Disagreeing with Amy Adams

Late last week, National Party finance spokesperson Amy Adams gave an interview to Bloomberg on the rather limp and half-hearted reforms underway to the monetary policy bits of the Reserve Bank Act.  The planned amendments are currently being considered by Parliament’s Finance and Expenditure Committee.

Adams isn’t too keen on the proposed amendments to the statutory goal of monetary policy.   I agree that the wording in the bill is poor, and suggests that there is room for semi-permanent tradeoffs that simply don’t exist.  But I don’t agree with the National Party’s specific concern

Adams said National has concerns about the dual mandate because the minister will have the power to dictate which goal the RBNZ prioritizes, which could result in monetary policy being looser than it should be.

Not to put too fine a point on it, but (a) elected politicians should determine the goals of the central bank, and (b) throughout most of the previous government’s term (including the whole time Amy Adams was a Cabinet minister) there is a reasonable case to be made that monetary policy was tighter than it should have been.  After all, inflation consistently undershot the target –  the 2 per cent focal point – her colleague Bill English had explicitly added to the Policy Targets Agreement.  Current inflation outcomes – core inflation still below 2 per cent –  are largely the outcome of choices made under the rules (the PTA) set by the previous National government.

More generally, it might be nice if the National Party could point to any advanced economy at present which is having problems with consistently too high inflation.  Australia perhaps, where the RBA has a statutory goal with some similarities to what the government is proposing?  But no, core inflation in Australia has also been undershooting their target for some years now.

But my bigger disagreement with Amy Adams is over what appears to be her bigger concern.  She doesn’t seem to like the proposed Monetary Policy Committee at all.  She says she isn’t opposed in principle to a committee but doesn’t like the specifics

New Zealand’s opposition party has voiced “serious concerns” about government reforms of the central bank, saying they could undermine its independence and turn it into a political tool.

“I would hate to see the Reserve Bank becoming a little bit like the U.S. Supreme Court, where it’s all about stacking it with your people,” National Party finance spokeswoman Amy Adams said in an interview Thursday in Wellington. “It’s too important for that.”

I don’t like the specifics either, but that is because they leave far too much power in the hands of the Governor (directly or indirectly) and give the Minister of Finance astonishingly little role in key appointments.

You will recall that:

  • while the Minister appoints the Governor, he can only appoint someone recommended by the Bank’s Board,
  • in future the Minister will be able to appoint the Deputy Governor, but again only someone recommended by the Bank’s Board,
  • the remaining members of the Monetary Policy Committee are also appointed by the Minister, but he can only appoint people recommended by the Bank’s Board, and
  • the Bank’s Board members are appointed to five year terms, so for most of a new government’s first term, typically a majority of the Board will have been appointed by the previous government (and thus, in the current situation, under a different mandate and legislation).

And, of course, the Reserve Bank Governor himself sits on the Reserve Bank Board.

The Minister can, of course, propose to the Board names of people he would like to see appointed –  perhaps he is already doing that, given that the selection process is well underway, even though the Act is not close to being passed (and if so, it feeds a non-transparency about the system that isn’t ideal – but he has no ability to appoint his own person to any of the direct decisionmaking roles (only – gradually –  Board members themselves).  And this is although the Minister will –  rightly, this being a democracy –  be held to account if Reserve Bank monetary policy choices/analysis turn out to have been poor.   And that most of the Board members have backgrounds that make them ill-suited to determining who our key monetary policy decisionmakers should be, suggesting that they will mostly defer to the fulltimer –  the Governor, who has long had too much barely trammelled power.

In a democracy, key appointments should be made directly by those whom we have elected.  They can take advice, can consult etc, but the choice – and the responsibility –  should lie with those whom we can toss out.  Under the Reserve Bank bill, that still won’t be the case.

Amy Adams worries –  in a totally overblown way –  about comparisons with the US Supreme Court.  On the one hand, perhaps she could turn her attentions to our own higher courts –  where the incumbent Attorney-General (a fully political Cabinet member) gets to appoint whoever he or she wants.   And on the other, perhaps she could show signs of actually understanding quite what (little) the Monetary Policy Committee –  as being established in the bill – will be able to influence.  The US Supreme Court isn’t controversial because the President nominates and the Senate confirms, but because far too much power has been given to the Supreme Court, covering almost every sphere of American life, and the members once appointed serve for life.  The comparison with the government’s proposed MPC is so overblown as to be laughable.

And it isn’t as if the National Party spokesperson can point to other countries where monetary policy committees have ended up created the sorts of problems she worries about here.  Especially not tame ones –  majority internals, inability for members to speak openly, short terms etc.   Take Australia, for example, where all the members of the Reserve Bank of Australia’s Board –  the monetary policy decisionmaking body – are appointed (unconstrained) by the Federal Treasurer.  Or the UK where most of the MPC members are appointed directly (unconstrained) by the Chancellor.  Or the US, where members of the Board of Governors (who serve on the FOMC) are appointed by the President, subject to the advice and consent of the Senate –  just like the Supreme Court, and yet not having taken the path Amy Adams worries about here (indeed, Trump quite recently nominated a technocrat who is a registered Democrat).   Perhaps Amy Adams has other problematic monetary policy committees in mind?  If so, perhaps she could let us in on her data?

The other area where Adams expresses concern is regarding the provision in the new bill for a nominee of the Secretary to the Treasury to serve as a non-voting participant in the MPC.

Treasury Secretary Gabriel Makhlouf will take the observer role and start attending RBNZ policy meetings from the end of this month.

“Treasury have wanted more control over the Reserve Bank since Adam played fullback for the apostles,” Adams said. “It also suits the government’s agenda. It’s in the government’s interest to be able to much more strongly dictate to the Reserve Bank what they should say about government policy and its effect on the economy.”

She said Treasury would effectively be “pushing the government line” in a room of policy makers appointed by the minister who “could be inclined to want to do the minister’s bidding.”

“That is an incredible weakening of the Reserve Bank’s independent and autonomous assessment” of government policy, Adams said.

Not quite sure about her biblical imagery (the story of Adam and the record of the apostles being quite widely separated in time), but even setting that to one side, is there anything to her concerns?

Having Treasury representatives on Monetary Policy Committees isn’t extremely common, but it isn’t unknown either.  In Australia, the Secretary to the Treasury is a voting member, while in both the UK and Japan (both systems overhauled in recent decades) there is a non-voting Treasury observer.  Perhaps Amy Adams can point to examples of how those systems have run into problems because of the Treasury participant?  But I suspect not.

This is one of those issues on which reasonable people can reach different views, while recognising that the final choice probably doesn’t make that much difference.  Personally, I’ve wavered on this one, but finally concluded that a non-voting Treasury observer could, on-balance, be a useful reform –  although I took that view in the context of also favouring a much more open and independent MPC, less under the thumb of an ambitious Governor.  But to suggest – on no evidence whatever –  that it  “is an incredible weakening of the Reserve Bank’s independent and autonomous assessment” of government policy” seems so overblown as to discredit any serious points Amy Adams wants to make about the legislation.  Remember, for example, that the “room full of policymakers” will mostly have been appointed by the Governor himself and his Board.  The Minister’s participation will typically be ceremonial and – to the extent it is more than that –  hidden from view.

Having said that, one transitional arrangement announced last week does concern me.  The Reserve Bank announced a few days ago that the Secretary to the Treasury himself (not a nominee) will from now on be invited to attend the monetary policy decision and deliberation meetings, in advance of the new legislation being passed and coming into effect.  I found this a little worrying on three counts:

  • first, this is a significant time commitment for one of our most senior public servants.  What won’t he be doing while he is sitting as a non-voting member of the Bank’s internal committees, at which the Governor finally takes an OCR view?   If you think he already spends too much time, say, cosying up to Beijing or promoting vapid schemes around “wellbeing budgets” and Living Standards Frameworks, you might think this distraction was net gain for public policy. But I don’t suppose his employers quite see it that way.  (As Makhlouf’s own term expires next year, it is not even as if he is going to be involved in the new committee on an ongoing basis),
  • second, the bill envisages a nominee of the Secretary to the Treasury serving on the MPC –  perhaps a Deputy Secretary responsible for macro policy or the Chief Economist (both of whom have currently have central banking backgrounds).  Makhouf, by contrast, has no evident expertise in macroeconomics or monetary policy, and
  • third, the bill does envisage a Treasury observer, but it also provides for several external voting members, who –  so we are told, although I don’t take it very seriously –  will play an important role in the new committee, including balancing out internal perspectives.  Bringing in the Secretary to the Treasury himself now –  months before the first externals appear (and the current “external advisers” do not attend Governing Committee meetings) –  does risk creating a climate in which the Treasury perspective and presence (even though formally non-voting) is prioritised over the externals.   That risk may be able to be managed, but it needs to be, including by the appointment of strong, capable, committed externals (and, as I’ve noted before, it is not clear why good people would seek the role).

Overall, this specific announcement was a mis-step.  It was probably good for the Governor, but what is good for the Governor typically won’t be good for New Zealand (nothing personal –  it is almost a precept of institutional design that the interests of the agent are often not that well aligned with those of the principal).

It is a shame that the National Party isn’t using the opportunity of the Reserve Bank Amendment Bill to push the case for a much more open, and democratically appointed and accountable, Reserve Bank.

 

Circling the wagons

Even fewer people than usual probably watched TVNZ’s Q&A programme on the Sunday evening of a long weekend (I didn’t either), but I hope many take the opportunity to download and watch the interview with Professor Anne-Marie Brady about Yikun Zhang –  initiator/organiser (or whatever) of the $100000 donation to the National Party –  the Chinese party-state’s United Front Work programme, and what New Zealand could or should do in response.   Perhaps equally worth watching –  for altogether different reasons – is the subsequent panel discussion.  I’ll come back to that.

Professor Brady was asked first about whether there was any evidence that Yikun Zhang is involved in United Front activities.  She was clear that his active involvement, both in the PRC and in New Zealand, is very well-documented in Chinese language sources (I touched on this last week, but for anyone who hasn’t read it I can also recommend this article by Branko Marcetic on The Spinoff,  which is full of useful links).  She was also careful to distinguish between welcoming, even encouraging, participation of new citizens, of whatever origin, in our political processes, and drawing a line when those activities are led by people with close ties to foreign governments, especially ones with deliberate and active strategies to exert influence over, or in, other countries.   She argued that we need to set boundaries around “inappropriate behaviour”.

Reprising arguments she has made consistently in public over the last year or so she highlighted two strands of the PRC’s United Front activities in countries like New Zealand:

  • neutralising the Chinese diaspora, including the Chinese language media and community associations, and
  • winning support, or acquiescence, for the PRC’s foreign policy agenda, including the place of the Belt and Road Initiative (ill-defined as it is), in the pursuit of a China-centred global order.

Asked what we could, or should do, Professor Brady listed these items:

  • a careful official investigation of the extent and nature of PRC influence activities in New Zealand (“as Australia, the US, and now the UK have done”)
  • “obviously” reform our election finance laws,
  • stand down periods for former MPs and minister (before taking up roles which might be seen as being in the gift of PRC entities –  or, presumably, other foreign powers),
  • look more carefully at whether MPs can lawfully be members of foreign political parties (the strong suggestion being that Jian Yang in still a member of the CCP),
  • take steps to help restore the autonomy of the New Zealand Chinese community, protect their freedoms, and promote (the restoration  of) an indigenous and diverse Chinese language media here.

She noted that the Five Eyes grouping had recently agreed on a programme to counter foreign influence, suggesting that our authorities will be doing something already.  (The article at that link is interesting reading, but when I read it last week my reaction was to be sceptical it meant anything much in the New Zealand context –  nothing suggesting any change of emphasis having been heard from the mouths of any New Zealand ministers or officials.)

Professor Brady noted that the political “bloodbath” we saw last week was an opportunity for the major parties to come together –  since they are being targeted by the PRC –  and devise better ways to build a constructive, but bounded, relationship with the PRC.

In concluding the interview, Brady was asked whether she had any concerns herself about speaking out.  She noted that it was, in law, her duty as an academic to do so, and noted that although there was some personal cost, to her and her family, she saw these issues as so important, to the integrity of our system, that she is willing to stand up and speak out, expressing the wish that more people would do so.   The still unsolved burglary of her house and office wasn’t explicitly referred to, but was a clear subtext.

The contrast between Professor Brady and most of her academic colleagues is pretty striking.  Our multi-university Contemporary China Research Centre –  chaired by Tony Browne (of the Confucius Institutes and other institutional arrangements with the Chinese Communist Party), and with representatives of MFAT, MBIE, NZTE etc on its Advisory Board – seems, from its website, more focused on dialogues with official visitors from the PRC  and the forthcoming year of Chinese tourism.  Not one of its key people has been heard from in the media and public debate on these issues, whether last week or in recent months.  In many respects, they seem little better than our politicians –  scared of their own shadows and reluctant to say anything lest visas, access, (New Zealand government) funding or whatever are jeopardised.   Any sense of that “critic and conscience” role, that the Education Act rather grandiloquently talks of for academics, seems dulled at best, or lost altogether.

But what of the panel discussion?  There was Bryce Edwards the political scientist, and three old tuskers from the big parties: former National Party president Michelle Boag, former National Party minister Wayne Mapp, and former Labour party president Mike Williams.

Bryce Edwards argued that out of last week’s maelstrom the Chinese influence/donations issue was the one that had attracted the least attention so far, and needed to have more.  The interviewer suggested something like a select committee inquiry, which Edwards seemed to think had merit, adding that there was no chance of any party in Parliament now picking up the issue.

And as if to prove him right, the old guard  – the other panellists –  rushed in to play down the issue.   Wayne Mapp went first, denying that there is any PRC influence in New Zealand politics, noting that he had never seen any evidence, and suggesting that having been Minister of Defence he would have seen it if it was there (he went on to suggest that the PRC issue was mostly one about the great powers, and the extent to which we were in some sense caught between them).   Michelle Boag chipped in to suggest that if there was a PRC influence strategy it would have to be counted a miserable failure –  there was, after all, only one “Chinese MP” (as if the fact that that one MP was a former PRC intelligence official, Communist Party member, actively associated with the PRC Embassy, and never ever heard to say anything critical about the PRC wasn’t in its own small way evidence of influence).  Mike Williams declared that he mostly “agreed with Wayne”.

It was sad, but it was worse than that.   People who are smart enough to know better, playing distraction (totally ignoring, for example, the way in which PRC activities and attitudes are compromising the rights and freedoms of ethnic Chinese New Zealanders who aren’t at all sympathetic to Beijing and its agenda) in defence of what has become the established way of doing things in New Zealand (both main parties).   It trivialises a serious domestic issue –  including the utter reluctance of any of our senior politicians to say anything that might possible disconcert Beijing and the willingness to court, and take money from, people who closely associate with one of the more evil regimes on the planet – ignores the international nature and reach of the PRC programme, completely discounts the threats to other peaceful and democratic countries in east Asia, let alone the growing repression of many of the PRC’s own populations.   People like those three know better, but choose not to see, or to care.  They actively choose to turn a blind eye to the character of the regime and its activities –  whether here, at home, or in the rest of the world.  Rather like their own current party leaders –  Nigel Haworth and Peter Goodfellow (united in perhaps nothing else but (a) the defence of the way things are done and (b) the celebration of Xi Jinping), Jacinda Ardern and Simon Bridges (and John Key, Bill English, Phil Goff and Andrew Little before them).

And this, of course, is where I part company to some extent from Anne-Marie Brady. At least in her public comments she seems to assume that our political leaders have an interest in doing the right thing, and only need to have specific suggestions made to them.  I see zero evidence of that.  I’m quite prepared to believe that both parties value the defence and intelligence relationship with the US and Australia, and will do the minimum to maintain it – and the rest of Five Eyes will cut us lots of slack, because it would be a PR coup for Beijing if it were ever to come about that we –  small as we are –  were no longer part of that partnership.

But there is no sign of any interest in doing anything about the domestic situation –  whether as regards party donations, a willingness to speak openly against external aggression or domestic human rights abuses, or about the situation of the ethnic Chinese New Zealanders who want to be free of Beijing and its abuses.  No sign last year (all parties kept quiet about Jian Yang), no sign this year (National and Labour combine to honour Yikun Zhang for what appears to be, in effect, services to the PRC), and no sign now.   This isn’t a case of good men and women being misled, and people like Professor Brady drawing things to their attention for the first time.  It is a system run by people who have allowed it, knowingly (but probably gradually and subtly), to be corrupted.    Labour and National (and ACT) seem as bad as each other, two sides the same coin.  New Zealand First is arguably worse, because it occasionally talks a good talk in Opposition, but then gets into government and just goes along.  And as for the Greens –  who don’t seemed to be reliant on donations from these sources –  and who sometimes in past appeared willing to bring a moral dimension to politics, where are they?  In government I guess, and perhaps strongly advised –  directly or indirectly –  by MFAT not to jeopardise the tourism year, or the “FTA” renegotiations.  If you just go along, you make yourself complicit.

(It was hard not to utter a wry chuckle at the suggestion of a select committee inquiry into such matters.  After all, the Justice select committee has its triennial inquiry into the election underway at present. But who chairs the Justice committee?  Why, Labour MP Raymond Huo, who –  as Professor Brady has documented –  is very actively engaged with various United Front organisations, who organised the event at which the very largest mainland donation to Phil Goff’s mayoral campaign was arranged.  If anything is ever going to be done, the stables –  party organisation and Parliament – need cleansing first.)

Wrapping up this post, I would draw your attention to a few things I saw over the weekend.

First, a reader sent me this (translated) extract from an essay/article by Auckland-based Chinese activist and dissident Chen Weijian which “examined how Zhang Yikun achieved his political promotion in three years in China and in the international Chinese community as well as his business achievements in NZ”.

The photo below was taken in Beijing on 30 Aug 2018 where Zhikun Zhang visited the Chaoshan (TeoChew or Chaozhou) Association  of Beijing along with the heads of other Chaoshan associations of the USA, Canada, Thailand etc.
永远.png
The poster on the wall they are reading is titled of ” Always go with the Party (the Communist Party).
Zhikun Zhang who joined the PLA in 1990,  the next year after the CCP sent troops to shoot unarmed Chinese young students in Tiananmen Square on 4 June 1989.
 After 29 years, on the same day of 4 June, the former PLA member was awarded of MNZM, an award to a person who ” in any field of endeavour, have rendered meritorious service to the Crown and nation or who have become distinguished by their eminence, talents, contributions or other merits”,[1] to recognise outstanding service to the Crown and people of New Zealand in a civil or military capacity.
 
Within only three months after receiving this honor, he was recognized by the CCP for his devotion to this most evilest political Party: always go with the party.
And this is the man our Prime Minister is photographed with, our Opposition leader courts, and Jami-Lee Ross, Sarah Dowie, Paula Bennett, Andrew Little, Phil Goff, Peter Goodfellow, Nigel Haworth-  and probably plenty more – are happy to associate with, happy to pursue and take donations he arranges, and so on.
How can anyone suppose his political activities in New Zealand are primarily about the best interests of New Zealanders?
“Always the Party” –  source of so much evil, past and present.

And then there are the Xinjiang concentration camps, that (all) our politicians are studiedly silent on.  I thought this thread was pretty telling (drawing on the point I’ve made here previously that in many important respects the PRC party-state is the late 1930s party-state Germany of our era)

This is regime Yikun Zhang associates with and supports.

Does this stuff not bother Jacinda Ardern or Simon Bridges at all?

Another reader sent me this over the weekend.

PRESS RELEASE – Tuesday 16 October 2018, London, UK.
Independent people’s tribunal is established to investigate forced organ harvesting
in China.

An independent tribunal to inquire into forced organ harvesting from prisoners of conscience in China has been established as an initiative of the International Coalition to End Transplant Abuse in China (ETAC).

The Tribunal will investigate if any criminal offences have been committed by state or state-approved bodies / organisations in China concerning forced organ harvesting.

You can read (a lot) more about this here and (more generally) here.   For any sceptical that there is an issue here, I’d suggest listening to this two-part BBC World Service investigation, in which they walk carefully through the reasons to strongly suspect that the PRC is killing prisoners of conscience (probably mostly Falun Gong, but not exclusively) to be able to undertake the huge number of transplants occurring in China –  for Chinese and foreigners, pretty much on demand (subject to payment) –  each year, in a culture averse to voluntary organ donation.

This is the regime Yikun Zhang associates with and supports.

While our politicians do and say nothing.

And finally, the Herald ran this cartoon on Saturday

ventriloquist

It is good that they are airing the issue.  But it still puts the responsibility on Beijing, and not where it actually lies, with our political leaders and heads of political parties.  Beijing does not force them to do or say (or not say) anything. They are moral agents, and they freely choose to allow the interests of New Zealand and New Zealanders to be compromised by their willing pursuit of, and association with, money rather strongly tinged with PRC political agendas and interests.

I was dipping into the famous Francis Fukayama book The End of History and the Last Man yesterday.   In his introduction he includes this line

For democracy to work, citizens need to develop an irrational pride in their own democratic institutions

That sounds generally right –  the fierce attachment that creates a willingness to defend something when it is threatened.  Given the way our political leaders are debauching New Zealand institutions at present, any such pride almost has to be irrational.  But perhaps there is a potential leader somewhere who will help restore our system?  Bob Jones played that role –  as regards the economic mess New Zealand had gotten into – in 1983/84.  The present challenge is greater, because all the main parties are equally compromised.  But so is the need for action.

UPDATE: Late this aftermoon today I was rung by Roy Morgan Research and participated in a quite detailed survey about trade, defence, values etc issues as regards New Zealand and each of Australia, India, Japan, China, and the United States.   Whoever was behind the survey (the Asia NZ Foundation perhaps?) I hope we eventually get to see the results.

 

 

 

The void where an economic strategy should be

During the week, rather lost amid the Jami-Lee Ross claims and counter-claims (how did a major party have the indecency to keep on rapidly promoting the man when their hierarchy clear knew at least a couple of years ago –  and kept quiet about – his character?  Unless of course, the main required quality for a National MP is now fundraising –  often of the most questionable kind –  not character or legislative/policy skills) the Prime Minister announced the membership of her Business Advisory Council.

This is the group

Prime Minister’s Business Advisory Council members

Christopher Luxon (Chair)                  Air New Zealand
Peter Beck                                                Rocket Lab
Barbara Chapman                                 Professional director
Jacqui Coombes                                   Bunnings
Anna Curzon                                           Xero
Andrew Grant                                        McKinsey & Company
Miles Hurrell                                          Fonterra
Bailey Mackey                                        Pango Productions
David McLean                                        Westpac
Joc O’Donnell                                          HW Richardson
Gretta Stephens                                     Bluescope/NZ Steel
Rachel Taulelei                                      Kono
Fraser Whineray                                   Mercury

And the terms of reference are here.

Here is how the Prime Minister’s statement begins

Prime Minister Jacinda Ardern has announced a diverse cross section of leaders from the business community will form her Business Advisory Council to advise the Coalition Government as it works on building a productive, sustainable and inclusive economy that improves the wellbeing of New Zealanders.

And here is how she was talking a couple of months ago when the Council was first foreshadowed.

“The Council will provide a forum for business leaders to advise me and the Government and to join us in taking the lead on some of the important areas of reform the Government is undertaking,” said Jacinda Ardern.

“The Council will report to me on opportunities it sees and identify emerging challenges. It will bring new ideas to the table on how we can scale up New Zealand businesses and grow our export led wealth.

“I want to work closely with, and be advised by, senior business leaders who take a helicopter view of our economy, who are long term strategic thinkers who have the time and energy to lead key aspects of our economic agenda.

Perhaps all the people on her group are very able at what they do.  Perhaps many are even good at thinking about the implications for their own businesses of specific technical advice.

But not one of them seems to have the background or skill set that suggests they have anything more to add to fixing New Zealand’s woeful economic underperformance –  over multiple decades –  than, say, the first 100 people in the Wellington phone book.

Drawing on old article from Paul Krugman, when this Council was first announced I wrote a post about how a company is not a country, and the skills that equip someone to run a company bear little or no relationship to those involved in identifying the economic failings, and appropriate remedies, for a country.

Expertise on economic management, and the particular confounding challenges the New Zealand economy faces, just aren’t the sort of thing that tends to be fostered in the course of a corporate career.   Many of these people might have been superb marketers, exceptional operations managers, corporate finance whizzes, smooth operators around the edges of regulation and the tax system, and have risen to assume overall responsibility for (by New Zealand standards) fairly large organisations. They are absolutely vital skills, and business roles done well are a big part of how, in pursuing the interests of shareholders, society is also made better off.   But those skills bear no resemblance to the issues involved in addressing long-term economic underperformance.  For a start, the things businesses have to take as given are precisely the sorts of things governments often can vary, and (as Krugman eloquently notes) the sorts of constraints even a large business faces are very different from those an entire economy faces.   And so on.

It is great that these individuals care about New Zealand’s economic performance, but there is no particular reason to believe that in general they will have more useful perspectives to offer than the average moderately-educated voter chosen from the phone book at random.  Running a business no more equips you to provide useful advice on economic policy more generally (as distinct perhaps from specific bits around your industry) than it does to, in Krugman’s words, write great poetry or make military strategy.

What isn’t clear is whether the Prime Minister genuinely expects this group to make a difference –  successfully identifying the key issues governments need to address –  or is simply buying a bit of time and goodwill with the big end of town in the hope that something will turn up.   One interpretation would suggest extreme naivete and the other a quite cynical approach.  Take your pick which you think is worse.  Perhaps it is just wishful thinking?  But whatever the answer, a year into the government’s three year term, there is no economic strategy, nothing that anyone credibly thinks will lift our long-term productivity underperformance, successfully reorient the economy outwards.    For a short time perhaps any goodwill around the creation of this council will paper over the void…..but a void it is.

Meanwhile,

  • the level of productivity is flat or even falling,
  • the export and import shares of GDP have been falling,
  • in per capita terms, the tradable sector of the economy hasn’t grown at all this century.
  • (and if we want to talk “inclusion” there is no sign of a structural fix to the housing o or urban land supply market),
  • while we are left with a structurally overvalued real exchange rate and the highest average real interest rates in the OECD.

 

What’s happening with immigration?

It is a serious question.  MBIE’s immigration data are pretty hopelessly poor –  not published in readily usable formats, not seasonally adjusted etc.   The Migration Trends and Outlook publication for 2017/18 is still not available.  I know they have plans afoot to improve things, but it is past time they did: immigration, after all, being one of the major instruments of economic (and social) policy in New Zealand.

But from time to time, I have a look at what they do publish –  huge tables in small fonts, from which one has to transcribe numbers if you want to do anything with them.  And the other day I had a look at the latest residence approvals data, and was quite surprised by what I found.

This chart shows the number of people approved for residence in each June year.  The 2018/18 number is the annualised number based on September quarter actual data.

residence 1

The “target” rate of approvals was around 47500 per annum for a long time, lowered slightly to something centred on 45000 per annum late in the previous government’s term.  As you can see, give or take 5000 or so people, they more or less meet that target. And so last year’s drop took me by surprise.  I didn’t make anything much of it then, when the numbers finally came to light: after all, announced policy hadn’t changed much, and perhaps it was just noise.

But the early data for the current year suggest something more than noise.  If the September quarter rate of approvals was kept up only about 33000 residence approvals would be granted in 2018/19.  Perhaps there is some seasonality in the series –  did I mention that MBIE don’t publish seasonally adjusted data, or make the raw data available in a form in which I could see for myself? –  but if not, it would represent quite an undershoot relative to the official target.

I don’t usually pay much attention to the nationality of those getting residence –  my arguments about immigration are mostly macroeconomic in nature, indifferent as to whether the migrants come from Bangalore, Birmingham, Brisbane or Beijing.  But as I’d been writing about the PRC and our political parties, out of curiosity I checked the residence approvals granted to people from the People’s Republic.  And finding those interesting, I looked a bit further.

residence 2

That (the blue line) is a staggering drop-off in approvals from China.   Again, perhaps there is some seasonality –  but it isn’t obvious why there should be, given that most residence visas are granted to people already in New Zealand, initially on other visas.

The falls in approvals from India and the Philippines are also pretty large.  And yet clearly the fall isn’t across the board. So far this year approvals from the UK are running at about the same (annualised) rate as last year (as were, more or less, when I checked, those from South Africa another significant source country, and those –  much fewer –  from Singapore and Taiwan).

I’m puzzled by what is going on.  I’d taken the new government at its word when it swore that it wasn’t changing the residence approvals target, but if not it looks as if something is going on that is markedly reducing the number of eligible people (especially from China and India) applying. (In another of the huge, not user-friendly, documents MBIE puts out, it looks as though there are also fewer applications in hand now than usual.) Perhaps it has something to do with the earlier wave of foreign students studying here, but although there has been a significant drop in numbers from India those from China haven’t changed much.  Perhaps there is something in the publicity around foreign investment restrictions –  which don’t of course apply to those who have residence?

I’m puzzled.  And, of course, I’ve spent years calling for a reduction in the residence approvals target, so in one sense I’m not unhappy to see the reduced numbers.  But I also strongly favour open and transparent policy, and there has been nothing announced suggesting that we should have been expecting –  or that the government was seeking –  such a large reduction in the number of residence approvals being granted.

If any officials or industry experts have informed insights on what is going on the comments section is open.

 

Thoughts prompted by the tape

What to take from Jami-Lee Ross’s tape of his conversation with his (then) boss?  I’m not interested in Bridges’s vulgar and insulting talk about his own MPs (although being, like him, a child of a Baptist manse, I can only surmise that he wasn’t raised to use that sort of language) or even that interested in the minutiae of whether and how donations are recorded and disclosed, including to the party hierarchy itself (significant as those issues probably are generally).

As compared to the situation a few days ago, we know that there was a $100000 donation to the National Party, initiated apparently (whatever final form the lesser components took) by Auckland businessman Yikun Zhang who (despite apparently coming here as a poor former PLA soldier 18 years ago) doesn’t speak English.   The first person I asked the other day about Yikun Zhang responded along the lines of “bad news”, and the more I read around the various sources which various Chinese speaking commentators have highlighted, the truer that summary description appears to be.

Several things struck me about the Bridges-Ross conversation:

  • the first was about how normal both of them  (one the leader, one the 8th ranked front bench MP) seemed to regard this sort of tawdry business.  Sure, fundraising is a vital function of a political party, but it is a far cry from Barry Gustafson’s description in his 50th anniversary history of the National Party: “an unwritten but scrupulously observed rule has always been that no MP should be placed in the position of seeking, receiving, or even being made aware of money collected on behalf of the party” (p201).   Perhaps (although I don’t know) National is no worse on this score than other parties, but it is a pretty bad situation that has been allowed to develop –  or, more to the point, actively fostered.
  • the second was about how utterly unbothered they were (leader and no. 8) about the Jian Yang situation.  Sitting in your caucus is a former PLA intelligence official, Communist Party member, close asociate of the PRC Embassy, someone who acknowledges misrepresenting his background when he came to New Zealand, and someone who even a former diplomat –  who knows him well – says he is careful about what he says in front of the man.  As leader, perhaps you are under pressure to defend the man publicly.  But perhaps, a very generous –  naive – observer might have thought, after last year’s fuss had died down, and some face saved, the party would be looking for a way to quietly retire, and replace, Jian Yang going into the next election.    But when Simon Bridges is caught talking about his colleagues, we hear about the unfortunate Maureen Pugh, about those (Finlayson, Wagner and Carter) everyone assumes would go before long,  but the only reference to “Chinese MPs” is to adding another one.  Jian Yang’s continued presence seems just taken for granted: none of that background stuff apparently bothering either of them in the slightest.  Lacking any decency themselves –  and not facing any uproar from other parties –  Jian Yang is presumably much too valuable in tapping the potential donors.
  • third was the utterly transactional way in which they approached the donation Yikun Zhang proferred (and presumably arranged) and the bid for another ethnic Chinese National MP.

    Ross: Yeah they’re good people. Now there’s no catch or anything to it. You may recall at the dinner they did discuss candidacy, and another Chinese candidate.

    Bridges: Two MPs, yeah.

    Ross: Colin Zhang? The younger one, he’s put his name in for Candidates’ College and so I assume he’ll get through and we’ll make some decisions as a Party further down the track as to what we want to do with candidates.

    Bridges: I mean, it’s like all these things, it’s bloody hard. You’ve only got so much space. Depends where we’re polling, you know? All that sort of thing…two Chinese would be nice, but would it be one Chinese or one Filipino? What do we do?

    Ross: Two Chinese would be more valuable than two Indians, I have to say.

    It was fine for Ross to say “there’s no catch or anything to it”, but everyone involved knows  how reciprocity works.  It is about an exchange of favours over time.  When, in the same conversation a wealthy businessman talks of a big donation and proposes that one of his staff might get a winnable place on National’s list, and they take the donation anyway, there is a quid pro quo, in expectancy, if not in some written contract.  No sense presumably, either at the earlier function or in this phone call of anything improper or unethical.  It is clearly just the way the National Party now does things.

But bad –  really bad –  as all this is, I think what disgusts me is the utter indifference of either Bridges or Ross (and to the extent there is ongoing silence from elsewhere in the party, or anywhere else in the political spectrum, the rest of our political class) to the character and interests of the man they were dealing with.  Not at a basic interpersonal level –  frankly it sounds hard not to be a nicer person than, say, Jami-Lee Ross –  but as someone actively and on an ongoing basis fully involved with the PRC government and its activities, in China and abroad.   And this seems to be the bit that most of our mainstream media is either missing or downplaying.

If we are going to have private funding of political parties (which I happen still to favour), the issue isn’t whether immigrants of whatever ethnicity or natives (of whatever ethnicity) should be able to donate to political parties.  It is much more specific than that, about whether political parties (openly or secretly) should be taking substantial sums of money –  indeed, actively pursuing it –  from people who they either know, or really should know, are in league with or in active support of hostile or egregiously awful foreign powers.  From people over whom the hostile foreign power has leverage, direct or indirect.  And when the egregiously awful foreign power has a track record of using threats, and economic leverage, to buy silence (or worse).    And with the question in the background: in what ways are we tailoring what we do or say –  party presidents, for example, praising the egregiously awful regime and its leader – to keep that donor flow going.

The issues could arise from somone in league with any egregiously awful foreign power but – not having many North Korean migrants –  the PRC is the one we in New Zealand need to be most worried about right now.  At some other time, it might have been the Soviet Union, Nazi Germany, or maybe even apartheid South Africa.  In the 1980s, emigre French business people, with close links to the DSGE, donating large amounts to our politicians, would rightly have attracted extreme disapproval.  There never were such donations, but today both main parties enrich themselves from donors with close ties to Beijing.

I noticed that Stephen Jacobi, the (NZ) taxpayer-funded lobbyist for keeping New Zealanders in line on things Beijing, was out today suggesting that perhaps state funding of political parties might be desirable after all.  His argument was a bit different from most though.

I haven’t seen anyone suggest that Yikun Zhang shouldn’t allowed to donate, or even to talk to politicians.  I have seen, and made, suggestions that our political parties shouldn’t touch his money –  or that channelled through bodies he runs or influences –  with a barge pole.   The suggestion is that the man is being “vilified”, but all I’ve seen so far is straight reportage –  often drawn directly from bodies he is involved on, or the Chinese language media – about his involvements and associations.  At least in Chinese –  he not speaking English –  he seems rather proud of and unapologetic for those involvements.

For those with Financial Times access, there is a nice article here which captures some of his close ongoing official involvement with the PRC government.  In a formal sense, he seems to have much stronger ongoing ties to the regime than (for example) Jian Yang does.   For others, and anyone interested, I suggest keeping an eye on these two Twitter accounts (both have been posting copious snippets of Yikun Zhang’s associations here and in the PRC): @geoff_p-wade and @jichanglulu.    As Wade (an Australian) urges

Reading the local media coverage, it strikes me that most of the local media is still reluctant to engage with the nature of the PRC United Front programme/agenda.   These aren’t just people who happen to have a few incidental ties to the homeland. Their organisations aren’t just neutral bodies.    The PRC is widely recognised as having an active agenda of influence –  and to say so isn’t vilification, but analysis, description, and reading.  As I noted, many of the links aren’t hard to find, at least for those with the language skills (to whom the rest of us can be grateful).   Some of it is even just pictures

This afternoon, for the first time in a while, I went back and read the whole of Anne-Marie Brady’s Magic Weapons paper, which has had so much attention (arguably more abroad than here, given the studied disinterest of our political leadership) since it was released last September.

Here are a few relevant snippets

United Front Work Department personnel often operate under diplomatic cover as members of the Ministry of Foreign Affairs, using this role to guide united front activities outside China, working with politicians and other high profile individuals, Chinese community associations, and student associations, and sponsoring Chinese language, media, and cultural activities. The Party has a long tradition of party and government personnel “double-hatting”; holding roles within multiple agencies. 17 Chinese consulates and embassies relay instructions to Chinese community groups and the Chinese language media and they host visits of high-level CCP delegations coming to meet with local overseas Chinese groups. The leaders of the various China-connected overseas Chinese associations in each country are regularly invited to China to update them on current government policies.

Yikun Zhang appears to have been on such missions regularly, and he (and the acolyte he wants to put into Parliament) are apparently in the PRC now (hosting the mayor of Southland).

And this longer piece

1. “Bring together the hearts and the power of the overseas Chinese”  Xi Jinping’s ambitious strategy to harness the overseas Chinese population for the CCP’s current economic and political agenda, builds on existing practices and then takes it to a new level of ambition.

Agencies: State Council Overseas Chinese Affairs Office, CCP United Front Work Department, Ministry of Foreign Affairs, Ministry of State Security, PLA Joint Staff Headquarters’ Third Department, and other relevant organs.

Policies:

• Monitor the local long term Chinese community via community organizations (侨务社团工作); establish Overseas Chinese Service Centres (海外华侨华人互助中 心) to coordinate this work, cherry pick which groups to work with.

• Sponsor and support the emergence of new united front organizations to represent the overseas Chinese, recognizing that they are a diverse group and flexibility is required to establish a positive working relationship with them. Avoid directly interfering in overseas Chinese community affairs unless there is a situation that directly affects China’s political interests,….

• Unite the ethnic Chinese communities through nurturing and subsidizing authorized Chinese cultural activities.

• Supervise Chinese students and visiting scholars through the united front organization the Chinese Student and Scholars Association (中国学生学者联合会).

• Encourage influential figures within the overseas Chinese community who are acceptable to the PRC government to become proactive in helping shape ethnic Chinese public opinion on political matters.

• Encourage wealthy overseas Chinese who are politically acceptable to the PRC government to subsidize activities which support China’s political agenda.

• Draw on China’s agents and informers abroad to enhance China’s political influence.

• Encourage political engagement of the overseas Chinese community (华人参 政). This policy encourages overseas Chinese who are acceptable to the PRC government to become involved in politics in their host countries as candidates who, if elected, will be able to act to promote China’s interests abroad; and encourages China’s allies to build relations with non-Chinese pro-CCP government foreign political figures, to offer donations to foreign political parties, and to mobilize public opinion via Chinese language social media; so as to promote the PRC’s economic and political agenda abroad.

It doesn’t seem unreasonable to wonder whether the Chao Shan General Association –  so much in the media in recent days as one of Yikun Zhang’s key involvements –  is not one of those “new United Front organisations”; able to attract many key figures of the New Zealand political establishment to its functions.

Political donations aren’t the whole story by any means.  They are simply the bit brought into focus, almost incidentally, in Jami-Lee Ross’s revelations of the questionable activities he was, apparently, a leading figure in.  The other half of the story is, of course, trade.  The PRC has a now-established track record of using economic coercion to attempt to silence any government that ever takes a stand or utters more than the meekest and mildest concerns.  As I’ve noted here before, most of what New Zealand firms export to the PRC is fairly homogenous commodities which if not sold to China would be sold somewhere else (someone else in turn selling to China).  In other areas –  notably tourism and export education –  there are greatly vulnerabilities. But no doubt representatives of all these industries also bend the ears of our political leaders, providing them another excuse for staying silent –  or worse, gushing in praise –  of one of the more heinous (and getting worse) regimes on the planet.   Perhaps it is really true that even without the donations, the politicians (all of them) would still lack any willingness to speak out, but the donor flow –  whether direct or through charity auctions – seems likely to reinforce the supine shameful state of New Zealand political leaders as regards the PRC.

The situation needs to change, but not one person on the New Zealand political scene offers any hope of making it happen.  Jami-Lee Ross probably only wanted to be at the top table making the “sellout” of New Zealand longer-term interests and values happen his way.  I did a media interview yesterday about some of these issues, and was asked about the potential cost of making a stand –  even just separating ourselves from Beijing-affiliated ethnic Chinese money.  As I noted to the interviewer, the only real test of what you value is what you are willing to sacrifice  –  pay a price –  for.  On the evidence to date, the integrity of our political system –  let alone the freedoms of other democratic states in east Asia –  clearly isn’t one of those things for the current crop of politicians, from any party.

Bernard Hickey has a nice article on some of these issues at Newsroom.  I agree with most of what he says, and commend it to your attention.   Of the Prime Minister’s responsibility he writes

Prime Minister Jacinda Ardern has been conspicuous in her lack of comment on Jian Yang and on the role of Chinese influence in New Zealand politics. She has also not criticised China directly over its South China Sea incursions or the persecution of minorities in China.

She should draw a line under New Zealand’s acquiescence to China and review the transparency of the Electoral Finance Act in relation to overseas influence. She should call for Jian Yang to resign from Parliament at the least, and follow the example of her Australian counterparts by asking for an official inquiry into China’s influence in politics here.

The Prime Minister talked a good game about human rights and sovereignty at the United Nations recently. How serious is she when her own party’s finances may be affected by pushing back against China?

Not talking, as the PRC Embassy reported her recently, of strengthening ties between the Labour Party and Communist Party of China.

And, finally, Anne-Marie Brady has re-linked to a couple of pieces she wrote late last year (here and here) on what can and should be done, including by the new government.  I will always defer to her expertise on the nature of the PRC programmes and interventions, although in thinking about policy responses, she probably put relatively more emphasis on national security issues, (while –  charitably? – presuming governments will want to do something serious), while I tend to emphasise the problems that lie within our own political processes.  In my view, it isn’t that people don’t know what could be done, rather that our politicians simply don’t want to do anything, or be seen to express serious concerns.    In that sense, the bigger problem –  the one we could control but refuse to –  lies here, not in Beijing (evil states will do what evil states do, including suborning the locals, encouraging the mindset of a tributary. Our political processes –  in a state far away from Beijing, and simply not that reliant on them for anything much –  make choices whether to fall into line, or whether to stand up.   Of course, one test may loom quite soon: what, if anything, will our government be prepared to do if is found that PRC agents were responsible for the break-ins at Anne-Marie Brady’s house and office.  Will we even be told?

 

 

What to make of the inflation data

The CPI data were released a couple of days ago.   There was, inevitably, a lot of commentary around higher petrol prices, although most commentators noted that the Reserve Bank was likely to “look through” what we are seeing, and not adjust monetary policy just because of higher petrol prices.  That would, indeed, be consistent with the Bank’s mandate –  and practice –  over almost thirty years of inflation targeting.

One can have all sorts of debates about what sorts of effects should be “looked through”.  We used to have lengthy discussions attempting to distinguish between petrol price effects themselves, indirect effects (eg higher airfares or courier costs directly resulting from higher fuel prices) and second-round effects –  the real worry, if changes in oil/petrol prices came to affect the entire inflation process, including medium-term expectations of inflation.   Those risks were real, and realised, back in the 1970s oil shocks, and that set the scene for much of the subsequent discussion and precautionary debate.

SNZ only has a CPI ex-petrol series back to 1999.  In this chart, I’ve shown the headline CPI inflation rate, the CPI inflation rate ex-petrol, and the Reserve Bank’s preferred core inflation measure, the sectoral factor model.

petrol price inflation

I’ve highlighted four episodes in which petrol price inflation was much higher than overall CPI inflation, and one (quite recent) when it was much lower.

In the first of those episodes –  around 2000 –  the surge in petrol prices coincided with quite a lift in core inflation.  Bear in mind that the economy was recovering from the brief 1998 recession, and the exchange rate had fallen sharply.

In the second episode –  2004 and 05 – the surge in petrol price inflation coincided with no change in core inflation.

In the next episodes –  2008 and 2010 –  the surge in petrol price inflation coincided with a fall in core inflation.  In the 2008, the Reserve Bank explicitly recognised some of this at the time, and talked of scope to cut the OCR soon, despite the high headline inflation.

And in the recent episode when petrol price inflation was very low, there was no fall in core inflation –  if you look hard enough, it may actually have increased very slightly.

There is talk that, if oil prices persist, headline inflation could get as high as 2.5 per cent before too long.  The experience of the last couple of decades suggests that will tell us nothing useful about underlying/core inflation trends, or about the appropriate stance of monetary policy.  And the preferred core inflation measure remains below the target midpoint, as it has been for almost a decade now.

Here are a couple of other series worth looking at.

other infl measures

The blue line is a fairly traditional sort of exclusions-based core inflation measure: excluding volatile items (food and fuel) and (administered) government charges (altho not tobacco taxes), and the orange line is non-tradables inflation excluding government charges and cigarette and tobacco taxes (which, you will recall, have been raised relentlessly each year, in a political non-market process).  There is no sign in either of these series of underlying inflation moving higher in the last year or two.  Core non-tradables inflation of under 2.5 per cent is not consistent, typically, with core (overall) inflation being at 2 per cent.

Having said all that the financial markets appear to have taken a slightly different view of this week’s inflation data.  Here is a chart of the breakeven inflation rate from the government bond market –  the difference, in this case, between the 10 year conventional bond rate and the 2030 indexed bond (real) rate.  I’ve highlighted the change since the inflation data were released.

IIBs oct 18 2018

At 1.4 per cent, the gap is still miles off the 2 per cent target midpoint (or than the comparable numbers in the US), but the latest change does look as if it is worth paying at least a bit of heed to.  Perhaps it will dissipate over the next few weeks, but if not it wouldn’t be a cause for concern, but some mild consolation that –  after all these years –  there was some sign of market implied inflation expectations edging a little closer to target.

What about a longer run of data?   We only have a scattering of inflation indexed bonds, in this case one maturing in September 2025 and one maturing in September 2030.  The 2030 bond was first introduced five years ago this month.    Creating a rough constant maturity 12 year indexed bond series –  the 2025 bond had 12 years to run in 2013, and the 2030 one has 12 years to run now –  and subtracting the result from the Reserve Bank’s 10 year conventional bond series produces this (rough and ready) chart.

iib constant maturity breakeve

A clear rebound from the lows of 2016, but implied breakeven inflation rates still much lower than they were five years ago.

There still seems to be quite a long way to go for the Reserve Bank to really convince investors that, over the decade ahead, they will do a better job of keeping inflation averaging near target than they have done this year to date.

Continuing to talk down the risks of the next serious recession, and the limitations of policy here and abroad to act decisively to counter such a recession and the likely deflationary risks, is cavalier and irresponsible.  It might (seem to) help confidence in the short-run, but if those risks crystallise –  and central banks should focus on tail risks in crisis preparedness –  the Bank will bear a lot of the responsibility if the economy performs poorly, and inflation ends up so low as to vindicate (and more) the evident lack of confidence among people putting real money on a view about the average future inflation rate.

 

The swamp

What has New Zealand politics come to when someone who was (until a few days ago) a senior frontbench member of our largest political party claims that he was active –  as recently as a few months ago – in collecting very large donations from an open and avowed supporter of one of the most egregious regimes on the planet.   And goes further to suggest that his party leader was not only active in soliciting such donations –  and whether the words are used or not, when senior politicians turn up for dinner at the house of a wealthy person who doesn’t speak English, there isn’t much doubt what the visit is really about  –  but may, illegally so the MP claims, have sought to enable the fact of such donations to be masked from public scrutiny. (Those latter claims are the issue in law, but in many ways they should be less of a political issue than the wider environment this episode sheds fresh light on.)

And when no other member of that political party, or any other political party, is willing to speak out about the culture that our politicians and political parties –  all of them it appears –  have fostered.  Why?  Because the other side is quite as heavily involved in this “donations for acquiescence (or worse)” business.

After all, the Herald reveals this morning that although the Labour/New Zealand First government was directly responsible for the honour recently bestowed on Yikun Zhang, the nomination was a joint effort of National MP –  former PLA intelligence official, Communist Party member, and active fundraiser – Jian Yang, former National Party MP Eric Roy, and former Labour leader and Mayor of Auckland –  recipient of a very large anonymous donation from mainland China to his campaign, in an event organised by Labour MP Raymond Huo –  Phil Goff.    Yikun Zhang is photographed posing earlier this year with the Prime Minister, and in Labour Party group including party president Nigel Haworth –  on record, in the last year as more and more is learned of the new and egregious evils of the PRC regime, praising Xi Jinping and celebrating the PRC regime.

And, of course, not a word is heard from any of them –  Jacinda Ardern, Winston Peters, Nigel Haworth, Peter Goodfellow, Simon Bridges, Gerry Brownlee, Todd McClay (or Jian Yang or Raymond Huo) – about:

  • the mass imprisonments in Xinjiang,
  • the continued illegal PRC militarisation of the South China Sea,
  • the increased repression of religions (and Falun Gong) across China,
  • the rollout of the “social credit” system of repression and control,
  • the growing threat to free and democratic Taiwan, or
  • the increasing erosion of freedoms in Hong Kong.

In fact, as a government minister only last year, Simon Bridges was signing official agreements with the PRC regime committing to an aspirational goal of a “fusion of civilisations”.

What of Yikun Zhang?  He is a leading figure in PRC United Front activities in New Zealand.  That’s not my interpretation, it is the view of the most prominent New Zeland expert on these matters.

Consistent with this, he was among the United Front people invited to Beijing to participate in the 90th anniversary celebrations for the People’s Liberation Army.

On 30 July 2017, Zhang Yikun, a former military servant was invited to participate the military parade in Beijing for the celebration of the 90th anniversary of PLA establishment.

Zhang said to Chinese media, “ As a veteran, now a overseas Chinese community leaders, I felt deeply excited for the tremendous achievements in the national defense  of my homeland. “

Perhaps someone could ask him, no doubt through a translator, about the South China Sea militarisation.

Only late last year, he was leading a delegation –  that included Eric Roy and Southland mayor (see yesterday’s post) Gary Tong  –  to the Overseas Chinese Affairs Office of the State Council –  then one of the key institutional entities in the PRC influence activities in and through ethnic Chinese communities abroad.

I could go on –  I’ve been sent numerous links to Chinese language articles, which one can run through Google Translate –  but the character of the man is pretty clear.  After 15+ years in New Zealand he hasn’t learned English, he remains close to various PRC bodies including the embassy/consulate in New Zealand, is actively involved in various United Front entities and activities (including the cultural associations, which aren’t simply the equivalent of the Cornwall or Sussex associations, but vehicles through which the PRC seeks to exert control over ethnic Chinese in other countries)…..and he seems to assiduously cultivate connections to key figures in both our main parties (at least) –  and, in turn (and this is the real shame) to be courted by them.    And they give him official honours, for what seem –  in effect –  to be primarily services to the PRC.  Did I mention that it was one of the most egregiously evil, and outwardly aggressive, regimes on the planet?

It is pretty bad that we have allowed people like this to achieve such prominence in our society.   We should, and generally do, welcome people who want to come from China to escape the evils of the regime, and embrace freedom, democracy, transparency and a (until relatively recently) uncorrupt society.   Rather like people escaping to the West from Germany in the 1930s.   But what we seem to be doing is facilitating the functional equivalent of Nazi Party front organisations in Britain or France in the 1930s, and not just accommodating them but embracing them…..for the money.

But evil regimes will do what they do.  What we can, or should control, is what we tolerate –  whether as politicians and political party figures, or as voters.  Our political leaders seem to have no appetite for anything much other than keeping the donations flowing –  and maybe worse if the full extent of Ross’s allegations happen to be true.  They don’t seem to value what made New Zealand one of the world’s best and finest democracies –  part of what made good people want to come here –  or, if they still tell themselves they do, they seem to attempt to compartmentalise in ways that are simply untenable.  Our parties and politicians need to learn to say no.  And we need to demand that they do so.

It is well past time to drain the swamp of New Zealand politics.  If only there were any real hope of that happening.

(For those interested there is a useful background article on Yikun Zhang on Newsroom and interesting – non-controversial –  account of his own life here.)