Fran O'Sullivan: Government playing the right game with China

COMMENT

If there was ever a sign that pragmatism and geopolitics could sometimes combine to a small country's advantage - this is it.

The Clark Government's bold call to bow to China's wishes to be explicitly recognised as a "market economy" is the real reason this country has been bumped to the top of the queue of those Western nations seeking bilateral deals with the world's fastest growing market.

The Government might not be prepared to sign away New Zealand's anti-nuclear status for an American free-trade deal - if indeed such a prospect was ever in the offing.

But the morality of this particular tradeoff is easier to justify.

The two economies are highly complementary. China - the manufacturing giant capable of producing low-cost goods for New Zealand consumers; New Zealand - the agriculture specialist loaded with expertise and products to help feed the burgeoning Chinese middle class.

But the phenomenal disparity in size shows this is hardly a deal between equals.

New Zealand showed uncommon foresight by being first to back China's bid to join the World Trade Organisation. This country never demanded China sign up to onerous anti-dumping provisions as did our most powerful trading partners, the US and Australia. New Zealand has also never questioned China's status as a market economy.

The Government initially thought this reality might be enough to get China to the bargaining table. But when the chips came down, the bigger player asserted its might and wanted "market status" recognition made explicit.

Chinese Ambassador Chen Mingming dangled the prospect that New Zealand stood a good chance of moving ahead of Australia to become the first Western nation to complete a free-trade deal with China.

The Government took the bait.

Now China has a valuable pawn to use during its negotiations with other players - particularly Australia.

The image of "New Zealand the free-trade purist" affirming China's market economy will also be used in discussions aimed at relaxing its WTO accession conditions.

Typically much of yesterday's reaction focused on potential downsides.

But these are reactions the Government can live with while it focuses on the bigger picture.

Trade Negotiations Minister Jim Sutton - who had to overcome Helen Clark's initial caution - was last night pragmatic. "This will help all our other bilateral ambitions too ... some countries have got to have an ogre there - someone they're in competition with."