Key Points:

    • New research paper lays bare China's influence campaign in New Zealand
    • Concerns raised over political donations and directorships offered to former ministers and relatives
    • Chinese-owned New Zealand dairy farms said to possibly being used to test advanced missile technology

A major research paper into China's soft-power campaign in New Zealand has detailed how dairy farms have been used for near-space balloon launches by a Chinese company developing "high-precision monitoring" of Earth from satellites.

The study also details extensive links between China and former New Zealand politicians and their families, and also highlights significant political donations.
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University of Canterbury professor Anne-Marie Brady, the author of the research paper, said she was disturbed by her findings.

"This is about our democracy and about our sovereignty. Anybody who reads the report will find this troubling," she told the Herald.

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Brady said the influence campaign being waged in New Zealand would be of concern regardless of its source.

"It'd be the same if it was any country: it's not about China, but it's our country and our democracy where we value freedom of speech and association. It's our right to choose our government."

Former National Party leader Don Brash, named in the report over his directorship of a Chinese-owned bank, agreed China was looking keenly at New Zealand.

"China clearly does want to extend its influence and cultivate people they think might help them do that, as, of course, all major powers do," he said.

A request sent to the Chinese embassy in Wellington for comment on the report was not answered.

Both Prime Minister Bill English and Labour leader Jacinda Ardern downplayed the report while on the campaign trail today.

"I don't see any obvious sign of things that are inappropriate," English said.

Ardern said she had not seen any demand for New Zealand to follow Australia's lead in launching an inquiry into foreign interference, but said she would explore the issue further.

"I don't think that's something that's necessarily come up... as being an issue. But I am interested in that work that was done in Australia, I would like to take a closer look when there is a little bit more time available," she said.

Brady, currently in Washington DC as a fellow with the Wilson Centre, is fluent in Mandarin and based much of her research on Chinese-language media both here and in China.

Her report, "Magic Weapons: China's political influence activities under Xi Jinping", was published earlier this week and builds on the methodology behind a similar study in Australia that followed investigations into the subject by the Australian Security Intelligence Organisation.

"The focus of media attention has been on Australia, but the People's Republic of China's efforts to guide, buy or coerce political influence abroad are widespread," Brady wrote, noting New Zealand is far from immune to actions by state or state-linked actors operating a under broad "United Front" on behalf of the ruling Communist Party of China.

The business ties of ex-Prime Minister Sir John Key also come in for scrutiny. Photo / Mark Mitchell
The business ties of ex-Prime Minister Sir John Key also come in for scrutiny. Photo / Mark Mitchell

The importance of New Zealand to China is highlighted by China's growing interest in Antarctica, over which New Zealand is a key stakeholder; our responsibility for the foreign affairs of United Nations-voting territories of the Cook Islands, Niue and Tokelau; and arable land for food production.

The previous Labour government and the current National iteration made deepening ties with China a key plank of their policy agendas. While Labour successfully negotiated a free trade agreement, Brady says the "current prominence afforded the China relationship has accelerated dramatically under the government that won the election in 2008".

Brady's report noted donations from Chinese groups - amounting to many hundreds of thousands of dollars each election cycle - switched at this point, following the government of the day.

Former Prime Minister Helen Clark told the Herald she had "skim-read" the report and believed "New Zealand must engage with major powers in its region, but that it should not be naive in its interaction with any of them."

Kingsley Edney, a New Zealander lecturing in the politics of China at the University of Leeds, said China's broad influence campaign was not limited to New Zealand but it had attracted significantly less domestic attention than in countries such as Australia and the United States.

"I don't think it's been properly discussed. We can't assume this is the Cold War all over again, because it's not and it's different - but we can't assume China is like Japan or the United States, it does operate differently," he said.

Edney notes China is an authoritarian one-party state and New Zealand's approach isn't costless. "Certainly there are risks this relationship will end up, in the long-term, end up undermining the liberal democratic principles New Zealand supports internationally."

Professor Anne-Marie Brady of the University of Canterbury. Photo / University of Canterbury
Professor Anne-Marie Brady of the University of Canterbury. Photo / University of Canterbury

"All governments are trying to balance economic and security interests. It seems like New Zealand is much more towards the economic end of that spectrum and it's been willing to let the security aspect slide."

Brady's report also notes possibly military applications of several tests undertaken at dairy farms in New Zealand owned by Shanghai Pengxin - publicised at the time as to enable broadband-delivering balloons.

"New Zealand is also useful for near-space research; which is an important new area of research for the [People's Liberation Army] as it expands its long-range precision missiles, as well as having civilian applications."

Shanghai Pengxin this morning did not reply to calls for comment about the tests on its property.

The release of Brady's research paper follows last week's revelations, first reported by Newsroom and the London-based Financial Times, that National list MP Yang Jian had spent 15 years studying and working with Chinese military intelligence at the PLA-Air Force Engineering College and Luoyang Foreign Language Institute.

Yang became an MP in 2011 and has been a significant fundraiser for the National Party.

He has acknowledged he did not disclose his links to Chinese intelligence when becoming a New Zealand citizen in 2004, but has insisted his declarations were "correct and truthful".

Reached by the Herald today, Yang said "I have no comment."

National list MP Yang Jian had spent 15 years studying and working with Chinese military intelligence. Photo / Dean Purcell
National list MP Yang Jian had spent 15 years studying and working with Chinese military intelligence. Photo / Dean Purcell

The Herald last week requested the urgent release of Yang's citizenship file under the Official Information Act. A spokesman for Internal Affairs said today: "We are still in consultation with the various parties and have yet to determine whether the file can be released or not."

Brady found links with "United Front" groups across the New Zealand political divide, naming Labour list MP Raymond Huo as someone who "works very closely with PRC representatives in New Zealand".

Light is also shed on Huo's role in marketing new Labour leader Jacinda Arden's fresh approach to the Chinese-speaking community in New Zealand by literally copying a slogan used by the current general secretary of the Communist Party of China.

"It was Huo who made the decision to translate Labour's 2017 election campaign slogan 'Let's do it' into a quote from Xi Jinping (which literally means 'roll up your sleeves and work hard')" Brady wrote

Huo strongly denied the "insinuations against his character", saying his connections with Chinese groups and attendance at their events were just part of being an effective MP.

He also defended his use of a Communist Party slogan to promote the New Zealand Labour Party to Chinese New Zealanders.

"The translation of 'Let's Do This' is an auspicious Chinese idiom that is known widely by Chinese constituents and resonates well," he said.

"My team tested this translation among many in the New Zealand Chinese community and this quote stood out as the best one. Given this, it is no surprise that Xi Jinping also used this idiom in his New Year Greeting."

Huo is expected to re-enter Parliament following Saturday's election after being given a senior ranking of 13th on New Zealand Labour Party list.

Labour leader Jacinda Ardern said she had seen no evidence that Huo or any other Labour candidate had links to the Chinese Government.

"Certainly I haven't seen evidence of that from [Brady] directly. It sounds to me like it's an insinuation that's being made.

"Of course, we do have close links as a country with China and as a party with China. It's another step again though to make that kind of link."

Former members of parliament have also become prominent in China's expansion of financial ties with New Zealand.

Brady's report highlights the numerous former National MPs who have joined the boards of Chinese banks; Ruth Richardson and Chris Tremain are directors of Bank of China in New Zealand; Don Brash chairs the Industrial Bank of China in New Zealand; and former Prime Minister Dame Jenny Shipley chairs the New Zealand subsidiary of the China Construction Bank.

Richardson and Tremain did not return calls.

Brash said he believed China saw value in cultivating relationships with New Zealand and that extended to having former politicians associated with its interests.

"I think it is intriguing that there were three Chinese banks in New Zealand of which ICBC is one. Across the three of them there are eight independent directors required by the Reserve Bank. Of those eight, four are former National Party Members of Parliament.

"Now to my mind that suggests the Chinese think they can get access to particular advantage by having former politicians on the boards. Their main obvious characteristic is they are all former National Party Members of Parliament. Was that directed by Beijing? Not to my knowledge."

He said China would be mistaken in thinking so as he believed all independent directors took their responsibilities seriously.

"I think the Chinese assume they would get all kinds of influence by having these former politicians around but they're quite wrong," he said.

Dame Jenny Shipley rejected any suggestion she was part of China exerting "soft power".

"No one uses me," she said.

Her involvement since had been on a commercial basis and fellow independent directors included figures with significant involvement in their own nation's economies. "These are not political slugs," she said.

"My own involvement in China - I simply don't go to the New Zealand government on behalf of anybody. I do not and am not a mouthpiece for anybody, including in my work in China."

Shipley said it was important for commercial leaders with a broad, geopolitical view to work well with New Zealand's largest trading partner outside Australia.

She said she worked "in the New Zealand economy's interest and not China's interest".

The business ties of ex-Prime Minister Sir John Key also come in for scrutiny, with Brady noting both his recent appointment to help media company Comcast develop business projects in China, as well as the recent sale of his Parnell mansion.

"The property was sold for $20m, well above market rates for the area, to an undisclosed Chinese buyer. John Key refused to answer any questions about the transaction".

Key did not reply to requests for comment this morning.

Family members of prominent New Zealand political figures have also been linked to entities identified by Brady as part of the "United Front".

In April 2017 GMP Dairy appointed Prime Minister Bill English's brother Conor to its board. GMP is part of a wider food and nutrition companies across Australasia and heads the Australia-New Zealand China Health Forum, described by Brady as a "group that links PRC State sector organisations and the health sector in Australia and New Zealand."

Conor English, a former head of Federated Farmers, strongly denied his brother's status as Prime Minister had any role in this appointment.

"I've got six brothers and five sisters and it had absolutely nothing to do with my relation to any one of them," he said.

His wife, Johanna Coughlan is also reported by Brady to co-head the One Belt One Road Foundation (the other co-head being Labour's Huo), a large-scale international initiative by Beijing to create a China-centred trade bloc.

Coughlan did not return calls.

Prime Minister Bill English did not directly respond to questions about Yang, his brother Conor, or Coughlan.

But he said that as China continued to grow, New Zealand needed to continue assessing its links with the superpower.

"We all have to think about what's the right relationship to China and it's dynamism that is going to work best for New Zealanders.

"So it's getting the right balance there of a positive political relationship with them that enables us to achieve things that are of benefit to New Zealand."

English added: "There's a growing migrant population here, now mostly New Zealand citizens.

"So I think what works in New Zealand is the way that we are able to include people in the New Zealand culture and they become Kiwis. And that's important for our ongoing sense of what is a New Zealander."

Former mayors are also linked to China-linked organisations, with Sir Bob Harvey fronting the One Belt One Road Promotional Council, and Sir Bob Parker chairing the Hauxin Group, a partnership for the Christchurch rebuild with Chinese SOE Huadu Group.

Sir Bob Harvey was enthusiastic about his role and said he was delighted that the report highlighted China's connections to New Zealand and those New Zealanders who were helping build those links.

"The possibility of the One Belt One Road projects in New Zealand, which are massive, seems to me to be a gift to the future. I am totally committed to the China philosophy of One Belt One Road."

Harvey said the "failure of the American system" meant that "China holds the balance of wisdom and I think China will save the planet".

Harvey said he was a committed New Zealander who believed New Zealand's interests ran parallel with China's interests. He said China was the one of the "sanest" countries in the world.

"If you look at it from a military point of view, China has never attacked another country. It is a country that has been governed by scholars and not dictators which the Western world has indulged in to the hilt," he said.

"I'm not working as a Chinese agent. I am working for Auckland and for New Zealand. It's up to me to have a moral compass and I sure do."

Sir Bob Parker said took issue with Brady's report and said there were factual inaccuracies in relation to his role which "suggests some poor research".

"I absolutely did not negotiate any investment deals for Huadu when mayor."

He said the report appeared to have misnamed Haudua's New Zealand subsidiary as Xindu when its name was Hauxin. He also contested Huadu's described links to the state, saying it was "a family company".

Parker also said the report was wrong to say Eugene Feng - Christchurch council's for international partnership's head - was chief executive of the Huadu NZ subsidiary.

The company website names him as the general manager, saying he "oversees all staff and provides leadership and strategic direction, as well as acting as liaison between its Chinese and New Zealand directors".

He said the report was also wrong to say Huaxin was a shareholder in the Port Hills Adventure Park. Instead, it was Huadu NZ which became involved "to help rescue the original project when it failed to attract enough initial investment".

He said it was "helping out a local project for the city" carried out by Huadu as "an expression of support more than a profit centre for the company".

Former Christchurch Mayor Sir Bob Parker. Photo / Martin Hunter
Former Christchurch Mayor Sir Bob Parker. Photo / Martin Hunter

Brady's paper notes the Cabinet Manual has broad rules requiring Ministers to maintain the confidence of the public, but its effect is limited: "The manual has nothing to say abut ex-ministers of Parliament or their relatives."

Intelligence analyst Paul Buchanan said the network sketched out by Brady was concerning, but did not point to espionage and would likely have drawn the attention of the Security Intelligence Service.

"One would hope our counterintelligence people would be aware of these reports and the extensive connections between prominent people and the Chinese government, however indirectly," he said.

"New Zealand holds itself out to have a higher standard of transparency, and promotes democratic values. To have so many prominent individuals in the pockets of an authoritarian regime is concerning."

A spokeswoman for the New Zealand Security Intelligence Service said there would be no comment on specific case although "we undertake a wide range of investigative activity".

The spokeswoman continued: "The NZSIS has a role to detect, defend and counter foreign threats."