reason why New Zealand wants to keep China as a close partner. Today, New Zealand’s major export products are dairy, meat, food, fruits, and fish. Since the population is small, most of them will be exported. Especially the amount of dairy exports, which occupies almost 30% of the total exports. Since China's economy has improved, the country’s lifestyle has been more westernized. Hence, people in China started to consume more dairy products. China is one of the greatest trade partners, and compared to 10 years ago, the export has become 10 times more. In 2013, New Zealand’s export to China became No.1 and surpassed Australia. New Zealand's dairy products contributed a lot to the country’s economic growth, mostly from the support from China. However, the demand for dairy products decreased about 50% due to the low economic growth since 2014. This caused a great deficit to the farmers in New Zealand. To recover from this economic situation, farmers changed their career in order to work in tourism. For New Zealand, it is important to make profits from tourism since the country doesn’t have an abundance of resources. This is why New Zealand signed the agreement with China to support the BRI, so the country can expect to get infrastructure and huge investment. New Zealand also introduced a special tourist visa for Chinese citizens (Suenaga, 2017).
Therefore, it can be said that New Zealand is afraid of exacerbating its relationship with China, since it can significantly damage the country’s economy. This can be seen when the Five Eyes members condemned China’s human rights abuse in Xinjiang and Hong Kong, saying what China is doing is equivalent to “genocide.” The criticism was meant to be from the Five Eyes memer states, however, New Zealand avoided using the term “genocide” when mentioning China’s human rights abuses. After this event, Australia’s exports to China have faced difficulties, and China's total investments to Australia fell greatly by 62% (Hollingsworth, 2021). Hollingsworth (2021) says that “rather than follow Australia’s lead, New Zealand is attempting a different kind of relationship.” New Zealand is put into a difficult situation: the country wants to keep and protect their stable economy, but at the same time, needs to stand for its allies. Gillespie, who is an expert of international law at the University of Waikato, says “It’s the largest conundrum of our time – how can you protect your economy, yet at the same time make a stand for human rights and the rule of law? Because the things right now are in conflict (Hollingsworth, 2021).” New Zealand’s response to China’s political donation might be because the country didn’t want to exacerbate the relationship with China. Actually, all the Five Eyes members showed concern about foreign interference in politics (Roy, 2019). It can be argued that New Zealand had to do something to show support to the member states, but at the same time, didn't want to make China hostile.
For New Zealand, it can be argued that the country chose to prioritize its economic interests whereas Australia values security over its economy. In other words, New Zealand has relied too much on China for its economy to be China’s enemy, or New Zealand is in a situation that the country “has to '' be politically close to China to protect its economy. In contrast, Australia has more control in its trade relations with China compared to New Zealand. Australia happened to find out that the country doesn’t need to depend on China for its economy, but this was a very important discovery for the country: This allowed the country to get out of the heavy dependence on China, and also show more hostility towards China.
The economy can explain why New Zealand has been close to China. New Zealand has tried not to be too hostile against China, so the country can keep China as a main trade partner. On the other hand, Australia has kept its hostility towards China, since the level of Australia’s economic dependence is low, and knowing that China depends heavily on the import of iron ore from Australia.
Australia could successfully reduce its dependence on China to maintain the economy, however, the country still needs to pay attention to China’s economy. This is because Australia’s iron ore industry is huge, and it occupies 26% of Australia’s export value. About 80% of total iron ore now goes to China. This means it will be difficult for Australia to find other countries to export large amounts of iron ore. If China’s demand for iron ore suddenly decreases in the future, Australia’s economy will heavily be impacted. It is also possible that China will find new partners and stop importing iron ore from Australia. Even though China’s strong demand for the commodity still exists now and there are less concerns for a short term, Australia needs to build some plans to protect its economy.
China’s demand for iron ore will decrease in the long term. Yoshida (2022), says it is expected that China will gradually reduce import of iron ore in the future, since the country is planning to transfer from a smokestack industry to the high technology industry. China also tries to pass a peak of CO2 emission by 2030, which is also another incentive that China will consume less iron ore in the future. Yoshida (2022) points out that Australia might not be able to find alternative countries to export iron ore like the country did with barley or coal. This is because the demand for iron ore might be lower in the future since the structure of the industry is changing, and people are taking measures against climate change.
In contrast, New Zealand needs to find a good balance between protecting the economy and protecting the country’s security, or find other countries to rely on the economy like Australia did. It is obvious that New Zealand’s great progress in its economy is thanks to China, but New Zealand also needs to pay more attention to China’s growing presence within the country. Suenaga (2017) says that New Zealand has relied too much on China’s economy for immediate profit, and now the country faces some serious problems. One example is gentrification in the capital city, Auckland: Since New Zealand’s economy is good, a number of Chinese citizens invested into the country. However, this has led to significant gentrification in the city. The average housing price in Auckland used to be 30% lower than Sydney, which is the biggest city in Oceania, however, now it has become much higher than in Sydney. There is a concern that the majority of young people in Auckland might not be able to purchase houses in the city due to the gentrification. Suenaga (2017) also says that relying on China’s economy indicates that New Zealand’s future will be at the mercy of China.
There are some possible limitations of my study. For this research, I adapted qualitative research and therefore, I didn’t use data. My study focus was more on state and international level, so I didn’t focus on impacts of the CCP’s political influence activities on individuals. It is important to understand how the political influence activities impact on individuals in Australia and New Zealand. Therefore, quantitative research which focuses more on people’s opinions toward China will be needed for future research. Furthermore, there is little data about how people think about China, so more data will be needed. Due to the in depth nature of government investigation, it will take more time for the Australian government to uncover the CCP’s attempts to influence the Australian government. In the case of Huang, it took the government 5 years to uncover the financial bribes. It will take time for the government to unearth more foreign activities and to publish articles regarding these activities.
China’s close relationship with New Zealand over Australia might be able to be explained by the CCP’s political influence activities. However, the real reasons are different economic situations, or different levels of economic dependence on China. China is the most vital country for both Australia and New Zealand, but New Zealand is more dependent on China in terms of economy. New Zealand has been attracted by China’s growing economy, which has made the country heavily reliant on it. This allowed New Zealand to keep improving its economy, but at the same time, it is now difficult for New Zealand to maintain diplomatic distance from China. In other words, China has significantly supported New Zealand’s economy so now it faces a situation that has to keep close diplomatic relations with China to protect its economy, regardless of the growing concerns of China’s influence in New Zealand. Australia, in contrast, has more control in its economy. The country succeeded in reducing dependence on China’s economy, which allows the country to be more aggressive to China. Australia also has abundant iron ore, which China desperately needs and can’t stop importing from Australia, which leads to more advantageous trades with China. These different levels of economic dependence on China caused the gaps in their diplomatic relations with China.
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