Sensitivity over South China Sea puts Key on the back foot

EDITORIAL

Prime Minister John Key finds himself in a tricky diplomatic situation as he visits China this week seeking concessions from our largest trading partner.

Just before he touched down, the Chinese news agency Xinhua released an editorial warning New Zealand not to enter the debate into the ownership of small islands in the South China Sea.

The editorial bluntly warned that future relations could be endangered and reminded New Zealand that it was not a concerned party. It carries weight because the Chinese media is closely controlled by the government, but Key’s response that it would almost certainly be raised was appropriate.

This country’s participation in joint naval exercises in the South China Sea has obviously annoyed the Chinese. Key has said New Zealand will not alter its stance and the exercises are in an area not involved in the dispute, but he is on the back foot.

That is a pity because the renegotiation of the eight-year-old free trade agreement with China is extremely important. Two-way trade is worth $19 billion, with China overtaking Australia as our biggest trading partner in 2013.

Australia obviously regards its China trade extremely seriously — Prime Minister Malcolm Turnbull led a delegation of 1000 business people there last week.

The main goal of Key’s visit is to seek an extension of import quotas for New Zealand and a reduction on the tariffs imposed by them. The terms of the FTA allow for changes if either country negotiates a more favourable trade agreement with another country, and New Zealand’s case is that China has done so with its recently agreed FTA with Australia.

The TPPA deal, which excludes China, also casts a long shadow.

It all adds up to a complicated situation but there are some positives Key can fall back on. He is said to have a good relationship with President Xi Jinping, who has become the most powerful Chinese leader since Mao.

Fortunately New Zealand has a long history of association and of recognising China, going all the way back to 1972 when Mao Zedong was still in power.

Prime Minister John Key finds himself in a tricky diplomatic situation as he visits China this week seeking concessions from our largest trading partner.

Just before he touched down, the Chinese news agency Xinhua released an editorial warning New Zealand not to enter the debate into the ownership of small islands in the South China Sea.

The editorial bluntly warned that future relations could be endangered and reminded New Zealand that it was not a concerned party. It carries weight because the Chinese media is closely controlled by the government, but Key’s response that it would almost certainly be raised was appropriate.

This country’s participation in joint naval exercises in the South China Sea has obviously annoyed the Chinese. Key has said New Zealand will not alter its stance and the exercises are in an area not involved in the dispute, but he is on the back foot.

That is a pity because the renegotiation of the eight-year-old free trade agreement with China is extremely important. Two-way trade is worth $19 billion, with China overtaking Australia as our biggest trading partner in 2013.

Australia obviously regards its China trade extremely seriously — Prime Minister Malcolm Turnbull led a delegation of 1000 business people there last week.

The main goal of Key’s visit is to seek an extension of import quotas for New Zealand and a reduction on the tariffs imposed by them. The terms of the FTA allow for changes if either country negotiates a more favourable trade agreement with another country, and New Zealand’s case is that China has done so with its recently agreed FTA with Australia.

The TPPA deal, which excludes China, also casts a long shadow.

It all adds up to a complicated situation but there are some positives Key can fall back on. He is said to have a good relationship with President Xi Jinping, who has become the most powerful Chinese leader since Mao.

Fortunately New Zealand has a long history of association and of recognising China, going all the way back to 1972 when Mao Zedong was still in power.

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