New Zealand fears China might give it the cold shoulder

New Zealand Prime Minister Jacinda Ardern's planned trip to Beijing, originally scheduled for late last year, was postponed due to "scheduling issues". PHOTO: AFP

WELLINGTON (BLOOMBERG) - When an Air New Zealand jet to Shanghai was forced to turn around earlier this month, it seemed a relatively innocuous event put down to misfiled paperwork.

But it was the first of a string of incidents that are fuelling concerns that China may be turning a cold shoulder towards New Zealand after it barred Huawei Technologies from its next-generation wireless networks.

While Prime Minister Jacinda Ardern denies any friction, the opposition is calling on her government to shore up the relationship to avoid potentially dire economic consequences.

"Our relationship with China is worth over NZ$27 billion (S$25 billion) in two-way trade," opposition National Party foreign affairs spokesman Todd McClay wrote in a New Zealand Herald column on Sunday (Feb 17).

"The prospect of a deteriorating relationship with China is a major risk. It hampers certainty in the economy and creates uncertainty for our exporters and tourism operators," Mr McClay said.

Any cooling of the friendship could have significant ramifications for the tiny South Pacific nation, which is in the process of negotiating an upgrade of its free-trade agreement with China.

The world's most populous country and second-largest economy has become New Zealand's biggest trading partner, taking a quarter of all exports, while surging Chinese visitors have helped make tourism the country's biggest foreign-exchange earner.

New Zealand, which is a member of the "Five Eyes" intelligence alliance that includes the United States, Australia, Canada and the United Kingdom, would not be the first to face a backlash from China.

Since Canada arrested Huawei's chief financial officer on a US extradition request in December, China has detained two of its citizens and sentenced a third to death for drug trafficking.

In Australia, beef and wine exporters complained of customs delays after the government implied that China was meddling in its politics and media.

The trigger for China's displeasure with New Zealand may have been the Ardern government's decision in November to block Huawei from supplying fifth-generation wireless equipment to its telecommunications operators.

Following Australia's lead, and after reported pressure from the United States, New Zealand said the Huawei 5G technology represented an unspecified national security risk, raising the ire of the Chinese authorities.

That came against the backdrop of a defence strategy paper in June that identified China's growing influence in the Pacific as a concern.

On Feb 9, Air New Zealand, the government-controlled airline, was forced to redirect a flight to Shanghai, apparently because paperwork included a reference to Taiwan.

Within days, other signs of strain in the relationship were being identified: the formal launch of the 2019 China-New Zealand Year of Tourism in Wellington was postponed because senior Chinese officials were unable to attend; seafood exporter Sanford said several of its fresh salmon shipments had faced delays in being cleared through Chinese ports; a report in a Chinese newspaper said tourists were cancelling plans to visit New Zealand due to the Huawei ban and strained political relations; Ms Ardern's planned trip to Beijing to meet President Xi Jinping, originally scheduled for late last year, was postponed due to "scheduling issues".

"If it had just been the plane that was turned around, I might have said it was just misfiled paperwork," said Dr Stephen Noakes, a senior politics and international relations lecturer at University of Auckland who specialises in Chinese foreign policy.

"But all these things happening at once makes it look like China is less than happy with New Zealand right now."

The Ministry for Primary Industries said on Feb 15 that exports continue to be cleared into China as usual, taking issue with "recent media reports suggesting delays".

And Ms Ardern has accused the opposition of scaremongering, saying it is blowing small administrative issues out of proportion.

"It's really important we do not confuse administrative and regulatory issues as being indicative of our relationship," she said last week. The relationship with China "remains an incredibly important one, but it is a complex one, and we're not alone in that", she added.

The Ministry of Foreign Affairs in Beijing did not immediately respond to a faxed request for comment.

Dr Noakes said it is impossible to say for sure whether China is snubbing New Zealand, and in any case things could be a lot worse.

"Canadian-China relations are at an all-time low, I don't think that's true of New Zealand," he said. "We're only at the point where we're speculating that it's not as good as it was last week."

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