Friday, March 29, 2024

Government cautioned on Huawei fallout

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As the Huawei issue simmers the New Zealand Government has reached a point where relations can be reset with Beijing to their previous warm levels or feel the cold winds blow harder over trade issues.
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Kiwi ex-pat, long-time Beijing resident and investment adviser David Mahon said it is misleading for the NZ Government to claim recent events have not clouded our relationship but it is not too late to reset them.

It was unfortunate NZ’s security agency publicly announced its concern about Huawei’s integrity. 

“The free-trade agreement does allow a mechanism for each country to talk behind the scenes about any concerns they may have about the other’s companies and policies. Having it in the open is interpreted by the Chinese as a blockade by NZ.”

In light of recent events, including the United Kingdom declaring confidence it can manage any risk around Huawei, the perception in Beijing is we were joining the United States.

“And, of course, the UK is also seeking a post-Brexit free-trade agreement with China.”

Chinese concern about NZ’s position was only reinforced by Winston Peters’ speech late last year in Washington DC where he strongly advocated for greater US defence investment in the Asia-Pacific region.

And the fact Prime Minister Jacinda Ardern has yet to visit Beijing cannot be whitewashed as a simple planning delay, as has been intimated.

However, Mahon does not believe all is lost with the relationship and welcomed Andrew Little and the Ardern’s efforts to restore communications. 

It is also a good thing Trade Minister David Parker is visiting in April for a Belt and Road summit with a high-level trade delegation.

“But having the determination to follow through, when Australia and Canada have not on Huawei, that remains to be seen. 

“We should not be afraid of what China will do but China just wants to see NZ follow our own processes, not simply the views of other nations.”

His concern is also over what he perceives is a lack of Government understanding of the political-economic dynamic making NZ part of a southern Asian economy.

And he cautioned those who maintain China will not push back too hard on Huawei, supposing a need to continue sourcing food products from NZ.

“China does not need all our products. 

“Admittedly whole milk powder remains a critical ingredient and a great deal of that will be let through but many other products, even in dairy, are not critical.”

He said there are plenty of historical examples where countries had experienced China’s displeasure by having trade suffer.

The most recent was South Korea in 2017 over that country installing a US missile system. 

Consumers stopped buying Korean products and share values in South Korean firms plunged.

And pressure might not express itself as a complete blockade but instead through customs delays that inconvenience and ultimately compromise the quality of the products being imported from NZ.

“Governments tend to look at retaliation as boats turned around on the water. China won’t do that. They will just delay goods’ arrival as they did to Australian wine last year and Australian coal.”

Mahon urged NZ companies operating in China to speak their minds to the NZ Government about any misgivings they hold on the Government’s position.

“All of Asia already watches our relationship with China as an indication of NZ’s relationship with the rest of Asia, with a population of 5 billion.”

Listen to Farmers Weekly editor Bryan Gibson speak to Richard Rennie in China below

 

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