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China, the United States, Australia, New Zealand & Huawei

The Antipodean Village Blogger writes:

China, Huawei and Broadband – and a dilemma?

A powerful driving force for change – an economically-resurgent China – is beginning to force some new thinking about New Zealand’s economic and security policy choices.

Some illuminating debate has been stimulated as a result of New Zealand’s wish to engage the Chinese firm Huawei for contracts to lay broadband cable within New Zealand and across the Tasman Sea.

On the one hand, New Zealand Prime Minister John Key has strongly endorsed Huawei, and three senior cabinet ministers have visited China to encourage it to pitch for contracts.

On the other hand, traditional New Zealand allies Australia and the United States, suspicious of the Chinese firm, refuse to engage with it and want New Zealand to follow their lead.

What should New Zealand do?

Go with a firm from an economically-dynamic China with which it wants to build up an economic relationship, or with other firms that its traditional friends Australia and the United States are comfortable with?

Incompatible dependencies or constructive independence?

The background to this dilemma is New Zealand’s historic, pattern of narrowly monocultural Anglo Saxon-centred trade and diplomatic relationships.

Since the Cold War nuclear stand-off and the entry of Britain into the European Economic Community in 1973, dependence on Anglo-Saxon connections has failed to deliver security or positive annual balances of payments.

Economically, since 1973 New Zealand has needed to create and pitch products to bring in top-dollars from Asian and other, non English-speaking markets. Instead, doggedly monocultural New Zealand tried to keep selling, where and as it could, bulk commodity products as it had always done. As a result it became a price-taker rather than price-maker.

The outcome of that approach has been, after almost 40 years, an accumulated foreign balance of payments deficit of  $147.0b – almost 72% of its GDP.

Then in the 1980s, New Zealand adopted a nuclear free policy. As a result, the United States suspended it from the Anzus military alliance signed in 1951.

Significantly, in the age of nuclear superpower confrontation, Anzus did not deliver security for New Zealand. Rather, it made the country a target for Soviet intercontinental missiles in the event of nuclear war. This has been acknowledged by a former New Zealand Secretary of Defence.

Falling back on the Australian connection is not working out altogether well for New Zealand either. Depending on it for finance and trade has resulted it becoming a branch of the Australian economy. For details see Brian Gaynor’s article in NZ Herald: Overseas ownership is holding NZ back.

Looking to Australia for defence security is also uncomfortable, and is becoming more so, given its (deepening) alliance it has with the US, an alliance from which New Zealand has been excluded and would not be comfortable to return to.

Problem-recognition, at last!

A very interesting recognition of these issues emerged on Radio New Zealand’s Karthryn Ryan morning program last Friday 30 April about half way through her discussion with right-wing commentator Matthew Hooten and the left-wing, former Labour Party president, Mike Williams.

Discussing the Huawei contract issue, these commentators mentioned how New Zealand, for the first time, faced a discrepancy between its new economic and its old security policy choices. As traced above in this blog, this potential for conflict of interests has been crystallizing for over two decades with the rise of the Chinese economy, and it has been well flagged on

The commentators came up with no clear answers, but I would like to propose a fresh approach to Matthew Hooten and Mike Williams and others wanting to think through this issue.

From recognizing problems to finding new opportunities

Feeling continually pressured to make choices between rival giants looks like a no win path for a small country like New Zealand. Now, before difficulties build up, is an excellent time for New Zealand to position itself so that it can make independent and constructive economic and diplomatic choices; choices that also relate to the genuine interests of all concerned.

I propose that New Zealand generally adopt an even-handed stance in conflicts between the United States and China.

Then, freed from anachronistic historical claims on it, New Zealand could offer to act when appropriate as a neutral communications-broker between both sides to help facilitate constructive relationships and avert or resolve conflicts rather than find itself caught up in them.

Even Australia now that it has, along with the US, irked China by hosting US marines in Perth, might find itself pleased that New Zealand is available as a third party communications channel if tensions look like building up between the US and China.

It is most useful to note more generally how everyone the region, including the United States and China, need to collaborate diplomatically and economically. No one in the Asia Pacific region – in the world for that matter – can afford to have the United States and China disagreeing too strongly or angrily.

NZ’s “strong ties with both the West and the East” – Mr McCully

Whether intentionally or not just few days ago, speaking in Beijing, the New Zealand Foreign Minister Murray McCully made a remark that could help to position the country for constructive, even-handed liaison roles. He noted how “We have strong ties with both the West and [the] East”. This important remark does not seem to be getting picked up in media reports on his speech.

China-NZ Pacific Island development collaboration proposed

He also flagged possible cooperation with China in a Pacific island development project. This was, he said, being “actively discussed”. This kind of project could also open up space for some very sensitive communications brokering between the Islands concerned and China to help ensure that real needs of Pacific peoples can be discerned, expressed and met.

Honest broker of premium information services?

Finally, it could be most useful to examine how, as a neutral diplomatic broker, a geographically-remote New Zealand that was well-connected internally and to the world by broadband, could offer trusted, premium international data storage, processing and coordination services for any and all in the region and beyond.

As the former Victorian Premier and now Huawei Australia Chairman John Brumby has said  of connection-building by New Zealand cabinet ministers and telecoms leaders with Huawei, it was “important that New Zealand got out in front of ‘geo-political trends”.

That would be an excellent way also of describing the theme of this blog.

What to you think? Your comments are most welcome.

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