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How New Zealand should deal with China

with 4 comments

This post follows on from a comment made by my co-blogger, The Veteran, in his post on China:

Tom … cheap shot in the context of ACT’s penchant for unloading cheap shots on National. Guess that’s part of your strategy for growing the vote … might just backfire one day. But there’s nothing but nothing in all your writings to suggest a pathway forward in our dealings with China …waiting.

Fair enough, although my hands-off approach to commenting on New Zealand is one reason I’ve not done this before, and I doubt that the ACT Party will be much better than National or Labour on the China issues.

Also to be fair, it’s the Green Party that has been more prominent in speaking out on various China issues over the years, but by the same token I don’t expect anything concrete from them when they join Labour in government post 2023, given how they’ve caved to Labour on various matters in recent years.

So, to some ideas for how New Zealand can deal with China.

  1. Focus on slowly reducing our exposure to them in exports and imports. Sure, this is easier said than done but I think the focus must be on increasing our export/import trade with other nations, starting with getting that Free Trade agreement with a Britain newly liberated from the EU. Deliberately trying to shrink our trade with China is not likely to work so the emphasis has to go on building trade with other nations so that our proportion with China shrinks.
  2. Increase the frequency and volume of our diplomatic work with the nations facing China. The diplomatic side is symbolism but that’s damned important: make the Chinese observe that we’re getting on well with nations that they are attacking, like Japan, Philippines, Vietnam, and especially India. By the same token start restricting our meetings with the Chinese and make them as cold and technical as hell. No more warm fuzzies in public. There’s no need for bad-tempered, Trump-style attacks, just a cold shoulder combined with warmth towards nations they’re unhappy with.
  3. Increased defence associations with those same countries. If there’s a military exercise involving them, join it in every possible way: Army, Navy, Air Force. Again, this is not being militaristic (whoever would believe that about NZ nowadays), it’s a matter of making it crystal clear to the CCP that we’re not on their side.
  4. We often boast about our ability to work behind the scenes on big, global issues so let’s do that by trying to persuade the likes of the EU, Britain, the USA and other rich countries to start helping out those nations in Africa and elsewhere that have found themselves getting in coercive hock to the Chinese. We’ve long claimed that we can be seen as an “honest broker” with the smaller, less-developed nations of the world so we work on that side of the same solution to bring them to the table (a quiet backroom table away from the cameras) with the rich folk. It’s not as if those nations are still unaware of the infrastructure stunts China has pulled on them so they should be attentive as we try to build some speed bumps into the Belt and Road initiative.
  5. Criticise those US corporations and entities – especially the likes of Hollywood and the NBA – that are crawling on their bellies to the CCP for access to all those hundreds of millions of potential customers. New Zealanders love America-bashing so there’s little downside and in case you have not noticed, young people are not particularly impressed with Hollywood nowadays anyway.
  6. Put the squeeze on the New Zealand influencing operations of outfits like the Confucius Institutes. They’re nothing more than a CCP propaganda front in the education field.
  7. Clean up our laws on electoral donations to eliminate, or at least reduce, the possibility that CCP money is being laundered into the NZ political scene via Chinese businesses and their connections to NZ businesses. I’m sure this will give China apologist Michael Barnett (Executive Director of the Auckland Chamber of Commerce) a bad dose of the squirts but that’s just a plus in my view.

    The “Inner Mongolia Rider Horse Industry” may have sounded like a snickering insiders joke at first (wink, wink) but it’s not funny any longer.

Speaking of funny, if we did desire to be slightly more assholish to the CCP we could always trigger them by having this map displayed in a few key spots – Motorway billboards perhaps.

And with a great sense of timing here’s a Substack article that partially covers this, Why Republicans Must Rethink Antitrust:

In the early 1990s, we were reliably informed by neoliberal economists, including the Chicago School, that if China were allowed to engage in free trade and join multilateral organizations that the country would gradually democratize and embrace America as the world’s only superpower.

“We know now that this theory missed the mark by a wide margin. Instead of democratizing, China became a surveillance state (thanks in large part to the U.S. internet). Contrary to the Chicago School theory, China never engaged in free or fair trade. Three million jobs shipped from the U.S. to China over the past twenty years — and our children get defective toys and contaminated baby formula.

I once believed those things too. I no longer do. If the National Party wishes to continue living in 1980-2000 period then they face a Mitt Romney future.

Written by Tom Hunter

June 14, 2021 at 10:04 am

ON CHINA

with 15 comments

I spent a fair portion or my early working life in Singapore and have a passing acquaintance with Lee Hsien Loong, Prime Minister since 2004. Lee is no slug. He earned a bachelor’s degree in mathematics and a masters in computer science from Trinity College Cambridge and a second masters in public administration from Harvard. He served 13 years in the Singapore Armed Forces where he rose to the rank of Brigadier-General before he entered politics in 1984. He’s a pragmatic politician who tells it how it is.

I was fascinated on his take on China when he was quizzed at the press conference held following a meeting between him and Scott Morrison who stopped off in Singapore on his way to the G7.

He made the point that China is not going away and cannot be ignored. That its close to being the dominant power in the Asia Pacific region. That China’s foreign policy will always be based on their national interest as opposed to scoring brownie points on the world stage (unlike certain other politicians).

In short China will do what it wants to do. You can push against that but you stand the risk of being walked right over. China today is the Pax Britannica of the 19th Century and the Pax Americana of the 20th. Interesting times ahead and I’m not sure we (the royal we) have quite figured it all out.

Napoleon had it right when he said ‘Let China sleep, when she wakes she will shake the world’. China’s awake and out of bed and striding purposefully towards its future as she sees it.

Written by The Veteran

June 12, 2021 at 2:55 pm

Posted in China

The spoon is long enough

In the spirit of blogs supporting one another I urge readers to read this rather long article, Economic Coercion, over at the Croaking Cassandra blog site run by economist Michael Riddell.

The article deals with the question of whether New Zealand can afford to confront China over its actions in recent years, specifically in the South China Sea and with its Uighur minority.

Most articles have focused on the geo-political and human rights aspects of these actions, of which this article over at the Kiwipolitico blogsite, by foreign policy analyst Paul Buchanan, Facing Facts, is a good example. I recommend you read it also. Buchanan argues that the 5-eyes partnership is not going away and is not going to be materially affected by any frictions that may arise between the partners in dealing with China. He also points out that China has nothing like the 5-eyes network but is instead reliant on old-fashioned human intelligence. But he also includes this piece regarding our economic relationship:

New Zealand is now essentially trade dependent on the PRC. Approximately 30 percent of NZ’s trade is with China, with the value and percentage of trade between the two countries more than tripling since the signing of the bilateral Free Trade Agreement in 2008. In some export industries like logging and crayfish fisheries, more than 75 percent of all exports go to the PRC, while in others (dairy) the figure hovers around 40 percent.

The top four types of export from NZ to the PRC are dairy, wood and meat products (primary goods), followed by travel services. To that can be added the international education industry (considered part of the export sector), where Chinese students represent 47 percent of total enrollees (and who are a suspected source of human intelligence gathering along with some PRC business visa holders).

Buchanan argues that this is why, in her recent “Taniwha and Dragon” speech, our Minister of Foreign Affairs was subtly saying that New Zealand needed to diversify away from China, without actually sticking it to them in a way that would get their backs up. I’m not sure I would read that much into such “subtlety” as it appeared to be one small sentence rather than a sustained argument and as such it amounted to the bleeding obvious.

Riddell’s expertise is economics and his article tackles this assumption, quoting National’s Gerry Brownley for a start:

“But you have got to bear in mind that there are hundreds of thousands of New Zealanders at work today largely because of our trade with China. It is not a simple matter, it is not a straightforward matter, it is one the Government should definitely have a position on.”

But as Riddell points out, statistics like “30 percent of NZ’s trade” can be deceptive:

And, yes the PRC recently moved a bit ahead of Australia as the country where the most two-way trade is done with, but – as people have noted for decades – one notable thing about New Zealand is that our trade isn’t very concentrated with any single other country/region (much less so than is the case for Australia). Total New Zealand exports to China, pre-Covid, were about 5 per cent of GDP.

Moreover, he points out that coping with economic blows from general things like recessions in the USA, or China, is what we try to do all the time, and what our systems are set up for:

A severe and sustained recession in China would represent a significant (but cyclical) blow to the world economy, and to New Zealand – and would do so whether or not New Zealand firms traded much directly with PRC counterparts. That is also true – as we saw in 2008/09 – of severe US recessions. That sort of shock – and others like them, at home or abroad – is why we have a floating exchange rate and discretionary monetary and fiscal policy.

And this is before we consider the rather strange fact that…

… contrary to the rhetoric about being a “small highly open economy”, actually the share of our economy accounted for by foreign trade (exports and imports) is (a) much less than one would normally expect for a country our size, and (b) has been shrinking. 

Like Buchanan he lists the areas of exposure as export education, tourism, and our commodity exports of dairy, forestry, meat, and seafood, and then looks at those specifically, noting in particular that the first two would be the ones most exposed to China, but which have already been dealt a huge blow by Covid-19 anyway so at present they’re not a factor when thinking about Chinese retaliation.

Riddell acknowledges the obvious, which is that specific businesses could get hurt, but there are some general economic aspects that apply.

The world price for commodity products is determined by world demand and supply conditions, a point given far too little attention in the timid New Zealand discussion of PRC issues.

To a very large extent, countries (all of them) make their own prosperity (or lack of it).

China didn’t make us rich or poor. It made China first (last century) poor, and eventually middle-income.

In other words, the argument that our FTA with China “saved” us after the 2008/9 recession, is a myth in the face of the fact that our total trade share of GDP was falling not rising over this period, that New Zealand’s productivity performance over this period was woeful, and that it took 10 years for our unemployment rate to get back to pre-recession levels.

By the same token, China is not actually in a position to “punish” us if we speak out against some of the things they’re doing. Riddell takes the specific example of Australia, much in the news recently as having been given some of that punishment. Again, there are specific businesses that have been hurt. However:

What we don’t see is any sign of severe economywide consequences: there is no mention of the issue (or risks) in the Reserve Bank of Australia’s latest (lengthy) minutes (by contrast, changes in New Zealand population growth actually get a mention). It seems to a third-order issue at a macroeconomic level – and the overall economy is what governments should be thinking about when they consider economic risks and consequences.

Of course, people will point out that China has not yet tried sanctions on Australian iron ore (but they did with coal, only to run into problems, because they still needed coal).

Australia, has 30 per cent of the world’s iron ore reserves (and a larger share of production) and China currently consumes a very large share of world iron ore production, so how badly are the Chinese willing to hurt themselves? The classic problem for people who want to use trade as a weapon is that you end up punishing yourself. Admittedly that may worry the CCP less than it would a democratically elected government, but even the CCP treads carefully when it comes to economically screwing over its people. Riddell makes that point in looking at the specifics of some of the other countries that China has targeted and notes the gap between China’s demand for dairy products and their local production.

He also makes the point that while these firms might have warranted sympathy a few years ago when these issues were not present and coercive tactics were not known, they are now trading with their eyes wide open to the risks and if they continue to do so that is no reason for a New Zealand government to cover for them.

He sums it up:

… we have macroeconomic policy for, fiscal and monetary, to help smooth the economy in the face of disruptions, whether Covid, coercion, or whatever.

Whatever the potential disruptions for individual firms – and they are real (for them) – it simply is not credible – given the (smallish) size of our total exports, the commodity nature of most, the share of trade with China – that any sort of conceivable economic coercion would represent a serious sustained threat to the New Zealand economy.

It’s worth that cost to confront the PRC about the stunts they’re pulling, and if they want to punish us then we’d be better off reducing our exposure with them anyway.

For the last twenty years I’d hoped that trading with China might soften the CCP’s approach to things: not that I expected them to become a democracy, but that they’d go easy on Hong Kong (as they did for twenty years) and Taiwan. And for a while – especially with term limits applied to their Communist party General Secretaries, which while not exactly democracy, at least had the same effect of preventing the rise of the usual Communist cult-of-personality – it seemed to be okay, as former Australian PM, Tony Abbot pointed out in recent article in The Australian. He had the same hopes most of us had.

But the rise of Xi Jinping has changed all that. The trade approach hasn’t worked. Worse than that, rather than us exporting our values to China they’re exporting theirs to us, primarily the choice to throw our morals and ethics to the floor for the sake of money. It worked with the Chinese people after Tiananmen Square and the CCP leaders are betting it will work with us too.

So far they’re right.

Written by Tom Hunter

May 2, 2021 at 6:00 am

SHUTTING OUR EYES TO APPEASE CHINA

So more evidence that the Ardern government kowtows to China with the revelation that we have refused to join a whole range of countries including the United States, Australia, the UK, Canada, South Korea, Japan (and eight others) along with the EU in speaking out against the much criticised World Health Organisation report into the origins of Covid-19 in China. A report that saw Tedros Adhanom Ghebreyesus, the WHO Director-General acknowledging that China had withheld data from the investigating team. Tedros said in a press conference “In my discussions with the team they expressed the difficulties they encountered in accessing raw data” … a press conference which was seemingly censored in the Chinese media.

Back here our foreign minister, one of the two main apologists for China in the Ardern cabinet, said our officials were still studying the report. A cynic might opine our response (lack of) is conditioned by the new trade deal we have just signed with China. Clearly pragmatism ‘trumps’ (bad word) principle in Labour’s lexicon.

New Zealand … the way you’ve got it.

Written by The Veteran

April 4, 2021 at 3:34 pm

RATCHETING UP THE RHETORIC

While the New Zealand government chides our cousins from across the ditch for their hard-line stance on China that country ratchets up the rhetoric warning Taiwan that any attempt to seek independence means ‘war’. China sees democratic Taiwan as a breakaway province while Taiwan sees itself as a sovereign state with its own constitution, military and elected leaders.

The warning comes after President Biden reaffirmed his commitment to an independent Taiwan.

Analysts say Beijing is becoming increasingly concerned that Taiwan’s government is moving the island towards a formal declaration of independence and it wants to warn President Tsai Ing-wen against taking steps in that direction.

President Tsai, however, has repeatedly said that Taiwan is already a independent state, making any formal declaration unnecessary.

A statement from China’s Defence Ministry said “We warn those ‘Taiwan independence’ elements – those who play with fire will burn themselves, and Taiwan independence means war.”

One suspects any response from New Zealand will be muted indeed. Bit like Labour’s response to the 1951 General Strike where they famously sat on the fence and declared themselves neither for nor against the strikers. A values based assessment indeed.

Written by The Veteran

January 30, 2021 at 3:03 pm

Posted in China, New Zealand

Tagged with ,

Disney Bombs

In an earlier post I briefly glanced at how DC Comics has blown themselves up by pandering to the Woke brigades.

But lest you think this sort of stupidity affects only the leaders of small fry like them, let me assure you that this crap is spreading fast through the formerly sober heights of corporate executives and boardrooms.

Disney has already had a tough year thanks to the response of governments to Chinese Sinus Rot.

Unfortunately they doubled down on their China bet with a “new” movie called Mulan.

Mulan, 1998

Actually it’s not really “new”. As is increasingly the case, the talentless hacks of Disney (and Hollywood), simply reached back into their past to convert one of their most popular animated movies of the last two decades, turning it into a live action, big-screen spectacle. Moreover, they really tuned it to Chinese audiences.

However, as captured by the Rotten Tomatoes website, viewer reviews were … not good.

“This is unbelievable how disney managed to completely missed the plot, the story, the atmosphere, the sound and the message? Mulan goes from this dilligent smart and awesome girl, mastering her way in a male dominated warrior world to this mary sue , all inclusive from the get go, no challenge, just “be the badass you are born to be ?

“Looked interesting enough to watch, but my kids got bored and I started to fall asleep. Seemed like “Rise of the Skywalker” mixed with old Mulan..

Mulan, 2020

At the same time there were threats of boycotts and protests in the West that pushed Disney into not releasing it in theatres in the USA but on their own streaming service, Disney +, charging $US 30 for the view.

For those of you unfamiliar with the situation, Disney thanked many Chinese government authorities in the credits of their recent Disney+ movie release, Mulan. One of those government authorities included the government powers within Xinjiang province. That location is also where the Chinese Communist Party government is holding millions of ethnic minorities in concentration camps

In addition Disney’s usual media rollout has been screwed by the CCP ordering Chinese news outlets not to cover the movie because it mentions Xinjiang and they’re trying to keep the backlash down. And so…

In China, The Walt Disney Co.’s “Mulan” had a disappointing debut of only $23.2 million. The low launch nonetheless claimed the film the No. 1 spot in the country where an estimated 91% of theaters are open but limited to 50% capacity. The studio noted that its opening is around the same level as “Cinderella” and “Maleficent: Mistress of Evil.”

This isn’t the first time that Disney has pandered to their Chinese overlords. The following are two different billboard presentations of the most recent Star Wars movies.

Never mind. Disney will reportedly get back that $10 billion by 2025, although if The Mouse does not get his copyright protection extended again from January 1, 2024, all bets are off. Thanks to Disney’s clever lawyers it’s already been extended several times.

I must say that I’m enjoying watching these institutions burning themselves to the ground.

Written by Tom Hunter

September 16, 2020 at 12:08 pm

NZL-CHINA RELATIONS

My Profile

The Chinese have long been a part of New Zealand society stretching back to the ‘Gold-rush’ days. In the latter half of last century and through to his death in 1987 our own Rewi Alley (known in China as 路易•艾黎, Lùyì Àilía) achieved almost legendary status as one of the few foreigners to enjoy the confidence of the Chinese government … OK, he was a fellow communist but still … But it was the Clark Labour government that forged a close relationship with China following the signing of the NZL-China FTA. That relationship continued under the Key/English government. You can argue that the relationship has benefited NZL more than it has China (certainly from a purely economic standpoint) but that positive can also be a negative in the sense that when China coughs, accidentally or deliberately, we tend to catch a cold.

Since Labour regained power the relationship has cooled somewhat. Ardern has made only a fleeting visit to China while her ever so slightly xenophobic Foreign Minister (never knew a WASP he didn’t like and an Asian/African he did) was far more interested in trying to forge a new relationship with the ‘evil empire’ (Russian Orthodox accorded honorary WASP status) on the basis that Stoli elit tastes better than Maotai.

Fast forward to yesterday and the suspension by NZL of our extradition treaty with Hong Kong in response to the new security laws forced upon the SAR by their Beijing masters. That elicited a swift response by the Chinese warning the government that they viewed our action as intolerable interference in Chinese internal affairs. China doesn’t like to be prodded and it can be expected that she will bite back. I fully expect that in the next little while a ship load or two of our exports to China will encounter unexpected difficulties at the Chinese border. We walk the high wire in our relationship with China.

It’s the game you play when you mess with the big boys ergo the tariffs placed on our steel and aluminum exports to the USA following Jacinda’s somewhat injudicious comments regarding President Trump. Compare that with Oz whose exports were exempt from the tariff impost.

I see Peters was dismissive of Bridges’ suggestion that NZL might care to follow the lead of the UK in offering a limited number of Hong Kong Chinese wishing to exit the SAR residence in NZL … well he would do that wouldn’t he …. they’re not WASPs.

Written by The Veteran

July 29, 2020 at 4:00 pm

If you bow at all, bow low.

Some weeks ago I was leading an American family around the sights of Queenstown, and part of that included a day on Coronet Peak Skifield, to which we took a bus from Queenstown.

I found myself sitting next to a young woman who had an interesting story to tell. She’s a sophomore attending Yale University but was originally from Hong Kong and her parents had just moved from there to settle in Auckland.

I told her that I thought that was great because I can’t see things improving in Hong Kong, and she agreed. Her family had held out hope for twenty years that there would be a gradual liberalisation of China, with Hong Kong setting the example. But by 2018 they had finally accepted that this was not going to happen, and that in fact the reverse was occurring, with China’s authoritarian control extending over Hong Kong.

We talked a little further about the parallels with European refugees escaping the Nazis and the Soviets prior to WWII, and even after it started, and I asked her whether she had other relatives who had not yet left: Aunts, Uncles and so forth. At that point she turned her face away from me and I realised that I’d pushed a little too far. After a minute she turned back to me and said that they were all still there and either could not or would not move.

Another parallel and the most chilling of all.

Her family’s departure had happened months before the start of the protests that are now roiling the city-state. Those protests were against a new law that would have seen people arrested in Hong Kong extradited to China for trial, but they quickly became about much more than that. The protests did force the Hong Kong government to table the law, but nobody was under any illusion that they would not re-introduce it at a more opportune moment to be rubber-stamped. They are mere puppets controlled by China, and this is part of China’s extension of its society into Hong Kong. It’s the true meaning and the eventual goal of the farcical “One Country, Two Systems” illusion that everybody has pretended to believe ever since 1997 when China took control of the city-state.

The protestors and the rest of the world are under no illusions now.

It also should be noted that at the same time that substantive portions of the Western Left are spitting on the history and symbols of the USA and Great Britain, the Hong Kong protestors understand precisely what they mean in terms of freedom.

They’ve also been clever so far; relying on technology to self-organise their gigantic protest marches, thereby providing no leadership targets that can be picked off and arrested. As described in two excellent articles in Quillette and The New Statesman, they have borrowed from the IT world, making the protests “Open Source”.

They have adopted Bruce Lee’s fighting strategy to “be water“: flooding the streets of various districts naturally through legal means instead of permit-required marches; the focus of a protest emerging only after the protest starts; a rally can turn into a march; a march starts in one direction and suddenly goes in another; protestors suddenly occupy government buildings, wait until the authorities close them – and then immediately head for another target.

There is also the fact that several million smart-phones mean that a Tiananmen Square “solution” is going to have photos and video of the bloodshed circling the world in minutes.

China has been executing Denial-Of-Service (DOS) attacks on various apps used to organise the protests, such as Telegram, but the protestors are already using the Apps between phones via Bluetooth, avoiding possible crackdowns on the primary telecoms services.

The other thing that has held China back has been the potential economic threat. The loss of freedoms, even curtailed as they are, that have made Hong Kong such an economic prize for China, would mean a rapid decline as people with talent and brains escaped, as that young woman on the bus has. And whether formally organised by other governments or not, there will be trading kickbacks. China has made no friends in Vietnam, The Philippines and most of SE Asia, adding to its traditional enemies in Japan and India – plus the USA now. Tanks running people down in the streets of HK would hand Trump a powerful new weapon in his trade war on China. Even those who hate his guts might be able to make a June 22 decision.

But I’m sorry to say that all this bravery and brilliance and geopolitical consequences will make no difference in the end.

Anyone with even a basic knowledge of Chinese history and its Mandate from Heaven, knows that Beijing doesn’t tolerate dissent – let alone public dissent in the form of protests. Forced to choose between economic shocks, the effective destruction of an economic prize, and massive amounts of bloodshed and horror – versus a USSR-style collapse of their own system, the Chinese Communist Party will choose the former path.

As I pointed out in this Op-Ed, China is determined on “unification” by 2049: Hong Kong now; Taiwan later. What loss a few thousand Hong Kong lives for that goal? This weekend, they clearly told Hong Kong cops to step it up: tear gas, rubber bullets, water cannons, fists, and sticks were all used against protestors. Plus live warning shots. In the air. For now.

The following video shows Hong Kong police wading into people inside a train stopped at a station: there are sequences showing them dealing to protestors who are wearing yellow construction hard hats, but quite a few victims appear to be people who just happened to be in the wrong place at the wrong time.
 

This is what real fascism looks like, courtesy of the Chinese Communist Party.
 
A blind person could have seen this coming, and the way things are going, what you see in this video will soon be considered “moderate”. Beijing is willing to go much further than this.

The West may be able to do nothing to stop this, but I suggest that one thing we can do is offer refuge to hundreds of thousands of Hong Kong people – right now. Get them out and away from the coming death and oppression – and stick a finger in the eye of the Chinese Communists by depriving them of many of the best and the brightest.

Written by Tom Hunter

September 2, 2019 at 1:36 am