Intensifying global geopolitical competition and geoeconomic fragmentation are posing complex challenges to middle powers across the world — New Zealand among them. Although its population barely tops 5 million and its military consists of only 12,000 regular and reserve force personnel, New Zealand is an indispensable player in the Anglosphere security and intelligence architecture.
It follows that amid deepening major power rivalry, New Zealand is particularly, and not unexpectedly, subjected to growing pressure from its traditional allies to adopt an ever-tougher stance on Beijing. Yet China is its largest trading partner, which places New Zealand in a delicate position: It must balance its economic interests with its alliance relationships and commitments. Fortunately, and impressively, New Zealand is quite experienced at handling such challenges.
It is generally acknowledged in New Zealand that given the country’s Western and Pacific identity, its security and economic interests should not be expected to always align with those of its formal allies. This perception and assessment have seen New Zealand being serious and open about striving for an independent and balanced foreign and security policy.
An often-cited example in this regard is its nuclear-free legislation passed in 1987, which bans nuclear-armed or -powered ships and aircraft from entering its territorial sea, land or airspace. An immediate effect was that American naval vessels were barred from docking at New Zealand’s ports because of the U.S. Navy’s policy to “neither confirm nor deny” nuclear capability.
This action resulted in New Zealand being suspended from its tripartite ANZUS military alliance with the U.S. and Australia and having its status downgraded from America’s ally to friend. Yet New Zealand was not deterred from pursuing its nuclear-free aspiration and has carried forward the legacy to date.
Another widely noted example of New Zealand following an independent foreign policy is that it was the first Western country to recognize China as a market economy and the first OECD state to secure a comprehensive free trade agreement with China. These initiatives produced a huge spurt in New Zealand’s economic relationships. Today, China is its largest trading partner and takes twice as much of New Zealand’s exports as Australia and the United States. More important, its FTA with China remains one of the few that includes agricultural commodities, the export of which are viewed as the foundation of New Zealand’s economy.
Relying heavily on dairy, meat, wood, and fruit sales, New Zealand attaches great importance to the Chinese market, which is widely reported to account for 35 percent of its dairy exports, 38 percent of its meat and wool sales, 54 percent of its forestry products trades, 22 percent of its apple exports and 36 percent of its seafood sales.
Being a small and export-led island economy, and physically far away from the rest of the world, New Zealand is always conscious of the risks of putting all its eggs in one basket, or becoming over-dependent on one market. With rising global geopolitical uncertainties, trade tensions, protectionist populism and headwinds facing the Chinese economy, there is more talk in New Zealand about exporters diversifying away from China. The public appeals are, however, accompanied with loud reminders that China is the main trade partner of not just New Zealand but also more than 140 other countries and regions worldwide. This reality says much about the colossal size and magnetic attraction of the Chinese market and the daunting challenge diversifying or decoupling from it.
Increasing insights and analyses from New Zealand also indicate that even the much-touted “friendshoring” and “ally-shoring” strategy may not enable the country to de-risk dependence on China for its key goods exports. A commonly accepted reason is New Zealand’s constrained market access to the European Union and the United States, which lead the call for it to trade first with political and economic allies.
Similarly, since the U.S.-led Indo-Pacific Economic Framework does not include market access elements, New Zealand’s membership in that partnership is not expected to allow options other than continuing to send a significant proportion of its exports to China.
There are thus many voices of caution in New Zealand on its being “very open” to joining AUKUS Pillar 2. The main concern is that while the second pillar of AUKUS reportedly involves cooperation on non-nuclear advanced military technologies and capabilities, it may still compromise New Zealand’s independent foreign policy and impair its complimentary trading relationship with China and hence undermine its own economic security.
Of course, New Zealand’s independent foreign policy has never meant that it is a non-aligned nation. Neither has the independent stance ever held New Zealand back from attaching great importance to continued close economic, political and social ties with Australia, the United Kingdom, the United States and other allies. Yet it is widely maintained in New Zealand that, unlike the large powers, its interests are better served by maintaining friendly relations with all nations through an evenhanded, balanced and non-aggressive approach.
Meanwhile, the demonstrated skills and competency in simultaneously maintaining a close economic relationship with China and a tight strategic partnership with the United States also indicates that New Zealand can function as a stabilizing force in geopolitical rivalries and geoeconomic competition.
Further, reflecting the wisdom and practices of its indigenous people, the Maori, New Zealand does not take a hierarchical view of international relations. Instead, it follows the Maori cultural principles of respect, humility and cooperation and regards all relations — human-to-human, human-to-nature and intergenerational relations as important. In particular, New Zealand respects the “mana,” or status, power and rights of all countries in support of own national interests and values, whether or not they are like-minded partners.
At the same time, New Zealand also seeks to help bridge differences and build an inclusive rules-based international system for equal and greater participation in dealing with global challenges. Being a non-aggressive and evenhanded middle power with a rich history and cultural knowledge of relationship development and management, New Zealand continues to demonstrate confidence in navigating geopolitics in a shifting world.
