After a series of posts late last year, I haven’t written much recently about the New Zealand economic and political relationship with the People’s Republic of China.  It isn’t that I’ve lost interest, or become somehow less convinced of the importance of the issues. It remains, for example, a disgrace that unrepentant former PRC intelligence officer Jian Yang  –  who now acknowledges misrepresenting his past on official documents –  sits in our Parliament, protected by his own party and not subject to any critical scrutiny from the new Prime Minister or her party.  All parties seem determined to look the other way.  Businesses trading with the party-State no doubt quietly cheer them on.  Don’t ever rock the boat, don’t ever display any self-respect, seems to be the watchword.  Deals need doing, bottom lines enriching.

I’ve been busy with other things, but yesterday was the “China Business Summit 2018” in Auckland, operating under the logo “Eyes Wide Open”.    The Prime Minister and the Minister for Trade and Export Growth both gave what were billed as keynote speeches.  I want to focus on the Prime Minister’s speech, but couldn’t go past David Parker’s risible description of

“China’s leadership on issues like…trade liberalisation have the potential to add momentum to collective efforts in the region”.

No serious observer –  no one with other than an obsequious political agenda –  could regard the PRC as a leader in the cause of trade liberalisation.  The PRC lags badly, mostly to the detriment of their own citizens. That is so whether it is tariffs under consideration, or non-tariff barriers, and it is as true of the letter of law as well as the way laws are actually applied (recalling that the PRC is not exactly known for the priority placed on the rule of law.  As the Chief Justice of the PRC regularly reminds people, in the PRC the law is at the service of the Party.

Curiously enough, even Stephen Jacobi –  executive director of and spokesman for the (largely) taxpayer-funded advocacy group the New Zealand China Council seems to agree.  He is reported in another article this morning again stressing how difficult it will be to get the upgrade to the New Zealand/China preferential (“free’) trade agreement unless New Zealand gets more actively on board with the PRC geopolitical initiative, the Belt and Road.    Because, let’s be clear, the PRC’s barriers to international trade are a great deal higher than those New Zealand still has in place.  For them, deals (“FTAs”) are primarily about politics, not about some rules-based international order –  which may from time to time be useful to them, but only instrumentally.

But what of the Prime Minister’s speech?

There is lots of gush, and little reality.

We will look to cooperate with China to promote regional stability and development

How, one wonders, do we see the PRC promoting regional stability –  that isn’t just the quiescence of the indebted, the intimidated, or the bought – in  flagrant aggression in the South China Sea, standoffs with India, in the repeated threats to prosperous and democratic Taiwan, in the intimidating patrols around the Senkaku Islands, in loading up developing countries with debt, in the threats to democracy in places like Cambodia or the Maldives?

She moves on to note that

The Belt and Road Initiative is a priority for China.  New Zealand is considering areas we want to engage in the initiative, and other areas where we will be interested observers.

In fairness, that is hardly a ringing endorsement –  and perhaps less than her audience would have liked –  but recall what our government (previous one) has already signed up to in the Memorandum of Arrangement.  I wrote about that a few months ago.  You might recall that the two governments agreed.

I think the ball is in the PRC’s court when it comes to avoiding threats to regional peace.  By pretending otherwise, New Zealand governments simply give cover to the PRC agenda.

Of course, there is worse in the agreement, with talk of us both promoting the “fusion of civilisations”

As I noted in the earlier post

I’m quite sure I – and most New Zealanders –  have  little interest in pushing forward “coordinated economic…and cultural development” with a state that can’t deliver anything like first world living standards for its own people (while Taiwan, Singapore, South Korea etc do) and whose idea of cultural development appears to involve the deliberate suppression of culture in Xinjiang, the persecution of religion (Christian, Muslim, Falun Gong or whatever), the denial of freedom of expression (let alone the vote) and which has only recently backed away from compelling abortions.  And that is just their activities inside China.    “Fusion among civilisations” doesn’t sound overly attractive either –  most of us cherish our own, and value and respect the good in others, without wanting any sort of fusion,and loss of distinctiveness.  But perhaps Simon Bridges [who signed the agreement for the previous government]  saw things differently?

Perhaps one day the Prime Minister could tell us, straightforwardly, whether this stuff –  an agreement the New Zealand government is party to – reflects her values?

In her speech yesterday there was a whole section headed “New Zealand Values”

This brings me back to something that this government has placed front and centre of its agenda – our values

But what might those values be?  She goes on to tell us (or at least I think she does –  the language is a bit garbled).

This is why my government is placing such an emphasis on our core values, like on environmental and climate change issues. 

So that was no mention of:

• democracy,
• rule of law, domestically and internationally,
• freedom of speech,
• freedom of religion,
• standing by countries that share similar values, when they are threatened.

or anything of the sort.  Just climate change and the environment (although are those “values” or just issues?) –  where, conveniently, her rhetoric and the PRC seem to, for now, align.

Then she moves to the standard fallback line of one New Zealand minister or Prime Minister after another.

Naturally, there are areas where we do not see eye to eye with China. 

We will just never, ever, come out and clearly and state what those differences are.  Instead, she trivialises the (unspoken) differences

This is normal and to be expected with any country, especially where we have different histories and different political systems.

It is as if she treats the PRC as a normal country, rather than one of the biggest abusers of domestic human rights and most aggressive external powers anywhere.  It is today’s Soviet Union, except probably with more evidence of an active external aggressive agenda.   Our Prime Ministers a generation or two back didn’t trivialise the difference between the Soviet Union and the West in the way that John Key did, and Jacinda Ardern does.  Then again, I’m pretty sure we didn’t have party presidents (Haworth and Goodfellow) issuing congratulary statements on the occasion of meetings of the Soviet Communist Party.

But there weren’t big business interests –  private and government (think universities) –  with dollars at stake then.

Of course, the Prime Minister tries to cover herself with talk of

New Zealand and China can and do discuss issues where we have different perspectives.  We can do this because we have a strong and a mature relationship – a relationship built on mutual respect; and a relationship that is resilient enough for us to raise differences of view, in a respectful way.   This is a sign of the strength and maturity of our relationship.

But it is just words when our leaders –  accountable to the citizenry, not to Fonterra, Zespri or university vice-chancellors –  will never utter a word of concern in public.   Maybe they do occasionally raise issues in private –  and the PRC authorities politely ignore them – but even that argument was undercut by the Deputy Prime Minister in comments yesterday

The foreign minister was asked whether China’s influence in New Zealand, Australia and the Pacific would be on the agenda during his trip.

“I’m in a job called foreign affairs, and diplomacy is rather important. You’ll know I’m naturally a tactful person, and I won’t be raising those issues in the way you put them.”

These aren’t values they stand for, just dollars.

The Prime Minister can talk in generalities all she likes

Our reputation as a leader on environmental issues; as a fair player internationally; as a defender of the international rules-based system, a system which privileges state sovereignty and dispute settlement on the basis of diplomacy and dialogue, is fundamental to who we are as a nation and as a society.

But specifics are what count.  Anyone can give POLSCI 101 talks, but when she won’t (say) stand up and call unacceptable China’s illegal creation of new artificial islands in the South China Sea, its illegal assertion of sovereignty, and the militarisation of those new “islands” –  to reference just her talk of “a system which privileges state sovereignty and dispute settlement on the basis of diplomacy and dialogue” –  it is hard to take her seriously on the values score.  When she won’t call out Jian Yang’s position, or the way in which PRC-affiliated entities have gained effective control of Chinese language media in New Zealand, or the way several universities and many of our schools are taking PRC money on PRC terms, it is hard to take her seriously when she talks of values, even as it directly affects New Zealand.   [UPDATE: This very morning she managed to openly criticise actions of two other countries.]

But probably the big-business entities putting pressure on the government to do whatever it takes to get the “FTA” upgrade –  unconcerned about values, but very interested in bottom lines –  will be happy with her.

It all seems a lot more Neville Chamberlain than Michael Joseph Savage (whose government was quite critical of the appeasement of Nazi Germany).  But however deluded Chamberlain was, nobody supposed his stance was just about the money.

And, since most of you come here for the economics, I was struck by an account I saw of the appearance last week by the Governor of the Reserve Bank at Parliament’s Finance and Expenditure Committee, where he was asked about China.  Astonishingly, the Governor reportedly claimed that the Chinese economic story was well-understood –  I think most of those close to it would argue that anyone who thinks they really understand it is only revealing how much they don’t know – but then he want on to make what is simply a factually inaccurate statement.  He claimed, so it is reported, that China was in some “miraculous” period where it was moving into “first world economic wealth”.

Productivity is the foundation of prosperity.  The cohort of countries near the very top of the OECD league tables (several northern European ones and the US) have real GDP per hour worked, in PPP terms, of around US$70 an hour.   Here –  from the Conference Board database – are the 2017 numbers for the various first world Asian economies, and for the PRC.

Real GDP per hour worked (USD, PPP)
Singapore	64
Hong Kong	54
Taiwan	51
Japan	46
South Korea	37
(PR of) China	14

Even underperforming New Zealand manages US$42 an hour.  Other countries matching the PRC productivity numbers include such denizens of the first world as Indonesia, Ecuador, and Peru.

It sounds as if the Governor has been buying the hype.  But I suppose his political masters won’t be unhappy: flattery and never ever uttering a sceptical word are among their watchwords.