The Australian warning: How close is NZ to triggering China's wrath?
Sunday, 19 July 2026
In the years leading up to Covid, the Australian government undertook a series of actions that greatly irritated the delicate plum blossom of its relationship with China.
The Aussies did A$170 billion in trade with the Middle Kingdom - over a third of its global exports - and China was the primary engine of its export wealth, employment, and GDP growth. But a steady stream of bans, policies and diplomatic incidents viewed by Beijing as anti-China containment tactics took place in quick succession.
From Prime Minister Malcolm Turnbull declaring - in Mandarin - that the Australian people would “stand up“ against foreign interference and political donations, to Australia being the first country in the world to publicly ban Chinese telco Huawei from participating in rolling out its 5G network, to the federal government blocking several high profile investment deals as well as any participation in Xi Jinping's signature Belt and Road Initiative, the string of incidents caused much fuming on the part of Chinese officials.
But it wasn’t until Australian Prime Minister Scott Morrison dropped a clanger - that a global investigation focus on Wuhan as the origin of the Covid 19 pandemic - that the proverbial hit the fan.
Read more:
Chinese officials were furious, and its state-owned paper angrily denounced Australia as “a bit like chewing gum stuck on the sole of China's shoes. Sometimes you just have to find a stone to scrape it off”. More damaging was China’s multibillion-dollar campaign of trade sanctions against certain Australian exports - rock lobster, wine, beef and barley in particular - causing an estimated $20b in net export losses for Australia between 2020 and 2022.
Professor James Laurenceson, director of the Australia-China Relations Institute at the University of Technology Sydney, remembers the time well, and observes that all sides lost in the ensuing trade fracas, including China itself in the court of public opinion. But, he tells the Sunday Star-Times, the thing that finally set Beijing off was not so much what was said by Morrison, but why it was said.
“Scott Morrison gave Beijing every impression that his government was working hand-in-hand with the Trump administration to launch a political attack against China over the pandemic,” he says.
In fact, the Morrison government was heavily influenced by a so-called “securitising coalition” - intelligence officials, defence chiefs, politicians, and select media figures who urged Australia to move closer to the US while adopting a very hawkish tone towards China. Their efforts bore fruit through the signing of the Aukus pact, which committed Australia to spending A$368b to acquire US nuclear-powered submarines.
Even prior to that, and certainly afterwards, there remain close ties between the intelligence and defence agencies of both countries.
As for the relationship with China, hostilities continued until the current premiership of Anthony Albanese and his foreign minister Penny Wong, and eventually China stepped back from all punitive trade measures. Laurenceson says it was a “convenient off-ramp” when [Australia’s] Labor won government in May 2022, but he says, it was mainly the public diplomacy towards China that reverted to normal, rather than any real change in Australia’s still fairly hardline policy towards China.
Now the Aussie government has a different trade-related thorn in its side.
“Here’s the thing … there are more Australians now who think we're likely to suffer economic coercion from the US rather than from China, and frankly, they've got a basis in evidence to conclude that; the way the Trump administration is weaponising trade and finance for its own purposes is pretty blunt, and pretty obvious.”
Escalating slights
New Zealand is, like Australia, enormously dependent on the Chinese market for export earnings, and China takes about 25% of this country’s global goods exports, as well as providing it with billions in affordable consumer goods.
Because we do not have the iron ore, gold, copper, LNG and thermal coal that Australia provides to China, and our biggest exports like dairy and kiwifruit, while prized, are ultimately substitutable, we are even less consequential to our critical trading partner than our Aussie cousins, with much more to lose by flapping our diplomatic gums indiscreetly or flagrantly aligning with China’s adversaries.
Yet some worry that is in essence what we are doing.
It is not that Prime Minister Christopher Luxon is saying anything particularly undiplomatic. At a recent conference he called the relationship with China “consequential” and “long term” and said New Zealand would “cooperate and maximise cooperation wherever we can, and where our interests align.
“We will disagree where we must, and we will communicate and manage those differences in a predictable and consistent way.”
But if actions speak louder than words, the New Zealand Government’s actions have told a much more assertive tale. Most recently, this country allowed the US to establish an FBI office in Wellington, which was described openly by FBI Director Kash Patel as part of a plan to counter “the CCP [Chinese Communist Party] in the Indo-[Pacific] theatre”. New Zealand’s joining a 14-country-strong statement commemorating the 10th anniversary of an international arbitration ruling that found some of China’s maritime claims in the South China Sea illegal under international law - a decision China rejects - earned an uncustomary stinging rebuke from Chinese ambassador Wang Xiaolong, who warned the stance 'seriously undermines the foundation of a healthy and stable relationship”.
New Zealand is also moving towards joining a new regional defence pact alongside Australia and Fiji. Foreign Minister Winston Peters said New Zealand should “not be fazed” by China’s reaction to the grouping, and he also publicly criticised a 7000 km Chinese ballistic missile test over the Pacific, urging regional resistance.
International trade expert and business leader Stephen Jacobi says he has noticed a hardening of the rhetoric towards China of late, observing there has “definitely been an evolution” since the days of Sir John Key or Dame Jacinda Ardern.
He says that while by and large the country continues to manage things well, it “is concerning that there seems to be one [incident] coming after the other … and it’s always hard to see if a trickle is going to turn into a stream, much less a flood”.
Jacobi says China is still doing things that benefit New Zealand - visa-free travel to China for example (something that has not been reciprocated as yet) - and early this year it introduced a country-specific duty-free cap of 206,000 tonnes of New Zealand beef exports.
“But at the same time we are keeping up this sort of commentary, whether openly or implied, that China is perceived by us to be a risk or a threat to the security and stability of the region, and that's the real problem,” he says. “It runs the risk of eroding what goodwill we have for New Zealand in China.”
This is not just a warm fuzzy feeling but something people have put hard figures against. Across core agriculture, horticulture, and meat sectors, “Brand NZ” commands an average 20% price premium over identical commodity competitors (like South American or domestic Chinese producers) according to research done by Beef + Lamb NZ. That means that as well as our $20b or so trade with China, we also earn roughly $4b extra in 'goodwill profit' annually - money paid by Chinese consumers solely for the words 'Product of New Zealand”.
Jacobi says the example of Australia is apposite: China finally took action against the virus comments after a very prolonged period of gradual ratcheting down of the relationship and several diplomatic stoushes. It actually presented a list of “14 grievances” with Australia dating back several years when it finally decided to enact trade sanctions.
“We haven't yet crossed the Rubicon to really challenge China in something they feel really, really sensitive about,” he says, adding that New Zealand is still perfectly capable of balancing the US and China well into the future.
“But do we want to? That’s the question.”
Aukus the deal-breaker?
There is only one imminent thing Jacobi thinks could cause a definitive blow-out in New Zealand’s relationship with China: If the country decides to act on its exploration into joining Pillar 2 (the level of high tech warfare co-operation) of the Aukus arrangement first established by Australia, the UK, and the US in 2021.
On that point, there is agreement from Stephen Noakes, associate professor of Politics and International Relations and director of the China Studies Centre at the University of Auckland.
“That would be interpreted as a very clear signal that at the end of the day, New Zealand is with those partners and not with China. It would certainly place strain on the relationship with Beijing,” he says. China has repeatedly warned New Zealand against joining the defence grouping, and, he says, “my sense is that that is probably not a bluff. New Zealand could expect there to be some blowback.”
That blowback could impact the country’s trading relationship with China, “if temporarily”, he adds, pointing to what happened with Australia after Scott Morrison’s Covid remarks.
Noakes believes a more imminent possible risk is one of New Zealand being tarred with the “hypocrite” brush to the Chinese. The recent opening of an FBI office in Wellington might have provided some fodder for this charge.
“A few years ago a Beijing-Solomon Islands security pact was signed, and in Australia and elsewhere around the region there was a great deal of panic around that … and people assumed it was China's increasing assertiveness or aggressiveness in the region.
“An FBI office in Wellington that is explicitly watching Chinese build up or activity in the region is going to smell in Beijing like hypocrisy, along the lines of ‘it's a problem when we do it, but not a problem when Washington does it.’
“There is a risk to New Zealand if China believes a double standard is being applied.”
But chairperson of the New Zealand China Council and long-time ambassador to China, John McKinnon, said he would “hesitate to attribute the word hypocrisy to anything that we do, because I think it's the essence of managing relations with different countries: that you are balancing different equities and different interests, and that inevitably may produce something which looks odd to somebody else, but I don't think that is in fact the case.”
“What I would say is that what it indicates … is that China follows these sort of developments quite closely, and that's not to say that that should in itself determine what New Zealand might or might not do.
“But we do need to know, and I'm sure the people who are making these decisions know, that those decisions are observed very carefully in Beijing.”
It’s chill
McKinnon takes issue with the notion that the rhetoric from parts of the New Zealand Government is hardening, saying the current Government “has actually managed its difficult relationship very well”.
“What has happened is that there have been a number of actions recently which the New Zealand Government has reacted to, and that may allow people to draw that sort of characterisation. But I think it's misleading.”
“Obviously, there are things that China does domestically and internationally, which New Zealanders find difficult to to deal with, and I don't see that changing. And I also think from what I've seen is that these things have been handled with a degree of care and caution. And I would expect that to continue.”
Is it in fact noteworthy that China has become more belligerent towards New Zealand?
“I think China is demonstrating what it has often talked about, which is that as a country grows in its wealth, it grows in its ability to have an influence in the world and to shape events, and that's certainly, I think, what we are seeing happening.”
Certainly, China reacted in an unprecedented way to a visit by four New Zealand MPs to Taiwan recently, imposing a one-year travel ban on them, to which Foreign Minister Winston Peters registered New Zealand's dissatisfaction. His officials viewed the ban as a symptom of a hardening, aggressive policy intended to force countries to abandon ties with Taiwan.
Laurenceson pointed to the issue as one which New Zealand was right to signal its opposition to, as it was also right to maintain it was running an independent foreign policy.
But caution was still important.
“Sometimes your foreign minister, Winston Peters, does speak in quite a flamboyant way,” he says.
“You can protect New Zealand's interests, no problem at all, but if you're sort of just firing off-the-cuff commentary that's getting right up in Beijing's face, that's not smart, and could result in repercussions.
“And it doesn't help New Zealand in any way either, that sort of flamboyance. I'd probably suggest cutting that out.”
Another thing most suggest to diffuse difficulties is a policy of trade diversification, which successive New Zealand Governments have already been pursuing for over a decade. The free trade agreement with India is the latest manifestation of this policy, and a meeting held in Auckland this week, the Future of Investment and Trade (FITP) Partnership Ministerial Meeting, brought together officials from Europe, Asia, the Middle East, Africa, Latin America and the Pacific to try and find ways to further reduce non-tariff barriers between a huge variety of countries including New Zealand.
On the issue of the New Zealand-China relationship itself, Stephen Jacobi suggests this country think of some “big new things we can do with them to demonstrate it's not just about selling them stuff”. The Southern Link, which sees this country become a transit hub connecting Asia and South America, is a prime example of the type of initiative he’s proposing.
“Because if it's just about us selling them stuff, that's a big risk. It means there's no consequence for them if we decide to do something stupid,” he says.
After all, at the end of the day, it will not be a loose-lipped politician that will bear the brunt of disrupting the country’s most consequential trade relationship, but those New Zealanders whose livelihoods rely on our largest trading relationship. Which is many of us.
“So I think it is in our interest to maintain a very careful positioning. And for goodness' sake, haven't we been careful about the United States? I mean, we have obviously learnt a really good lesson with China because now we've been applying it to the United States,” he says.
“I would argue that we've been far more outspoken about China than we have about the United States, both directly and in concert with others. And that just goes to show you how the landscape has been changing.”