Luxon's Challenges in East Asia

Luxon Government facing early challenges in East Asia

While the conflicts underway in Ukraine and the Middle East are grabbing the headlines, New Zealand`s new government under PM-elect Christopher Luxon also faces some immediate challenges in our own hemisphere.

Over the last week the dispute between China and the Philippines over access to the Second Thomas Shoal, a reef occupied by the Philippines but claimed by China, escalated seriously with Chinese ships appearing to ram Philippines vessels attempting to resupply a team on the shoal.

China blamed the Philippines for “stirring up trouble”, suggesting it was being used as a pawn by the US.

The Philippines pointed out that the shoal is clearly within the Philippines`s Exclusive Economic Zone, and that China`s claim to the area is in contravention of a 2016 arbitral ruling under the UN Law of the Sea.

Despite the interregnum in government, New Zealand did not shy away from taking sides.

Along with Australia and Canada, New Zealand`s ambassador in the Philippines expressed deep concern at China`s actions.

Japan and South Korea also voiced support for the Philippines.  The US reiterated ominously that any attack on the Philippines would trigger US defence under its bilateral alliance with the Philippines.

The very day after the incident, New Zealand frigate HMNZS Te Mana joined the navies of Australia, Canada, Japan, and the U.S. in a joint exercise (Exercise Noble Caribou) in the South China Sea. 

Since the exercise would have been planned for some time, the timing is coincidental, but illustrates the extent to which New Zealand is already deeply engaged in the region. 

The New Zealand Defence Force reported on a concurrent exercise with Five Power Defence partners in Malaysia but has made no public mention to date of Noble Caribou.

Regional leaders are concerned that the international situation is serious and deteriorating.

Japanese Prime Minister Kishida warned last week that “the rules-based, free and open international order is in grave crisis”.

Mindful of Gaza and Ukraine, commentators have expressed concern about the capacity of the US to manage several crises at once.

While not going that far, top US security official Kurt Campbell last week acknowledged that the US appreciates help, calling on nations in the Indo-Pacific region to step up their efforts to address global crises.

"It's no longer just the U.S. continuing its engagement in the Indo-Pacific. It is the Indo-Pacific that is playing a larger role in global affairs," he said.

These comments make it plain that NZ`s approach to the region under the new government will come under close scrutiny, from Japan and Korea as well as its traditional friends in the Five Eyes.

Both Japan and Korea have stepped up proactive diplomacy recently.

Trilateral ties between Japan, Korea and the US have strengthened, as displayed at the three-way meeting between Biden, Kishida and Yoon at Camp David in August.

A key contributor has been the warming of relations between Japan and Korea.

On taking power in May last year President Yoon pushed hard to improve ties with Japan, long bedeviled by issues relating to Japan`s colonial occupation of Korea.  He and PM Kishida have met several times this year and reached a breakthrough agreement in March to resolve the issue of forced wartime labour.

Korea`s response to Japan`s discharge of radioactive wastewater from the Fukushima nuclear reactors into the Pacific illustrates how far the relationship has progressed.  Initially hostile, Yoon moderated Korea`s stance, accepting - as New Zealand does – the scientific advice that Japan`s approach is reasonable and (as far as possible) safe.

On North Korea, Yoon has jettisoned the détente policies of his predecessor Moon Jae-In and strengthened deterrence with the US.  As a concrete illustration, a US B-52 bomber capable of carrying nuclear weapons landed in Korea last week for the first time in 35 years. 

Yoon is treating North Korea with care but, unlike Moon, not letting it dominate his foreign policy.  That in turn is providing scope for a tougher line on China and Russia.

Japan too has been taking an increasingly assertive stance on both security and economic issues – and has sought to strengthen ties with New Zealand as part of that. 

With strong New Zealand support, Japan took up the leadership of TPP (now CPTPP) after President Trump took the US out in 2017.  Japan then pushed hard to get the UK into CPTPP this year. 

New Zealand has been keen to see Korea to join CPTPP also, but Korea has so far hung back, due to domestic lobbies and uncertainty around whether the US will ever change its mind.

A big driver of the US, Japan and South Korea coming closer is shared concern about China`s aggressive approach to the region and its manipulation of the rules-based order.

Concern is not confined to officials. Polls show that ever larger majorities of the populations of Japan, Korea, Australia and New Zealand are mistrustful of China.

A deep but unspoken concern in Tokyo and Seoul is the prospect of a return to office of President Trump or someone similar in 2025 – with the risk that the US may exit or reduce its commitment to its cornerstone alliances with Japan and Korea.

Both countries are therefore looking to broaden their own options and reduce dependence on the US.

In Korea talk of developing its own nuclear capability has grown – though so far the government maintains this is not an option on the table.

Both Japan and Korea have publicly expressed concern about potential conflict across the Taiwan Strait.

In 2022 Japan, South Korea, Australia and New Zealand inaugurated a new group, the so-called AP4 (Asia-Pacific 4) in the margins of NATO, where all four are NATO `partners`. 

PM Ardern was cool on NATO developing a presence in Asia, but supported New Zealand joining AP4 provided discussions were confined to regional issues. 

One question for the Luxon government will be how far New Zealand wishes to push those discussions.

All four countries share a concern about their own economic dependence on China – and on the risks of aggressive US-China “decoupling”.  

All four have been making efforts to reduce their trade dependence.

It is not clear that this is working. 

Exports to China from Japan, Korea, Australia and New Zealand have all declined since 2021, yet imports have increased – in some cases massively.

Nonetheless all four countries recognize the importance of the trading relationship with China and wish to maintain it – unlike it seems the US.

All these issues will be on the agenda when PM-elect Luxon gets his first chance to meet regional leaders at the APEC Leaders Summit in San Francisco later in November.

He has some things in his favour. 

For the first time since 2017, New Zealand, Japan and Korea share centre-right governments.

New Zealand and Australian views on China are closer now than they have been for several years.

After years in the proverbial dog box, PM Albanese has been invited to visit Beijing early next month. 

Coming on top of the recent release of journalist Cheng Lei, China`s agreement to review punitive tariffs on Australian wine, and the renewal of the Chinese lease on the port of Darwin, this suggests Australia`s efforts to lower the tone with China are bearing fruit. 

New Zealand took a different path from Australia, maintaining a cordial relationship and keeping up regular high level visits to China under PM Ardern.  But the government has steadily shifted to a tougher stance since 2018.

Three New Zealand defense and national security documents published in August echo PM Kishida`s concerns in calling out regional neighbors as threats to “existing international rules and norms”, and explicitly naming “an increasingly powerful China”.

While Chris Luxon may have one eye firmly on APEC, his attendance as NZ Prime Minister will be down to a workable coalition agreement being struck in time for the November 17th summit.

He can of course be there as an observer, and attend bilateral discussions as PM-elect.

He’ll bring to those discussions a set of concerns shared with New Zealand’s democratic neighbours about the need to strengthen the rules-based order, and deter Chinese and Russian threats to that order.

One area where Luxon may be on the back foot is New Zealand`s commitment to defence.  This is not just a question of increased budget spend – though New Zealand lags conspicuously behind Australia in spending as a percentage of GDP.

PM Kishida too is pushing for a substantial increase in Japan’s defence expenditure.

He and other leaders will want to know that New Zealand`s ability to contribute to security in the South Pacific is robust. 

More pressing than budget spend however is the need to restore New Zealand’s defence forces to full operational capability, after being badly undermined by the distraction of managing COVID and the loss of critical personnel over the past three years.

The August Defence Policy and Strategy Statement acknowledges upfront that it does not “address capability investment questions.”  That is all for the Luxon government to address. 

How he responds will be followed with great interest by New Zealand`s friends in the region.

+Opinions expressed are those of the author +

- Asia Media Centre