China rift deepens

Liam Dann interviewed Beijing based New Zealander David Mahon on the subject of the deteriorating relations between China and New Zealand. His comments are sobering at best, and reflect a possible threat to trade at worst.

Mahon lives in China, where he established his business advisory network Mahon China in the 1980s. He has watched the New Zealand – China relationship flourish over the last few decades… and now it is deteriorating rapidly. quote.

Mahon has serious concerns that New Zealand’s relationship with China has deteriorated to the point where we may now face a political retaliation and our exporters may face border difficulties.

“We need to stay out of these things and not takes sides,” says Beijing-based Kiwi businessman David Mahon. “Because if we choose to take sides we will be crushed.”

On Tuesday the Herald reported that Prime Minister Jacinda Ardern was scheduled to visit China early this year but the invitation has been put on hold.

The 2019 China-New Zealand Year of Tourism was also meant to be launched at Wellington’s Te Papa museum next week, but that has been postponed by China.

We have had a “brilliant relationship” with the Chinese Government in Beijing, Mahon says.

But he believes that in the last 12 months it has gone into reverse.

“So there is now a very different view, almost an opposite view of New Zealand.”

What’s caused that?

Rising tension between China and the US – the trade war and the stand-off over telco Huawei’s ambitions to build the new 5G mobile network around the world have put New Zealand in a difficult diplomatic position.

The Government decision to exclude Huawei from Spark’s 5G network tender process has now been qualified as a “concern” but it was initially presented as “ban”, Mahon says.

“And that’s how it was taken in Beijing,” he says. “We didn’t have discussion with them over concerns. We announced this publically and as a result they now feel they cannot trust us.”

And the messaging from the New Zealand Government has not been clear enough, he says.

a newspaper end quote.

While the Huawei issue has been difficult, it could have been handled better. We are not the only country to shun Huawei, but stating outright that we were not going to consider them was a diplomatic gaffe that should have been avoided. When a contract is awarded, the other contenders do not have to know all the details as to why they were not chosen. That is simple business practice.

A speech in Washington by deputy Prime Minister Winston Peters, which appeared to indicate New Zealand had reset its Asia Pacific policy to a more pro-American stance, had also created mistrust, Mahon says.
So too had the wording of a defence paper last year which cast China as the aggressor in the South China Sea. end quote.

Once again, the government shows its considerable inexperience. Of course New Zealand is going to back the USA: we are part of the 5 Eyes network. That does not mean we have to offend our second largest trading partner in the process. This was a diplomatic issue and the government has handled it poorly.

Amidst claims that Beijing has issued a directive to its people NOT to travel to New Zealand, Hong Kong Airlines has now cancelled its flights to Auckland, only months after AirAsia announced it would cut its Kuala Lumpur to Auckland flights, with effect from February.

The government could have simply kept quiet until the trade talks between China and the USA were completed. It is likely that these talks will result in new deals, and China will not be seen to ‘lose face’ over the issue. Instead, our incompetent government has insulted a major trading partner once again, without a thought to the consequences of their actions.

Last year, Winston Peters made grandiose claims that New Zealand could well be in a position to mediate between the USA and China over their trade issues. With Jacinda insulting Donald Trump and now the government offending the Chinese, Peters has proved his unsuitability to any such role. Perhaps Vladimir Putin might be available instead.