The indications that China is displeased with New Zealand cannot be mistaken. China is a country where nothing of this kind happens by accident, the government's reach into every aspect of Chinese life is virtually unlimited. Nothing happens without the government's say-so.

There can be little doubt the Chinese government has decided to send our government a carefully calibrated message, and that message has been to the effect that our hitherto excellent relationship, and particularly our trading relationship, with the new superpower is at risk. The import of that message has potentially serious implications for our economic future and is no doubt intended to arouse considerable anxiety in some circles.

Nor can there be any real doubt about the reason for sending the message. It seems painfully clear that the Chinese government has reacted adversely to New Zealand's decision to exclude the Chinese IT giant Huawei from any involvement in setting up our new 5G network.


That decision was taken on the grounds that Huawei, like many major Chinese companies, is best regarded as an arm of the Chinese government and our government was warned by our security service, the GCSB, that there could be risks to our security if an enterprise with such close links to the Chinese government were allowed a central role in our internet system.

That advice mirrored, of course, similar advice tendered to and acted upon by the security services of some of our principal allies, who have found themselves embroiled in even more direct retaliatory responses from China. Our government is criticised by its opponents for allowing this situation to develop — with the inevitable corollary, it must be assumed, that we should hastily backtrack and reverse the decision concerning Huawei's role.

NZ's decision on Huawei was right and we should stand up to China. Photo / Getty Images
NZ's decision on Huawei was right and we should stand up to China. Photo / Getty Images

But are we really at fault? And is the Chinese response justified? And should we yield to the threatened reprimand, as some critics seem to suggest?

The first point to make is that our trading relationship with China, like almost all trading arrangements, is a voluntary one between equals, and is not - nor should it be - one of master and servant. New Zealand and China trade with each other because they each see advantage in that trade. Chinese gain access to goods that they need or at least want, and we earn foreign exchange which helps us to balance our books.

There is, or should be, no implication that we are being done a favour by the Chinese in deigning to trade with us, a favour that will be withdrawn if we upset them in respect of a completely separate issue. And the Chinese have no one but themselves to blame if their governmental system makes it difficult for us to disregard the fact that a company like Huawei is in reality not just another commercial company but is rather an arm of government.

It is the Chinese, not us, who have introduced, into what should be a straightforward trading relationship, the complexities of security issues and the need to choose between China and the US in an apparent power struggle in the Pacific between the two superpowers — and can anyone really be surprised in the light of our history, in both war and peace, that we continue to give priority to our long-standing alliance with the US?

And when we review our own recent history and the value we have placed on refusing to be bullied — our nuclear-free policy, despite American hostility to it, was a classic instance of our insistence on independence — are we really being enjoined to yield to blackmail in this case?

Our proper response to the "message" sent by the Chinese is that we regret they have taken umbrage at our decision on Huawei but that we can see no good reason why that should affect our mutually advantageous trade and tourism links and that the remedy that would qualify Huawei as a participant in our G5 rollout lies in Chinese hands.


If we were to follow the advice that we should reverse our decision, we would have cast aside a longstanding and hard-earned reputation as a small country that is not to be pushed around or bullied.

Our future relationship with China will be all the stronger once they realise that good trade relations do not depend on one partner's ability to dictate to the other and are harmed if that claim is made.