The kowtow

EARLY IN the morning of 14 September 1793, George, Lord Macartney, the first British ambassador ever to visit the Chinese court, entered the imperial tent in Jehol, the Manchu capital, to see the emperor Qianlong.

As one, a thousand demonstrated their submission to the Son of Heaven by performing the ceremony of the kowtow. Three times they fell to their knees, and three times on each occasion they touched their foreheads to the ground. Macartney, however, refused to kowtow. He would bend one knee, he said, to his sovereign; both knees he would bend only to his God. Three times, with the greatest politeness, he went down on one knee. And three times, in the course of each genuflexion, in rhythm with the mandarins, he respectfully bowed his head. But he flatly refused to touch his forehead to the ground.

(from this)

There is a good article today in the New York Times today on the Jian Yang affair –  or non-issue as the National Party, and most other parties, and most of our establishment appear to believe (and want us to believe).   As the article notes

While New Zealand is a small country, it is a member of the “Five Eyes” intelligence sharing partnership along with the United States, Britain, Canada and Australia. And so vulnerabilities in New Zealand’s government could have wider import.

Curiously, not being particularly well-connected, I’ve had several people mention in the past few days private talk among our traditional allies of possibly ending New Zealand participation in Five Eyes over our government’s growing deference to China.   Whether that possibility would bother a majority of New Zealanders is questionable, but it should.

The article goes on

Chinese-language news media outlets in New Zealand reported that Mr. Yang had presented awards in April to members of the New Zealand Veterans General Federation, a group made up of former Chinese military or police officers now living in New Zealand. The awards were reportedly for members’ activities during a visit to New Zealand by Premier Li Keqiang of China, when they blocked the banners of anti-Chinese government protesters and sang military songs.

Chen Weijian, a member of the pro-democracy group New Zealand Values Alliance and the editor of a Chinese-language magazine, Beijing Spring, said Mr. Yang was “very, very active” in New Zealand’s Chinese community.

“When he speaks, he speaks more as a Chinese government representative, instead of a New Zealand lawmaker,” Mr. Chen said.

And this is how New Zealand now appears in yet another impeccably liberal part of the global press?

There are several organisations in New Zealand, partly or wholly government-funded that serve, in effect, as fronts to advance the establishment perspective on China.   There is the Asia Foundation, the Contemporary China Research Centre, and the New Zealand China Council.   The Council is chaired by a former National deputy prime minister, and includes a former National Prime Minister (who holds various positions in the gift of the Chinese government, and other Chinese directorships), the chief executive of the Ministry of Foreign Affairs, the chairman of Fonterra, and other mostly less well-known figures.  The Executive Director is Stephen Jacobi, a former diplomat and industry advocate (with a past focus on North America).

At the People’s Republic of China (PRC) national day celebrations last week, the Consul-General invited Jacobi to speak.  He posted the text of his remarks on the Council’s website.  Those brief remarks were both extraordinary and banal.   Extraordinary for the degree of deference to the PRC, and the indifference to any concerns around Yang and Raymond Huo, and yet probably just what one has come to expect from an establishment whose considered approach appears to be never, ever, openly say anything that anyone could possibly construe as critical of the PRC.   National day celebrations aren’t the time to gratuitously offend people, but with normal countries it is quite appropriate to recognise differences of values, interests, and perspectives.  We and the United States, or the UK, don’t always see eye-to-eye, as you’d expect with two different countries.  With China, per Jacobi, it is as if our hearts are at one –  or at least our minds are well-trained to pretend so.

It is an honour for me to be with you this evening and to convey the warmest greetings and congratulations of the New Zealand China Council on the 68th anniversary of the founding of the People’s Republic of China.

Toasting the founding of a regime that has brought forth so much evil… turns one’s stomach.  He goes on to describe it as an “auspicious day”.

The relationship is going from strength to strength, building on the firm foundation of mutual respect, shared interests and a history of co-operation.

As one observer of China noted, it is “Party-speak” (and not of the cocktail variety).

As we have watched China emerge as a major global power, we have continued Rewi’s pioneering spirit as we have built a Comprehensive Strategic Partnership based on expanding trade, investment and people to people links.

From the earliest days in the history of our country we have welcomed Chinese immigrants, thereby increasing the vitality and diversity of our nation.

And, so on the one hand we simply rewrite our own history –  Chinese migrants weren’t exactly welcome in the 19th century –  and on the other we blithely celebrate the emergence of a global power that simply flouts international law (South China Sea) and its own international commmitments (including around the WTO).  For a country –  New Zealand –  supposedly committed to a rules-based international order, it is extraordinary obseisance.

And then unadorned congratulations.

I would also like to congratulate Dr Jian Yang MP and Raymond Huo MP and the other MPs with us this evening on their re-election to Parliament.

If anyone close to the Council is remotely troubled by Yang’s past –  hidden from the electorate for years – or the wider arguments advanced by Professor Brady, they are obviously keeping very quiet.    As with Charles Finny the other day, this is the establishment falling right in behind the position of these questionable figures –  particularly Yang in our Parliament.

While we have achieved much together, I believe there is more to come.

For now, though, it gives me great pleasure to propose a toast to the health and prosperity of the great Chinese people and to the relationship between New Zealand and the People’s Republic of China.

It is almost as if Jacobi and the Council believe that the PRC has any concern with advancing the interests of New Zealand and New Zealanders.    And thus he concludes with his toast to a regime that has been responsible for the deaths of tens of millions of its own people (and tens of millions more unborn), that is increasingly repressive of its own people, is actively engaged in subverting the political process and values of countries like New Zealand, and which is an increasing expansionist threat to other countries in its neighbourhood.

Perhaps you might charitably think this is just stuff he had to say.  You sell your soul, and you pay the price.

But then earlier this week, Jacobi was tweeting his endorsement (“message in here for us kiwis too”) for a piece in the Australia Financial Review,  in which the authors –  an academic and a business figures –  push back, by very heavy use of straw men, against any concerns about the PRC and its activities in, in this case, Australia.  Nothing to worry about apparently, China no different from any other country, and foreign donations are just a “fact of life”.  And this in a country where earlier this year an Opposition Senator had to resign his shadow frontbench position over claims he’d been backing China’s position on the South China Sea in exchange for money.

At least there seems to be a serious debate occurring openly in Australia.   Denton and Drysdale can make their case for the defence in the AFR.  But others are considerably more sceptical.  There was an excellent sceptical piece in the Australian cultural, political, and literary monthly, Quadrant  by a former senior China analyst in the Australian Office of National Assessments and a former Australian ambassador to the Koreas.    And perhaps more powerful was a short article yesterday by a former senior Australian diplomat and deputy secretary in the Australian DPMC, “The China-Australia free trade agreement meets the all-controlling state”.

Philosophically, Australia and China occupy different solitudes regarding trade and investment. These days, not always, the underpinning attitude for Australia is free enterprise capitalism: commercially motivated, profit-driven, private sector enterprise, pursued within a clear legal framework. Beijing’s version is state capitalism, plus an underpinning of autarky: investment at home and abroad directed to national priorities, improving China’s competitive advantage (often using subsidies). The aim is to enhance China’s economic power and sovereignty.


At a societal level, President Xi has been emphatically reasserting the centrality of the Communist Party. Controls over China’s citizenry are being tightened—for example, by the ‘great firewall’ scrutinising and limiting access to the internet, and by closer monitoring of all citizenry for a ‘social credit score’.


The recurrent experience of foreigners seeking to invest in China has been that they are pressured to provide information on their secrets and systems as part of the price on entry. One fears for Cochlear and CSL. This is now being taken a step further. According to a recent Angus Grigg article in the Australian Financial Review, in future all foreign companies operating in China will be forced to hand over sensitive commercial data to Beijing under a system directed at generating a ‘social credit score’ for commercial enterprises as well as individuals.

More generally, while foreign investment in China is encouraged in cutting-edge industrial sectors, foreign firms are squeezed out once they reach maturity, with their key technologies secured. Writing some months ago in the Australian, Rowan Callick noted that China opened its mining industry to foreign investors about 20 years ago. At the peak, in 2009, there were 300 foreign mining operations in China. The number is now down to a handful. ‘Through a range of contrivances their services have been dispensed with.’

I presume Fonterra is well aware of all this, although one wonders if their farmer shareholders are.

There are other examples  (or here) of a robust debate in Australia, and serious open scrutiny of the way in which the PRC is attempting to exert influence in Australia.  Reasonable people might differ on the conclusions and appropriate policy responses, but in New Zealand any discussion or debate seems to be regarded as some sort of lese-majeste.    And yet this is the government of our country we are talking about.

One of the issues that needs to be tackled is our political donations laws.

In the Charles Finny defence of Jian Yang I linked to the other day, there was this line

It is my understanding that Dr Yang has become one of National’s most successful fundraisers, in much the same way Raymond Huo is important for the Labour Party’s fundraising efforts.

I dug out Barry Gustafson’s history of the National Party, published only thirty years ago.  There Gustafson’s records the active efforts of the party stalwarts to raise funds, while noting that

“An unwriten  but scruplously 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”

No doubt the culture change is not just of relevance to ethnic Chinese MPs or candidates.  MPs –  legislating in the interests of all New Zealanders –  shouldn’t be known for their fundraising prowess. But, more particularly, we shouldn’t be running a system where the largest known donor to the governing party is a foreign-owned company with quite modest New Zealand operations.

How has New Zealand come to this?   Where even the debate is almost disallowed, where neither the politicians nor the local media seem to have any interest in pursuing the issues (whether specific-  Yang –  or general, those raised by Brady).    When did we become the sort of country where the Financial Times and the New York Times  –  worthy outlets both –  are the ones raising more searching questions about New Zealand’s polity, and its relationship with a hostile foreign regime than our own media and our own political figures (past or present)?

What makes our establishment so willing to perform what amounts, in effect, to today’s full kowtow?

Debating immigration

Someone yesterday sent me a link to a column from a Canadian newspaper in which a prominent Canadia academic was calling for a five-year pause in Canada’s high target rate of non-citizen immigration, to let housing (and other infrastructure) catch up to the population-driven increase in demand.  I can see the case when it comes to infrastructure, but I suspect that in Vancouver as in New Zealand the housing issues are mostly about land.  If the land use regulations aren’t fixed then a temporary pause in immigration for just a few years won’t make more than a temporary difference.   And in New Zealand, at least, the real economic problems associated with rapid immigration –  plenty of jobs, but few good economic opportunities to enable us all to really prosper –  have to do with the average level of immigration we target over time, not with the peaks and troughs in individual years.

But in reading that column, my eye lit on another article on the same site, “How to debate immigration without distorting facts and foes” .  It began

Canada is one of the few advanced countries that can’t seem to hold an authentic public discussion about immigration policy.

Canadian boosters of high immigration and those who oppose it are mutually contemptuous. Their verbal boxing matches are dominated by sloganeering and name-calling.

If Ottawa is ever going to take seriously public opinion to fine-tune its immigration policies, the combatants need to follow a few rules. They may need a referee, who acts fairly when others are losing their heads.

I’m not so sure that Canada is that different than other countries, including New Zealand and Australia.  But the article was about a new column by Andrew Griffith, a former senior official in Canada’s immigration bureacracy, who took early retirement, to undergo cancer treatment, and now has a interesting-looking blog Multicultural Meanderings  which touches on issues of culture, immigration, identity and so on.  I get the impression that he is generally rather sympathetic to Canada’s fairly liberal approach to immigration.   But what interested the journalist, and me, was the piece Griffith had written recently for a public policy forum on “How to debate immigration issues in Canada” .

Griffith begins

Given the polarization between those who advocate for more immigration and those who advocate for less, we need guidelines to facilitate more respectful and informative debates. I also suggest some alternative language for both viewpoints, to provoke reflection.

And he summarises his suggestions in two tables, one for those favouring more immigration –  apparently a live option in Canada at present –  but presumably also applicable to those defending the quite high rates of non-citizen immigration Canada already promotes.

and one for immigration critics

Not all of it is directly relevant to New Zealand debates, but much of it probably is.  I’d add, for both sides, “focus on the specifics of your own country’s experiences and constraints, even when informed –  as you should be –  by overseas experiences”.  These are important issues –  about economic performance, but also about culture and society –  and if all sorts of important issues often excite emotion (on both sides of any issue), it is likely to be more productive if the emotions and the analysis can be separated, to allow civil reflection on the arguments and evidence various people bring to the debates.  On the other hand, of course, political discourse and popular debate are never likely to proceed like some idealised academic seminar (and I stress the word “idealised” here).

On a more immediate note, Newsroom has a piece this morning on concerns in some industries about how they will/would cope if immigration to New Zealand was to be cut back.     The focus is particularly on a few industries that have made themselves very heavily reliant on immigrant labour.    If the rules make it relatively easy to recruit labour to particular occupations, and such labour is available from relatively poor countries, it is hardly surprising that the industry concerned will gravitate to a production model in which (a) wages in that sector are pretty low by New Zealand standards, and (b) a large proportion of the workforce is foreign.  New Zealanders become reluctant to seek work in the sector because there are better opportunities in other sectors.  It isn’t a state of nature, or something inevitable, just a product of the regulatory environment –  the rules.

The aged care/rest-home sector seems to be a prime example of this sort of phenomenon.  It is a growing sector –  ageing population and all that –  heavily reliant on government subsidies (and thus cost-restraint pressures), and is a totally domestically-focused sector.

As I’ve noted here previously, if overall immigration flows were sharply cut back, there would be short-term adverse effects on some sectors that have become particularly reliant on immigrant labour.  But there would also be a reallocation of labour within the economy: demand for labour would fall markedly in sectors (often not particularly reliant on immigrant labour, like construction) that depend heavily on population growth, and those workers would need to find work elsewhere.   In sectors like dairy farming and tourism –  previously heavy employers of immigrant labour – employers would be looking for locals to replace the immigrant labour they could no longer hire.   People might be reluctant to take those jobs, in which case employers might have to offer higher wages.  But because the exchange rate would fall –  probably quite a lot –  if immigration was cut back substantially, those employers could afford to pay higher wages.  Business activities in the tradables sector would be more profitable, and in relatively short-order the labour market would adjust (it would take time, and I’ve never suggested changing the rules overnight).

But the rest-home sector is different.  Cut back their access to immigrant labour, and they might have to offer more to attract New Zealanders to do the jobs.   New Zealanders will do the jobs, at a price.  30 or 40 years ago when my grandmothers were in aged-care homes, the bulk of the employers will have been New Zealanders.  The question is likely to be largely one of price (ie wage rates).

But rest homes may not have a lot of pricing power.  They are typically heavily reliant on fixed government subsidies, and if immigration is cut back they can’t suddenly turn themselves into an export industry.  There is no more income to support higher costs.

The industry pushes back in the Newsroom article

“It’s a big issue for us because we are facing over the next 10 years a real spike in the ageing demographic and estimations from the work that we’ve done … is that we’ll need 1000 extra workers a year between now and 2027.”

The notion that the industry could just hire New Zealanders to fill the positions was unrealistic, as caregiving was now a much more highly-skilled position and there were simply not enough locals willing to do the work.

1000 new workers a year –  in an industry that apparently employs 22000 people –  just doesn’t seem that much (there will always be fast-growing and slow-growing industries) and people will do jobs for a price.  In fact, whatever one makes of the recent pay-equity settlement – which seems to have loaded additional net costs on the rest-home sector –  it is likely to increase the number of people willing to do the work.

(And while I won’t rely on anecdotes, as Griffith notes they do sometimes contain insights.  And so the suggestion that care-giving was now “much more highly-skilled” rang a bit hollow when a staff member in a home a relative of mine lives in was trying recently to encourage a room full of dementia patients to vote.)

New Zealand is in rather desperate need of a lower long-term real exchange rate.  That means raising the prices of tradables relative to those of non-tradables, increasing the relative attractiveness of investing in tradables sector firms.  A much lower immigration target is one way to bring about such an adjustment.  For many non-tradable firms, such an adjustment would mean a much lower level – or path of growth for –  demand.   Those sorts of firms would become relatively smaller.   But there are some areas within the non-tradables part of the economy –  and the aged-care sector is a prime example –  where demand wouldn’t be materially affected, and costs might well rise somewhat (and, of course, the value of their extensive land holdings might fall).   There is no point pretending such pressure points won’t exist, but we shouldn’t be orienting a key strand of economic policy around the needs of a highly-regulated heavily subsidised industry, even if it is one that cares for many New Zealanders (our parents or grandparents) in their declining years.   An appropriate rebalancing probably would involve some increased costs for residents and families and some increased costs for the government.   But over time, the stronger productivity path that would be likely to ensue from abandoning the “big New Zealand” strategy, would enable New Zealanders as a whole to be made (considerably) better off.

As Andrew Griffith noted in his tables, sometimes opponents of the status quo feel free to attack what is happening at present without advancing specific alternative approaches that can themselves be scrutinised and challenged.   I’ve previously tried to meet that challenge and be relatively specific in what I’m putting forward as an alternative to our current (package of rules that make up) immigration policy.

Some specifics of how I would overhaul New Zealand’s immigration policy:

1. Cut the residence approvals planning range to an annual 10000 to 15000, perhaps phased in over two or three years.

2. Discontinue the various Pacific access categories that provide preferential access to residence approvals to people who would not otherwise qualify.

3. Allow residence approvals for parents only where the New Zealand citizen children have purchased an insurance policy from a robust insurance company that will cover future superannuation, health and rest home costs.

4. Amend the points system to:

a. Remove the additional points offered for jobs outside Auckland

b. Remove the additional points allowed for New Zealand academic qualifications

5. Remove the existing rights of foreign students to work in New Zealand while studying here. An exception might be made for Masters or PhD students doing tutoring.

6. Institute work visa provisions that are:

a. Capped in length of time (a single maximum term of three years, with at least a year overseas before any return on a subsequent work visa).

b. Subject to a fee, of perhaps $20000 per annum or 20 per cent of the employee’s annual income (whichever is greater).

More of the associated story for why such changes are needed is in this recent address.

(And as I quoted from a Newsroom story in this post, this is probably the point to disclose that I have recently entered an arrangement with Newsroom in which they will be paying me for occasional columns.  Those pieces will usually be variants of material that has appeared here first.  It will not change my willingness to disagree with other material they run, but in the interests of transparency, I thought I should disclose it.)