Heather du Plessis-Allan: China will keep squeezing NZ

Trade and tourism are huge for New Zealand. China's our biggest trade partner. It's about to become our biggest source of tourists. And tourism is our biggest industry. Photo / 123RF

China knows how to hit the soft spot.

We saw that in the trade war with Donald Trump. While the US president zeroed in on the country, that country zeroed in on him.

China slapped tariffs on soybeans, whiskey and cranberries. They all come from states Trump won in the 2016 Presidential election. If Trump's America was going to hurt China, China was going to hurt Trump.

China is using similar precision to hit New Zealand. We're copping nothing like the sledgehammer tariffs the US got whacked with.

It's more like a gentle squeeze. To let us know it's grumpy with us. And it's zeroed in our precious trinkets, too. Trade and tourism.

Trade and tourism are huge for New Zealand. China's our biggest trade partner. It's about to become our biggest source of tourists. And tourism is our biggest industry.

That's why China's government is encouraging its people to ditch planned travel here. It's why China's postponed our joint Year of Tourism launch at Te Papa. It's why our PM can't score a normally annual visit there.

And it could well be why that Air New Zealand plane was turned back. Sure, that was caused by an Air NZ mistake but those who understand business in China will tell you the mistake might have been cleared up mid-flight if we were in China's good books.

Can you blame China?

New Zealand has been acting so recklessly it's almost invited this reaction.

Just last year, in the space of a mere 12 months, we threw a lot of stones on China's roof. We released a Defence White Paper explicitly warning of China's threat in the South Pacific, threw cash at the Pacific to outbid China, and Foreign Minister Winston Peters gave a jaw-dropping speech in Washington pleading for US help in dealing to the Chinese.

And then finally, the spit-in-the-face moment China couldn't ignore. New Zealand told Chinese telecommunications giant Huawei to take a hike.

Don't tell me that was our independent decision. It's too coincidental that the US publicly demanded its Five Eyes partners ban Huawei and then we did.

Of course the Chinese are annoyed at that. Why wouldn't they be? We were supposed to be one of their mates. We signed the first ever FTA with them.

So if they see last year's tantrums as a breach of loyalty, fair enough.

It became so obvious that we were on thin ice by the end of last year that I wrote about it in this newspaper in December.

I warned it was a high-risk move to needle China. I may have got that right. But I also said this will probably sort itself out in time because the Chinese are pragmatic. I got that wrong.

It now looks possible that China will keep squeezing. Why? Because we're the weakest link in the Five Eyes network. So we'll be the easiest to flip on the Huawei decision. And if we flip, it might fit others and that's embarrassing to the US.

There will be pressure domestically, too. New Zealand businesses will be wanting this bottle righted. They're the ones wearing a lot of the cost of this. How much do you think it costs Air NZ to turn a plane around? How much for Spark to find a new 5G partner?

Really, to sort this out, the PM needs to rein in Winston Peters. Because it looks obvious that he's the guy running this show. As Foreign Minister he gave that clanger of a speech in Washington without the PM even reading it. That's as amazing as it is dangerous.

For some weird reason, Peters has got a love crush on the US that seems to manifest itself in an equal dislike of China.

To prevent China tightening its squeeze, he needs to get over that.