China Business Summit 2024: Exploring Trade, Security, and AUKUS Implications

In today's global landscape, economy and security are inseparable. The 10th China Business Summit, held at the Cordis Hotel in Auckland on Monday, clearly underscored this connection, demonstrating that navigating today's China requires attention to both trade and geopolitical factors. 

During his inaugural address at the summit as Prime Minister, Christopher Luxon encouraged business leaders to keep up with China’s dynamism and look at the potentials of untapped markets, as trade, he said, is New Zealand's economy's "lifeblood."

In creating more opportunities for Kiwis onshore, businesses need to be much more ambitious offshore. "We need New Zealand to become an export powerhouse. That's why we've set a target of doubling the value of our exports over the next ten years - hitting NZ$190 billion in annual exports by 2034."

He also urged New Zealand businesses to remain nimble and responsive to market demands in China, citing pet food export and video gaming sectors as areas with significant potential for New Zealand's exporters.

China remains New Zealand's largest trading partner, primarily in industries like tourism and agriculture. Last year, bilateral trade reached NZ$38 billion, a fourfold increase since the Free Trade Agreement (FTA) took effect in 2008.

Luxon then emphasised that New Zealand's trade relationship with China is critical to the country's prosperity, “China remains a strong economic opportunity for Kiwi firms and businesses. We should celebrate our successes so far, but also aim to do more and be better."

New Zealand companies are performing strongly and facing tough competition in three major Chinese cities: Beijing, Shanghai, and Guangzhou. However, Luxon has suggested to the business community that they should also consider expanding into other cities in China beyond these major hubs. 

Rebuilding New Zealand’s economy has been a key focus of the current administration, and during Luxon's visits to Southeast Asia, he assured leaders in Singapore, Thailand, and the Philippines that New Zealand is “open for business.” He aims to diversify New Zealand's trade partnerships globally while maintaining strong relations with China, describing this approach as “China-and” rather than “China or.”

“It’s not about closing one door to open another but opening every door possible - hustling to create the conditions for growth on the world stage that every Kiwi company deserves," he explained.

Christopher Luxon addressed New Zealand business community in his first China Business Summit as the Prime Minister. Photo: Christopher Luxon's FB Page

Trade Minister Todd McClay, who also spoke at the summit, reflected on his visit to China last month. He expressed confidence that China continues to recognise New Zealand as the world's leading producer of safe, healthy, natural, nutritious, and sustainable food products.

Sharing this optimism, Raymond Yeung, Chief Economist for Greater China at ANZ Bank, stated, "China is helping New Zealand's trade deficit. China is a stabiliser for New Zealand's economy."

Be that as it may, Luxon's vision extends beyond trade.

He asserted that New Zealand must be proactive in global affairs as well, addressing social and geopolitical issues involving China. From human rights violations to tensions in the South China Sea and Taiwan Strait, Luxon emphasised New Zealand's commitment to advancing its national interests in the Indo-Pacific region, stating that regional security, stability, and prosperity are essential to New Zealand’s future.

“We cannot just choose to opt out of the strategic issues that our region faces. We need to navigate this reality, guided by our interests and values. That is why my government is ambitious about being much more active in the Indo-Pacific region," he declared.

“New Zealand cannot be a bystander; we need to be active and engaged in world affairs. How we engaged internationally, and how we take our message to the world, is critical to our security and prosperity,” he added.

Luxon is optimistic about fostering a “constructive” relationship with China, pursuing opportunities and cooperation where mutual interests exist, while also “speaking frankly” about differing views.

During a Q&A session, Prime Minister Luxon addressed the question from summit organiser Fran O'Sullivan regarding New Zealand's possible participation in AUKUS.

While he noted that New Zealand is still exploring the Pillar Two of AUKUS, he emphasised the intrinsic connection between economic and security issues. He explained, “The point I was trying to make is that if you don’t have a stable, secure, and peaceful Indo-Pacific region, you don’t have the platform or foundation to drive economic growth and prosperity. That’s why I keep saying that security and economics in today’s world are very much interdependent.”

After his remarks, PM Luxon spoke with Chinese Ambassador Wang Xiaolong, outside the room where the summit held. Photo: AMC c/o Carla Teng

From Trade to AUKUS

During his statement at the summit, China's Ambassador to New Zealand H.E. Wang Xiaolong reminded business leaders that robust economic cooperation has always been a cornerstone of the New Zealand-China relationship, outweighing the differences between the two nations.

“China is not a threat to New Zealand. Rather, China represents an opportunity and a mutually beneficial partner for New Zealand,” he emphasised.

Wang also dismissed the “Peak China Economy” theory and “China Overcapacity” narratives, criticising international organisations orchestrated by Western countries that can no longer dominate the global economic landscape.

“Some of the very countries that lectured us in the first place have abandoned their own principles. It so turns out that the “fair competition,” “comparative advantage,” or “free trade” they espouse is but a game that must be won by them and them alone, and is for everyone else to lose,” Wang stated.

“And that also reveals the true colours of their much-trumpeted “rules-based international order”, which in actuality only means that I rule, and I order, and that you are ruled and can only do what I order you to,” he added.

Chinese Ambassador Wang Xiaolong warned NZ over AUKUS, at this year's summit. Photo: AMC c/o Carla Teng

Acknowledging the complex international situation China faces, Wang urged New Zealand to prioritise bilateral dialogue over “megaphone diplomacy,” particularly when addressing the controversial topic of AUKUS.

The Chinese envoy cautioned New Zealand about the potential consequences of joining the non-nuclear second pillar of AUKUS, which aims to enhance New Zealand’s defence capabilities by sharing advanced technologies like artificial intelligence and quantum computing with Australia, the United Kingdom, and the United States.

Wang argued that joining AUKUS, in any form, would signify taking sides against China.

“The sole purpose of the second pillar is to support nuclear-related military cooperation under the first pillar, rather than being an innocent platform for technology sharing. Many in New Zealand and beyond believe that joining such an alliance, in whatever form, is indeed taking sides,” Wang asserted.

Expressing Beijing’s serious concerns about AUKUS, Wang reminded New Zealand of their strong existing relationship, celebrating this year the 10th anniversary of the Comprehensive Strategic Partnership between the two nations. He emphasised China’s desire to see New Zealand as a “good friend” and an “important partner.”

“For China, cooperation with New Zealand has no forbidden areas, and our friendship has no limits. But it takes two to tango, and the future of our bilateral relations depends on mutual respect from both sides,” Wang stated.

“Regarding AUKUS, the decision ultimately lies with New Zealand. However, we hope that New Zealand will consider its long-term fundamental interests and the need to promote the healthy and stable development of our bilateral relations when making its decision,” he concluded.

Regional Reality Check

In a panel discussion with Dr Henry Wang, founder and president of the Beijing-based Center for China and Globalization think tank, Suzannah Jessep, CEO of the Asia New Zealand Foundation, Philip Turner, former New Zealand Ambassador to Korea, and Simon Bridges, co-chair of the summit, a stark reality check emerged about the region's dynamics involving China. The discussion accentuated that New Zealand cannot ignore these developments.

Jessep listed several concerns about China's alarming actions, such as claiming other countries’ exclusive economic zones (EEZ) in the contested South China Sea, trade coercion, using economic power to influence political outcomes, arbitrary detainment of the media, spreading misinformation and disinformation, state-sponsored interference and hacking, and controlling strategic assets through debt.

She highlighted ongoing tensions between China and the Philippines in the South China Sea, where Chinese Coast Guards have been chasing, ramming, employing water cannons, and recently given powers to detain vessels and personnel. All these encounters occurred within the Philippines' claimed EEZ.

Amid the business summit, Jessep provided a dose of reality by addressing the elephant in the room, stating, “I know trade is great, trade is going well, trade is going to continue, the people-to-people contact, all to continue, but that in the geopolitical context is what keeping small and medium-sized countries awake at night.”

Echoing similar concerns, Turner, now based in Japan, elaborated on East Asian nations' anxiety about China, citing its lack of transparency, undisclosed political agenda, and "aggressive and high-risk behaviour."

“What I see in places like Japan, Korea, the Philippines, and Southeast Asia, I don't see support for the idea that we should contain and stop China’s rise. Instead, there is legitimate and understandable uncertainty about the extent of China’s ambitions and a desire to stop the bad behaviour that [Jessep] described, and to adhere to the rules we’ve spent 70 years painstakingly building up,” he said.

(L-R) Philip Turner, Suzannah Jessep, Dr Henry Wang, and Simon Bridges. Photo: c/o Ethan Jones

On the contrary, Dr Wang defended China's approach towards nations such as the United States, Japan, South Korea, and the Philippines, which he believes have already aligned with the U.S.

He argued that New Zealand does not need to follow the same path, but instead consider the examples of nations like Singapore and Switzerland, which managed to be non-partisan and maintain excellent relationships with China. 

“I would advise that maybe in geopolitical [matters] we don’t take sides that much; we count on the basis of trade and economics,” he said. “New Zealand has a lot of soft power to mediate; you can really balance relations rather than side with one.”

Dr Wang described China as a "peace-loving country" that wants to maintain the status quo in the South China Sea and the Taiwan Strait. He then criticised the Philippines, under President Ferdinand “Bongbong” Marcos Jr. for disrupting the regional status quo by establishing more military bases with the assistance of the U.S. and other allies.

Jessep disputed Dr Wang’s statement, saying, “I think it comes down to whose status quo [is being upheld], and that’s the challenge and the anxiety for small- and medium-sized countries. If China’s status quo includes the EEZs of other small countries, where they don’t have the economic or military might to defend themselves compared to China, therein lies the challenge of world order: whose status quo [is maintained], and how major powers use their influence to change that order.”

She also mentioned the "three Bs" theory of Malaysian foreign policy expert, Professor Cheng-Chwee Kuik, which stands for Build, Bide, and Buffer—an ideal approach for small to medium-sized nations like New Zealand facing pressure from superpower tensions.

Build involves enhancing a nation's infrastructure, which supports trade partnerships and economic prosperity. Bide is a strategy that allows a nation to exercise its own judgement at its own pace and maintain an independent foreign policy, even in the face of tensions from major powers. Lastly, Buffer means ensuring that New Zealand remains friendly with all countries and avoids isolation, fostering good relations without making enemies; good relations does not necessarily mean alliances. 

Turner also raised a strong point, highlighting the importance of multilateralism over bilateral approaches for smaller countries like New Zealand, in navigating pressures from China and the United States.

“The nightmare for smaller countries is when power is exercised bilaterally, forcing the weak to submit to the will of the strong. Politically and economically, that’s disastrous for us... We, as a country, fight quite hard to prevent that from happening. And how do we do that? Typically, by forming larger groups," he said.

In this year's China Business Summit showcased New Zealand and China's prosperous trade partnership, which continues to flourish. With China’s growing middle-class purchasing power, this offers numerous opportunities for Kiwi businesses to explore and thrive.

However, the summit also served as a venue for discussing pressing regional issues.

Underlining Prime Minister Luxon's remark, in the current global climate where stability is no longer guaranteed, economic advantages cannot be considered separately from security concerns, and New Zealand is exerting every effort to balance and address both aspects. 

-Asia Media Centre