Li Visit Underscores New Zealand's Rising China Dilemma

“I raised with Premier Li a number of issues that are important to New Zealanders and which speak to our core values, including human rights and foreign interference,” Luxon said.

New Zealand authorities have repeatedly raised concerns over Chinese influence operations targeting prominent figures as well as exiled Chinese dissidents in the country. Earlier this year, Wellington also accused China of engaging in a cyberattack campaign on New Zealand's parliament years earlier .

The biggest sticking point in bilateral ties, however, is Wellington's potential plan to join the Australia-UK-US (AUKUS) security partnership. Proponents of AUKUS believe that New Zealand, which has one of the world's largest coastlines and exclusive economic zones (EEZs), has limited resources to stand on its own in an increasingly uncertain geostrategic environment.

For them, New Zealand should stop“free-riding” on its more powerful partners, particularly Australia and America, and instead more proactively contribute to a US-led“integrated deterrence” strategy to check China's ambitions in the region.

Critics, however, maintain that New Zealand could end up undermining its“independent” foreign policy and can ill-afford to engage in a massive defense buildup that could spark potential Chinese reprisals.

Earlier,
China's Ambassador to New Zealand
Wang Xiaolong
warned against any move that would be
akin to“taking sides”, which he suggested could torpedo otherwise robust bilateral ties.

The Chinese envoy has said that bilateral relations are at a
“critical juncture” while insisting that“China is not a threat to New Zealand, rather, as has been pointed out by both the Prime Minister [Christopher Luxon] and [Trade] Minister [Todd] McClay, China represents for New Zealand an opportunity and a mutually beneficial partner.”

Policymakers and pundits in Wellington often speak of an ongoing“foreign policy reset”, referring to the more supposedly Beijing-friendly orientation of the previous Labour government under Prime Minister Jacinda Ardern in contrast to the more Sino-skeptic stance of Luxon's conservative government.

In contrast to neighboring Australia, the Ardern administration signed up to China's Belt and Road Initiative (BRI), steered clear of AUKUS and other US-led security initiatives aimed at China and proudly touted New Zealand's“independent” foreign policy.

Nevertheless, even the Labour government took a
nuanced yet increasingly critical
stance on China. In 2018, the Ardern government issued a strategic defense policy statement which explicitly described China as a“threat” to the international rules-based order.

The following year, New Zealand passed legislation banning all foreign donations over NZ$50 to New Zealand political actors, in a thinly-veiled response to growing concerns over Beijing's influence operations.

China's expanding strategic presence in the South Pacific has triggered further security concerns in New Zealand, which publicly criticized a controversial security pact between Beijing and the Solomon Islands in 2022.

Former
Minister of Foreign Affairs Nanaia Mahuta has also expressed concerns about China's use of economic coercion as a foreign policy tool, especially in light of Beijing's imposition of trade restrictions on neighboring Australia after Canberra called for an international investigation into China's possible role in Covid's origin.

While acknowledging New Zealand's vital role and robust security cooperation with Washington and Canberra, particularly under its
Five Eyes intelligence-sharing relationship with fellow Anglophone democracies, she insisted on a more multilateralist diplomatic approach that“involves dialogue, which ensures we build multilateral support for the things we advocate on that will protect our values and our interests.”

Under Luxon's government, however, New Zealand has expressed growing openness to joining AUKUS, albeit on a more limited, calibrated basis than Australia. Due to its
non-nuclear security policy rules, Wellington can't get involved in any direct participation in the AUKUS nuclear-powered submarine project.

But it can, under AUKUS Pillar II, engage in the sharing of state-of-the-art defense technologies, especially in areas of cyber-warfare, artificial intelligence and hypersonic missile development. Last year, the Biden administration officially welcomed New Zealand to join Pillar II of AUKUS, which immediately raised alarm bells in China.

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China has expressed“strong concerns” about any potential New Zealand participation in AUKUS, maintaining that the initiative is an aggressive US-led alliance aimed at containing China and that
the
“sole purpose of its second pillar is to serve and support nuclear-related military cooperation under the first pillar”, in violation of Wellington's current non-nuclear policy.

“Many New Zealanders accept that the world has become a more complex and challenging place but the current government may face the prospect of a hard sell, in domestic political terms, in attributing this largely to China,” argued the New Zealand expert Robert Patman.

“Apart from the possible economic fallout from such a move, critics point out that China's assertiveness is only one of many threats facing the multilateral system on which New Zealand and many other small and middle powers rely,” Patman said.

But other New Zealand security watchers like Sakura Gregory believe that partnering with AUKUS is consistent with the country's foreign policy since it doesn't involve the development of nuclear weapons.

It's“about recognizing and sharing the burden required to provide a better deterrent to Chinese military development and potential escalation, which has gone largely unchecked in the Pacific over the past few decades,” Gregory said.

Eager to maintain robust trade with China while facing AUKUS-related criticism from the opposition, the Luxon government has tried to strike a balance by maintaining a degree of strategic ambiguity while focusing on purely bilateral concerns during Premier Li's visit.

“We canvassed AUKUS and they raised their concerns. And, you know, we raised a number of concerns and different differences that we have as well ... I expressed our view that foreign interference is something that we do not support from any countryman,” Luxon said, underscoring the need for both robust economic engagement and firm diplomacy with China.

Follow Richard Javad Heydarian on X at @Richeydarian

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