Chinese policemen patrol the Bund area in Shanghai, China's biggest commercial and trading city. Photo / AP
OPINION:
Ask most New Zealanders what they think about trade with China, and chances are they will say something like: “If we could just sell a lamb chop to everyone in China, we would run out of sheep” – no mean feat for a country with about five times as many sheep as people.
This basic equation captures what we in New Zealand know to be true: the burgeoning middle class of China is a game changer for our own economy.
A similar analysis is made by Australia’s resource sector and, until recently, its beef and barley producers too.
China is large, its demand vast and its potential mind-blowing.
It’s why as Prime Minister I made seven state visits to China.
It’s why the government I led extended the China Free Trade Agreement and it’s why my visits to China, along with those of other ministers were popular with the public.
We in New Zealand saw Asia as the region that would play an enormous role in helping the world navigate a path out of the Global Financial Crisis. And it did.
From foreign students to massive tourist numbers, China was where the action was and we in New Zealand stood to benefit from it.
However, since my retirement from politics at the end of 2016, a lot has changed in the eyes of many people.
For starters, former United States President Donald Trump went on a widespread anti-trade, anti-China campaign.
He ripped up the young Trans-Pacific Partnership trade agreement and spent years telling Americans that China didn’t play fair and that America’s enormous trade imbalance with China was living proof that Americans were being taken for suckers.
At the same time, he promoted a view that China was about to become a significant and real military and cyber threat to the United States and its friends.
Slowly but surely this negative view of China became mainstream.
Britain, Australia and many others ramped up their anti-China rhetoric while in the United States, Democrats and Republicans who seemed unable to agree on anything else were united in believing the stronger their anti-China rhetoric, the more voters liked it – and them.
Against that backdrop, Covid-19 arrived and suddenly billions of people who’d never heard of Wuhan, and even now could not pinpoint it on a map, were told by Trump that this “China virus” was part of China’s masterplan to wreak havoc on the world.
For its part, China has not helped itself in the eyes of Western countries which worry about its military build-up, cyber practices and human rights and environmental records.
With all these impacts considered together, many CEOs globally are now discussing how to exit China, when five years ago, the talk was about how to enter it.
But how valid is all this concern really?
Who to believe
Who should New Zealand believe and, more importantly, how should we act?
For starters, we need to acknowledge that a lot has changed in the 10 years that China’s President Xi Jinping has been in office.
All aspects of China’s structures, including the Chinese Communist Party, the Government and the military are controlled by him and only by him.
He has rewritten the rule book for officials so at the recent Party congress he managed to not only secure a third term but ensure the all-important Standing Committee of the seven most powerful people in China are loyal and committed to him.
He is without doubt the most important and powerful Chinese leader since Mao.
From Zero Covid to a crackdown on entrepreneurs like Jack Ma, Xi has charted China on a course vastly different from the West’s.
More government, less market. Common prosperity, not individual capitalism. Tight state control, not personal choice and freedom.
While he is vastly popular with his people, recently some cracks have appeared in China’s economy.
The Zero Covid policy has come at a huge cost. China’s housing market is structurally flawed and failing. In the absence of any state support, Chinese consumers are reluctant to spend. They are also getting older and less productive in their droves.
Yet for all of this, I remain inherently optimistic about China.
For starters, China still has hundreds of millions of people it needs to move from the rural countryside to cities and towns and with this urbanisation will come massive economic stimulation.
China is only a tiny way through the infrastructure deficit it needs to complete from roads to energy, and airports to railways.
That’s before the trillion-plus dollars to be spent on the Belt and Road programme which looks to connect China with Europe, like a modern version of the old Silk Road.
China’s middle class is nascent. In time they will become the largest source of tourists in the world, the biggest buyers of luxury goods, and the largest consumers of commodities anywhere.
China will be a superpower with an economy to match.
Unlike many, I don’t think China will flex its military muscle any time soon.
China has for decades talked of, “one country, many systems”. Citizens in Taiwan are unlikely to force a divorce from China in my lifetime and, despite what Trump may peddle, China does not have form when it comes to invading others.
China is not a big Russia, and nor is Russia a little China. (Russia is more a big Iran and that’s a very different proposition.)
But anyone looking for China to be more like the West should forget it.
The Chinese have looked at the West and their goal is to be nothing like America. Ask Chinese people directly and I suspect they can give you chapter and verse about what’s wrong with the US, from inequality to social unrest.
Will China move towards greater freedoms for its people? Perhaps slowly, but certainly not at a timetable and pace the West can comprehend or support.
Will it remain somewhat of a mysterious black box when it comes to the inner workings of the Party? Definitely.
Will its economy become more market-based, as former Chairman Deng Xiaoping once dreamed? Not for some time, I think.
Finally, will it sit back quietly when others criticise it? No. Xi has made clear China will be more vocal in its own defence.
But all this doesn’t make China an unguided military threat, as many argue.
The Party knows that to avoid a Chinese “Arab Spring” it must deliver economic and social advancement for its people.
The Party also knows that war and sanctions are bad for growth and advancement.
Quest for common ground
And, like everyone, the Party will always respond better to trying to find common ground on what can be agreed, rather than focusing on differences.
While China will always have policies many disagree with, so do most of the nearly 200 countries New Zealand trades with.
China still represents a huge market for New Zealand companies, our people and, yes, our lamb chops.
It can be New Zealand’s meal ticket to a stronger economy and a wealthier country.
New Zealand can remain a country the Chinese genuinely listen to.
In trading with China we don’t have to give up speaking out about issues we hold dear, like human rights or climate change.
We don’t have to forfeit our friendships with our traditional allies.
But we do have to start forming our own opinions. After all, isn’t that what an independent foreign policy means?
New Zealand needs to judge for itself how credible Trump’s and others’ views of China’s military ambitions are, and how much of Trump’s rhetoric rests in his domestic political imperatives and reluctance to accept the club of superpowers may be about to have more than one member.
For China’s part, it can’t dismiss every international criticism as the work of Trump or people with unwarranted bias.
It must recognise the genuine concerns in the West about the scale of cyber threats from Chinese actors. If these are indeed not state-sanctioned, China must stamp this unwarranted intrusion out.
If it wants to be part of the rules-based system, it must not solely dismiss negative findings from the International Court of Justice. And if it wants a flow of foreign capital to fuel its economic ambitions, it must make sure intellectual property rights are observed and fairness is demonstrated in corporate partnerships.
In other words, it will take both sides of this debate to demonstrate a commitment to build a better and more constructive relationship based on goodwill and compromise.
I hope and believe this can be done because I, for one, remain a bull on China.
It is a fascinating place, vast in size, population and complexity.
China is too big to avoid, too important to ignore and, I believe, too sensible to give the world a bad fright.
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