How New Zealand can make sense of China’s Pacific foray
Former West Coaster Warrick Cleine lives in Vietnam and is a member of KPMG’s Global Board and Asia-Pacific Board, and Chairman and CEO of KPMG in Vietnam and Cambodia. He is also an Honorary Advisor to the Asia NZ Foundation. The views here are his.
OPINION: China’s recent diplomatic foray into the South Pacific has drawn considerable media attention in New Zealand and Australia, with an outpouring of concern from foreign policy experts in both countries.
The Australian reaction was perplexing and, at times, alarming. Amid the heat of a general election, politicians nearly beat the drums of war and the public braced for conflict. The candidates pledged to lead Australia into battle. And most shocking of all, this war was apparently going to be in Asia.
Little was felt in the war zone. Life went on as normal on the streets of Tokyo, Hanoi and Taipei. The football matches were going on with delight. Pho was served on noisy beer tables. Citizens did not shelter in bunkers, stockpile supplies, or bid farewell to their sons and daughters.
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While Australian politicians blew their bugles, Asian consumers paid bills, worried about petrol prices, booked holidays in Europe and moved their lives beyond Covid. Governments were thinking about inflation, infrastructure, climate change and tax reform. Asia was missing the news, and it made no sense.
It is therefore strange, as calm returns with the new government in Canberra, to see a level of alarmism in New Zealand as well. There is no need for that. As China seeks to play a bigger role in the Pacific, we can look to Asia to understand what is happening and chart the way forward. Like us, many Asian economies are trade dependent, capital importers and exporters, and culturally distinct from their huge neighbor to the north and west. They know that China is here to stay, that competitive tension must be managed, and that peaceful coexistence is a better outcome than any other alternative. We are about to experience what happens as usual in Asia.
Like New Zealand, Asia knows that engaging with China has huge economic potential, with its huge consumer market and vital role in global supply chains. Even as countries around the world reduce risk by diversifying markets and building resilient supply chains, China remains the world’s largest importer and exporter. For the rest of Asia, this phenomenon has generated economic prosperity, spurred industrial growth in developed and developing Asia, and lifted millions out of poverty. The rise of China has lifted all boats.
Engaging with a new player is not a zero-sum game. In Asia, engagement with China has not come at the expense of competing alliances and exchanges. While there is perpetual pressure to “choose sides” in various forms and forums, many Asian countries operate an independent foreign policy, pursuing trade, commerce and social relations with each other, with China and with its competitors.
Even Asian economies, with their defense and foreign policy firmly skewed toward the United States, have massive trade and investment ties with China. For much of Asia, CP-TPP membership and trade deals with the EU, UK, US, Australia and New Zealand do not preclude similar engagement with RCEP (the Asia-Pacific trade agreement) and bilateral agreements with China. Social, educational and cultural ties between Asian countries and China coexist with those with the West, and enduring government-to-government ties run deep in the region.
Maintaining balance is not without tension, high defense expenditures, and even occasional conflict, and requires dexterity from all players. But calm heads and a long-term perspective have prevailed to ensure both peace and prosperity on the Asian continent.
Asian countries have had to build their institutional capacity to protect their own interests against those of their main trading and investment partner. This includes their ability to enforce the rule of law, regulate business, protect workers’ rights and the environment, and collect taxes.
The business sector across Asia has had to strengthen its ability to compete, fair and unfair, to compete for resources such as capital, labor and land. Trade, diplomatic, and defense alliances are given new importance, as going it alone is neither prudent nor sustainable. Groupings – such as ASEAN – have endured as external engagement with larger powers has increased across Southeast Asia.
New Zealand and the Pacific can learn from Asia. We must ensure that ourselves and our neighbors reap the economic benefits of engagement with great powers, old and new, while ensuring economic and supply chain security. New Zealand has allowed concentration risk to grow in our export sector, and we should address this while ensuring that others do not repeat our mistake.
We need to build institutional capacity at home and in our partner countries to ensure that local interests and communities are protected. We need to strengthen businesses at home and in the Pacific to ensure they can compete for resources, and we need to celebrate alliances of common interest.
China’s rise coincided with a long period of peace and prosperity in Asia, and we should aim to emulate that in the Pacific.