COMMENT:

Chinese Ambassador Wu Xi has taken a leaf straight from the Winston Peters playbook by throwing a dinner for him as the relationship between China and New Zealand becomes increasingly vexed.

Peters will no doubt accept. The Foreign Minister has used his undoubted interpersonal skills to New Zealand's advantage before — notably with Julie Bishop on the eve of an Australia bilateral.

China has snubbed the launch of the China-New Zealand Year of Tourism. Seafood exporters are facing problems at the Chinese border.

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And Air New Zealand — which has been told to make yet another yet another application for its problematic Dreamliner to land in Shanghai — is also experiencing pushback.

China and New Zealand have clearly diverged in some key areas during the 18 months that the coalition has been in power.

Chinese Ambassador to New Zealand Wu Xi. Photo / Supplied
Chinese Ambassador to New Zealand Wu Xi. Photo / Supplied

Sensibly, it will take more than one dinner to reach a new accommodation.

But given Wu Xi's brief, these shifts can be expected to be discussed at their convivial dinner.

5G network — Huawei

Chinese officials are angered that the NZ Government put their national champion "in a black box" and is refusing to comment directly on an about-face in New Zealand's previously welcoming stance to Huawei.

It was the Government Communications Security Bureau (GCSB) verdict that a Spark 5G bid, reliant on Huawei technology, presents a security threat to New Zealand.

But to the China side, the decision is a Five Eyes stitch-up.

A well-informed Australian media report directly linked an unprecedented campaign to block the Chinese tech giant Huawei from supplying equipment for 5G wireless networks to the Five Eyes partners — Australia, the United States, Canada, New Zealand and the UK.

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But China does not just view this simply through a security lens.

It harbours suspicions the Western players are using security as cover for a strategy to knock a stronger Chinese player out of contention from the move to 5G.

The prior National Government welcomed Huawei to invest in New Zealand.

It has already partnered with Spark on its 4G network.

This is the key move which has put a spanner in bilateral relations.

Cyber attacks

In December, New Zealand again took an unprecedented step and joined its Five Eyes partners in calling out China for state-sponsored cyber attacks.

But unlike our nearest neighbour Australia, where Morrison Government ministers directly rebuked China for stealing commercial secrets from Australian businesses, New Zealand's response was muted.

Cabinet left it to the GCSB through its director-general Andrew Hampton to publicly front the issue.

There was no formal statement from Peters. Hampton said the GCSB had established links between the Chinese Ministry of State Security (MSS) and a global campaign of cyber-enabled commercial intellectual property theft.

"This long-running campaign targeted the intellectual property and commercial data of a number of global managed service providers, some operating in New Zealand," Hampton said.

New Zealand security briefings have touched on this before. But it's the first time China has been named.

Trade war

The United States-China trade war has wide ramifications for global trade and New Zealand.

The US has major concerns in China — IP protection, technology transfer requirements, opaque joint-venture arrangements, and dumping.

Instead of taking these to the World Trade Organisation, the US President has introduced tariffs to pressure China to make changes. But tariffs also affect New Zealand (steel).

The WTO — which New Zealand depends on — is crucial.

That is why New Zealand is working with like-minded countries to keep both main players engaged in the multilateral system.

The bilateral negotiations on the China-NZ FTA upgrade are also at issue — particularly over dairy, investment, and China's wish for more of its people to work here.

It's reached the point where there needs to be a clear signal from the leaders of both countries to make the necessary accommodations to get the deal done.

South China Sea and Pacific reset

The 2018 Defence Strategic Policy statement was the first time New Zealand has isolated China as a threat over its behaviour in the South China Sea.

Peters was careful not to specifically call out China. But there is no escaping that there has been a major shift under this Government.

John Key had said he would engage with China over the South China Sea. But he was told this would not help New Zealand's quest for an FTA upgrade. So he kept his criticisms face-to-face.

The Pacific reset — where Peters has talked about China's role in the region without specifically naming the superpower — is also an issue.

There are genuine misgivings, not only about the amount of debt some Pacific nations are taking on to pay for China funded projects, but also China's growing footprint.

Foreign investment

The Government's legislation to ban foreign investment in residential housing is seen by many as squarely aimed at Chinese investors.

Beijing would understand the need for a Government to ensure its people are housed first.

But it is the forthcoming tightening of the foreign investment laws which will be problematic.

As Trade Minister David Parker observes: "Many of our closest allies have the ability to block significant investments that are characteristic with their national interests.

"It is likely that a broad, but rarely used discretion to decline approval for significant foreign investment — such as infrastructure assets with monopoly characteristics — will be introduced."

Again, no direct mention of China. But when those allies clamp down, it has been China in the frame.

There are a raft of other issues bubbling away. For instance, the Ardern Government has yet to spell out clearly where it stands on China's Belt and Road Initiative and its concerns over China's movements in Antarctica.

More than enough for a series of dinners.