Fran O'Sullivan: China major factor in NZ's 'Pacific reset'

Winston Peters is moving to reverse a drop in New Zealand's Pacific investment. Photo / File

Winston Peters has made an art form out of bidding up large in Budget rounds.

So it was no surprise that the Foreign Affairs Minister chose an address at the Lowy Institute in Sydney on Thursday evening to stake out the coalition Government's plans for a big dollop of new cash to underwrite plans for a Pacific reset.

Nor that he indicated that it was time to reverse a trend which has seen NZ's overseas aid, as a proportion of gross national income, dropping from 0.3 per cent in 2008 to 0.25 per cent in 2016.

The Pacific is New Zealand's backyard. It is resource rich. But increasingly, other nation state actors have moved in to occupy the territory that Australia and New Zealand have long regarded as theirs, exerting influence and creating "strategic anxiety".

New Zealand remains the Pacific's second-largest donor.

But Australia has been nudging New Zealand to increase the level of financial support this nation gives to the Pacific.

Partly, this is driven by China's increasing role in the region. But it is also driven by the problems many Pacific nations face. "There might not be votes in it, but it is the right thing to do and it shows New Zealand's seriousness in being an active and good neighbour," Peters said.

He indicated that there will be a substantial Budget increase for the Ministry of Foreign Affairs — which he believes needs to increase its focus on diplomacy — and also for the Pacific.

Perhaps in line with the position that Prime Minister Jacinda Ardern staked out in her first major foreign policy speech on in Wellington on Tuesday, Peters did not single out China directly. He said: "So much is changing in the Pacific and sometimes not for the best. Need and temptation often leads to greater risk than prudence would suggest."

Peters' comments came as Xinhua reported that Tonga is willing to enhance co-operation with China in areas including trade, building infrastructure and under China's "Belt and Road" initiative.

Chinese Premier Li Keqiang also met King Tupou VI on Thursday afternoon in Beijing.

The king said he hoped China could help Tonga to realise greater development and address the challenges posed by climate change.

Li called on the two countries to consolidate political trust, expand pragmatic co-operation, enhance people-to-people exchanges and integrate the Belt and Road initiative and Tonga's development strategy.

"China supports the major production projects, infrastructure and projects related to people's well-being in Tonga," Li said, adding that "China is willing to have agricultural technology exchanges with Tonga, and the Chinese market also welcomes high-quality agricultural and fishery products from Tonga."

This is the nature of the Pacific today.