Luxon’s China programme mimics Chris Hipkins’ 2023 visit. He’ll spend two days in Shanghai urging consumers to buy more dairy products, kiwifruit and holidays, then one day in Beijing.
Sadly, the Nato clash means Luxon can’t follow Hipkins in pitching New Zealand as an investment destination at the annual economic summit in Tianjin, attended by the world’s biggest fund managers.
Nothing better symbolises our challenge in balancing economic dependence on the authoritarian superpower and our security relationships with the democracies in Australia, North America, Europe and north-east Asia.
This underlines that the very notion of an “independent” foreign policy is a category error. If an independent foreign policy means only that final decisions are made by a country’s own leadership, then Luxon is right that 192 countries have independent foreign policies.
But foreign policy is inherently about interdependence. When people argue for an independent foreign policy, they don’t mean it in Luxon’s banal sense. They mean independence from Australia and the US. They certainly don’t argue New Zealand should be independent from China.
Consider former Prime Ministers Helen Clark and Sir Geoffrey Palmer criticising Luxon and Foreign Minister Winston Peters for making statements averse to China, being part of “strategic groupings” led by the US, strengthening defence ties with the democratic Philippines, our navy sailing in international waters near Taiwan, and having “allowed” MPs to visit there.
These things are risky, they and their supporters argue, lest Beijing starts thinking New Zealand doesn’t value our “special relationship” as much as it thinks we should.
The argument’s rational conclusion is that, despite these dangerous times, New Zealand ought not to be too friendly with our oldest friends like Australia and other democracies in case China decides to do us harm.
That’s not remotely an argument for independence. It’s about accepting the dependence on Beijing we have let develop since our 2008 free-trade agreement with China.
While extraordinarily good for export volumes, the agreement’s effects on productivity aren’t too dissimilar from the Muldoon Government’s notorious supplementary minimum prices for farmers.
After China gave us permission in 2008 to dump commodities into its seemingly limitless market, the pressure came off to become more productive.
New Zealand’s urgent economic challenge is not to grow trade and investment with China but to find ways to reduce our reliance on the aspiring Asian hegemon.
That’s the logic behind Luxon promising a free-trade agreement with India before the next election, Trade Minister Todd McClay’s deal with the United Arab Emirates five months ago, those concluded by the Ardern Government with the EU and UK, and even the Trans-Pacific Partnership.
New Zealand’s tilt away from China and towards the democracies that Clark and Palmer attack, was launched by Dame Jacinda Ardern.
In 2022, with the other three leaders of Nato’s Indo-Pacific Four (IP4) – Japan, South Korea and Australia – Ardern became the first New Zealand Prime Minister to attend a Nato summit, for which she was publicly attacked by the Chinese Embassy in Wellington.
Her successors followed her in 2023, 2024 and now 2025. Relatedly, Defence Minister Judith Collins implicitly links New Zealand’s increase in defence spending to Nato’s guideline that its members spend at least 2% of GDP on defence.
According to Collins, we’ll reach 2% by 2032/33; the last Nato or IP4 country to do so, by a big margin.
For context, Finance Minister Nicola Willis has allocated Collins $5.1 billion for defence for next financial year. For 2% of GDP, it needed to be $4b more, spare cash Willis doesn’t have.
Rutte now says he expects Nato leaders to agree at the summit to more than double their commitment to 5% of GDP.
Of that, Rutte says 3.5% must be for core military requirements covered by the existing guideline, and the remaining 1.5% for “defence and security related investments, including infrastructure and building industrial capacity”.
This includes military-capable roads, rail and ports; protection from threats like cyber-attacks and sabotage; civil preparedness; and the ability to produce more defence equipment quickly.
Rutte says a Russian attack against Nato today would fail. But he warns the speed and scale of the “awful foursome’s” military build-up means it could succeed within five years.
Nato, he says, must become “more lethal so that we can continue to keep our people safe and our adversaries at bay”.
Using Chinese technology, Russia is producing weapons faster than previously believed. While Nato’s economy is 25 times as big as Russia’s, Rutte says Moscow manufactures four times as much ammunition as Nato and will roll out 1500 tanks, 3000 armoured vehicles, and 200 Iskander missiles this year alone.
In contrast, he says it takes 10 years for a Nato country to receive a Patriot air defence system “if you order it today”.
Name-checking New Zealand, Rutte says Nato and IP4 countries are equally worried about the Pacific.
By 2030, China’s navy, already the world’s biggest, will include a battle force of 435 ships. In the same five years, China’s nuclear arsenal will pass 1000 warheads.
Despite not being adjacent to it, China already operates in the Arctic Ocean, exploiting the climate change it fuels as the world’s biggest greenhouse-gas emitter, producing nearly a third of the global total, three times as much as the US and five times as much as the EU.
Yet if Luxon gets told off by Xi in Beijing for New Zealand’s insufficient loyalty to the “special relationship”, he may also encounter some disapproval at Nato.
Reaching 2% of GDP on defence by 2032/33 isn’t remotely close to current expectations. While we can add in some of Infrastructure Minister Chris Bishop’s new projects to help with the new 5% goal, 3.5% must still be traditional military expenditure. That would have cost Willis $16b in 2025/26 alone, $10.9b more than budgeted.
Remaining allied with Australia and part of the democratic world’s collective security network isn’t cheap. Yet, long term, the alternative is accepting our fate as a Chinese vassal, run out of its embassy in Wellington.
