‘A matter of time’: New Zealand’s foreign minister warns China ‘storm’ could be coming

New Zealand could find itself at the heart of a “storm” of anger from China, foreign minister Nanaia Mahuta has warned, saying exporters needed to diversify to ensure they could survive deteriorating relations with Beijing.

Mahuta’s comments come as the New Zealand government faces increasing pressure to take a firmer stance on human rights violations and crackdowns by China, putting the spotlight on the potential repercussions for countries who provoke Beijing’s ire.

Neighbouring Australia is in a deepening trade war with China, which Mahuta likened to being at the centre of a storm – one which could easily engulf New Zealand.

“We cannot ignore, obviously, what’s happening in Australia with their relationship with China. And if they are close to an eye of the storm or in the eye of the storm, we’ve got to legitimately ask ourselves – it may only be a matter of time before the storm gets closer to us,” she told the Guardian.

It was one of the minister’s more frank discussions of the vulnerability of New Zealand’s trade dependency on China – and a clear directive to local exporters that they should be seeking to redistribute some of those eggs to baskets elsewhere.

“The signal I’m sending to exporters is that they need to think about diversification in this context – Covid-19, broadening relationships across our region, and the buffering aspects of if something significant happened with China. Would they be able to withstand the impact?” she asked. China accounts for more than $33bn of New Zealand’s total trade, and nearly 30% of exports.

New Zealand is attempting to walk a difficult tightrope with China: maintaining a strong trade relationship, while still carving out space to criticise violations of human rights or international law. Over the past year, that position has become increasingly difficult to maintain.

Up to a million Uyghurs are believed to be held in detention camps in Xinjiang. Photograph: Greg Baker/AFP/Getty Images

The country is under pressure to take a stronger moral stance on human rights issues in and around China. Human rights groups have described mass human rights abuses in Xinjiang, including the incarceration of more than a million people in internment and re-education camps, forced labour, mass sterilisation of women, and restrictions on religion, culture and language, as cultural genocide.

The crackdown on pro-democracy activists in Hong Kong is ongoing: an operation rounding up of dozens of pro-democracy politicians and activists in March means many key voices of dissent are now in custody or prison. Earlier this month, Prime Minister Jacinda Ardern said New Zealand’s differences with China were becoming “harder to reconcile”.

New Zealand has issued statements expressing “grave concerns” about China’s actions in both Xinjiang and Hong Kong, but those statements have tended to be softer than those of its longstanding allies in the Five Eyes network, Britain, the US, Canada and Australia.

Jacinda Ardern says differences with China becoming ‘harder to reconcile’ – video

New Zealand, along with Australia, welcomed coordinated sanctions announced by the UK, US, the EU and Canada over Uyghur abuses, but did not institute sanctions of their own. In May, New Zealand shied away from using the word “genocide” in a motion on Xinjiang debated and unanimously adopted by parliament – opting instead to use more general, watered-down language of “human rights abuses”. Mahuta says New Zealand “didn’t go to the degree of naming it is genocide because of the international legal threshold around that”.

At the time, trade minister Damien O’Connor said that using the language of genocide would hurt New Zealand’s trade relationship. “Clearly the Chinese government wouldn’t like something like that … I have no doubt it would have some impact [on trade]. That’s hardly rocket science,” O’Connor said.

The opposition leader, Judith Collins, also said New Zealand’s trade relationship with China was the “elephant in the room” in the discussion. “At the moment, clearly we are [beholden to China] in terms of trade,” she told Stuff.

Mahuta has previously come under fire for comments that New Zealand was “uncomfortable with expanding the remit of the Five Eyes,” a remark that some saw as a shift away from traditional allies. In China, state-run media heralded the comments as “New Zealand secure[ing] its interests by distancing from US-led clique”.

“In sharp contrast with Australia, which tied itself to the US’ chariot, New Zealand has maintained a relatively independent approach on foreign policies, paving the way for the country to pursue policies that benefit its own economy,” the Global Times wrote.

“To be clear, New Zealand values the Five Eyes relationship,” Mahuta told the Guardian. “It’s a security and intelligence framework from which we can work with trusted allies on those specific issues. But the human rights community is much broader than that. … We don’t need the Five Eyes to articulate where we stand on human rights issues.”

Australia provides a vision of what collapse in that trade relationship could look like. The diplomatic rift escalated when Australia called for an investigation into the origins of Covid-19 in China. It has only intensified since.

China has retaliated with tariffs, import restrictions and a warning to its citizens not to travel to Australia. Analysis last year found China’s declared and undeclared sanctions affected Australian industries worth around AU$47.7bn (£26.5bn) last year. So far, the impact of that trade war has been buffered by China’s continued reliance on Australian iron ore. But China has been exploring how to shift its sourcing to mines in Brazil and Guinea – if they’re successful, Australia could be hit harder.

New Zealand does not have an equivalent resource monopoly in its China trade relationship. “Everything that you can get from New Zealand, you can get elsewhere,” international law professor Alexander Gillespie said.

“China will know our vulnerability in this area. And I think the way that we’re positioning ourselves with our statements shows that we’re conscious of that vulnerability as well,” he said.

If it came, trade retaliation from China could hit New Zealand across multiple industries. Near the end of 2020, the value of exports to China alone surpassed the value of New Zealand’s next four largest trading partners – Australia, the US, UK, and Japan – combined.

Trade to China accounts for 28% of New Zealand’s overall exports, including a quarter of dairy exports, more than 60% of forestry products and around 50% of meat. The country is New Zealand’s second-largest source of tourism cash, behind only Australia – before Covid-19, Chinese tourists were spending about $1.7bn in New Zealand each year. International education is a $5bn industry for New Zealand, and Chinese students make up about 47% of international students at New Zealand universities.

“Right now, China will be delighted with us because they will see us as the weak link in the Five Eyes,” Gillespie said. “For a country like New Zealand to steer away from that words like genocide when the other countries use it, symbolically, it’s important.”

Asked about the differences between New Zealand and Australia’s approaches to China, Mahuta said she did not “want to be drawn into commenting on the approach of another country in its bilateral relationship”. But she did say that New Zealand’s connection with China had changed, maturing over time.

“The relationship with China has moved beyond the relationship of firsts – we were the first to achieve a free trade agreement with China – to a maturing relationship … where we can be respectful, consistent and predictable on the issues that are important to us, but also on the issues that separate and differentiate our view of the world from China.”

Mahuta was careful to frame her message to exporters as part of a wider broadening of New Zealand’s connections across the Asia-Pacific. “We’ve said that it’s ‘China, and,’ not ‘China, or’,” she said.

New Zealand would need to strengthen its relationships across the region in the coming years, she said. “Trade is – while it is important, so is regional peace and stability.”

• This article was amended on 1 June 2021. An earlier version said that analysis had shown that “China’s declared and undeclared sanctions against Australia cost the country around AU$47.7bn last year”. This should have referred to the total value of the export sectors affected by the trade actions, rather than the final cost of the sanctions.