New Zealand faces a huge challenge in its diplomatic relations with China and I don't envy Prime Minister Jacinda Ardern.

It is hard enough working out what to write — let alone what to do and how to do it.

Essentially New Zealand's problem is this:


When we signed up to the Free Trade Deal with China in 2008 and took on "special friend" status, the Chinese Communist Party (CCP) appeared be on a path of liberalisation — both economically and politically.

But when Xi Jinping took over in 2012 the direction of travel changed.

It wasn't really a subtle change. It has been well documented over the past six years although I'm not sure it has ever has been explicitly acknowledged by the New Zealand Government.

China is becoming more authoritarian — not less. There is no danger of democracy breaking out.

In fact, Xi has been quite explicit about this direction in his speeches.

In March the CCP ended presidential term limits, effectively making Xi leader for life.

As time goes on the reality of China's direction puts New Zealand in an increasingly difficult position.

How long can we ignore stories about concentration camps and the suppression of the Uighur people in the western Xinjiang province?


If reports out of Xinjiang get worse not better, what will we say?

There are concerns about increasingly authoritarian control in Hong Kong and the suppression of free speech.

It looks likely that those tensions will come to a head in the next few years.

Of course we still trade with countries with which we clash with on human rights.

We are an export-dependent nation and (Green Party aside) there has long been political consensus about pragmatism on trade issues.

But our special friend status with China creates problems that Australia does not have.

Any negative signals that Australia sends to Beijing look predictable.

When New Zealand sends negative signals it looks like a change of stance and the criticism appears more acute.

Australia first banned Huawei in 2012. It got a free trade deal regardless.

Its stance now makes it a lot easier to play the diplomatic game as tensions rise between the US and China.

The GCSB's call on Huawei couldn't have come at a worse time for the Government.

Spark's planning for a 5G mobile phone network made the politically charged decision hard to avoid but it looks like the messaging around it all was not handled well.

GCSB Minister Andrew Little now says it's not an outright ban and there are issues being worked through which could mitigate things.

International media — The Financial Times, Wall Street Journal, CNBC and more — quickly ran with the Huawei "ban" story — effectively interpreting it as New Zealand picking a side in the global diplomatic stoush.

It is clearly a technologically complex and morally ambiguous issue.

But it isn't really the big issue. It's just the issue that is putting the Government on the spot right now.

As China's power and influence in the region grow, the flash points will too.

There are moral issues we need to grapple with even if we put the tensions with the US to one side.

Of course we can't ignore those either.

Singapore's Prime Minister voiced the dilemma openly at the ASEAN (Association of South East Asian Nations) meeting.

There time may come when ASEAN "may have to choose one or the other" he warned.

There is no doubt where New Zealand's political and cultural sympathies ultimately lie ... with the democracy which champions freedom of speech.

No matter how much we dislike his language, behaviour or policies, US president Donald Trump has institutional checks and balances on his power.

And he will only be in power for two, or perhaps six, more years.

Trump's unorthodox and combative style makes the Chinese President look moderate by comparison.

On the world stage Xi speaks softly and talks of a multi-lateral, free-trading world.

On this he is in alignment with New Zealand's global outlook for the past 35 years.

We shouldn't forget that our political differences are actually much greater.

Trump and Xi will meet this weekend at the G20 leaders summit.

At the time of writing it is impossible to say how it will go.

We may see smiles, handshakes and enough positive language to ease trade war concerns.

Or we may see the stand-off escalate.

Regardless, the tensions will not disappear and neither will Xi's or Trump's resolve to reshape their respective countries.

We don't have to be pro-China or pro-US.

We need to be pro-New Zealand. That means being in a position to state our concerns, to both powers, more openly.

We need to be sure China understands and respects our deeply held belief in a free-press and freedom of academic thought.

In 1985 the Labour Government made a very brave call. It refused to allow the nuclear-powered warship USS Buchanan to visit. Relations with the US soured.

But we got through it and America (mostly) got over it. We stayed friends if not allies.

These things can be done.

But let's not pretend that this will be easy for our Government.

China is our largest export destination, our biggest customer.

The path forward requires bold but but strategic thinking.