New Zealand has the most adroit and high profile international leader in a generation with Prime Minister Ardern, but she has weakened New Zealand against China.
It was terrific that the leader of China Xi Jinping recently allotted 45 minutes to Prime Minister Ardern recently, if success is measured in minutes talking to someone. That profile is not matched by the performance.
In my opinion the purpose of the Prime Minister is to advance our common wealth and not just display common operating principles with other countries. That is particularly the case with a Labour government or should be.
Since Labour’s 2001 China-New Zealand Free Trade Agreement, China has increased its take of our exports to over 30% and rising. Great that we have the customers but a bad idea to willingly make ourselves so vulnerable to one economy. Just ask Australia.
Though we certainly need foreign direct investment in agriculture, the number of key investments we have lost to Chinese state interests is getting very high.
By 2011 under National we had lost the following to Chinese interests:
PGG Wrightson. Fisher&Paykel appliances sold to Haier. Synlait and Crafar Farms to Milk New Zealand a subsidiary of Shanghai Penxin, which also has a strong supply agreement with Miraka the iwi dairy entity.
Since the 2017 election to Labour we have seen the sale of the following to Chinese interests:
UDC to HNA Group. Oceania Dairy to Yili. Westland Dairy to Yili, and also a major investment into a massive butter factory there. Yashili NZ to Mengliu. Fonterra’s Chinese dairy farms. Fonterra’s entire Chinese businesses. Big chunks of CBD Auckland.
By the end of 2017 Chinese Foreign Direct Investment in New Zealand was almost $8.3 billion and much of it in our key export companies, and $13.19 billion in real estate development in Auckland alone.
Many of these investments have been critical to the survival and growth of New Zealand businesses which were struggling to grow. Don’t ask me why we have such a propensity to manage business so badly so often that we need to sell out to foreigners.
Chinese investment in New Zealand is diverse, well distributed across sectors and regions of New Zealand, and characterised by long term approaches emphasising sustainable employment, innovation, and increased exports of key products and services.
But our own Minister of Foreign Affairs has warned us of our growing deep dependence on China.
“The signal I’m sending to exporters is that they need to think about diversification in this context – Covid-19, broadening relationships across our region, and the buffering aspects of if something significant happened with China. Would they be able to withstand the impact?”
That’s Mahuta not Winston.
China now takes 42% of our dairy exports, 65% of our forestry, over 42% of our meat, generates the second highest number of tourists, and under COVID their students made up 47% of international students. Through entities like Fu Wah they have dropped billions and billions into developing Auckland’s waterfront hotels and apartments.
Chinese investors are the largest foreign investors in New Zealand’s primary products exports, waste management, whiteware goods, and tourism infrastructure. Over half of the 25 largest Chinese investors in New Zealand are state owned enterprises. I can’t see anything that would stop them taking over Fonterra – particularly after the Silver Fern Farms takeover.
Each one of those investments now have their profits going offshore to Chinese interests, not making dividends and great salaries here as they would have.
In return our investments in China are small and after the spectacular Fonterra divestments have got far smaller.
How has the Prime Minister and indeed the elected guardians of our most important exporting corporations taken heed of Mahuta’s clear warning? It was delivered only last year. Indeed last year even Ardern discovered a spine.
But this year both Labour and National have forgotten that they are there to advance OUR interests not those of China with Mahuta noting “Our engagement will be respectful, predictable and consistent … I think in terms of the political stability around various jurisdictions, what the world needs now is leaders who will advocate for peace stability, and a de-escalation of conflict around the world.” Brownlee was similarly anodyne.
The upgrade to the Chinese Free Trade Agreement under Labour this year provides for rapidly weakening controls on Chinese investment.
We should treat Chinese state investment with the same postcolonial resistance as we would British or United States investment. Neither Britain nor the United States have pointedly taken over our sole source of competitive advantage in agriculture like China has, and China has made us very dependent on them.
This may well be where the left diverges from popular New Zealand opinion, indicating that we still have an ideological pulse rather than a bloodstream consisting of foreign cashflow.
We are poorer, and our children are poorer, when we sell out. The great salary opportunities are gone. The dividend opportunities are gone. The ability to control our own destiny with our own competitive specialisation is gone. Our common wealth is gone.
Prime Minister Ardern has led us far, far deeper into this dependence upon China than either Key or Clark did. This is what is hidden as the true fealty of power Ardern has delivered New Zealand to Chinese when she gets 45 minutes of glorious face time, while on the surface she complains to them about human rights issues.
Forget talk about New Zealand’s value tightrope. We have been set on the steep slippery slope to mercantilist control.