OPINION:

The signals out of Beijing suggest China’s next phase of technological development will test Western nations.

New Zealand is not immune to these shifting tectonic plates, which are primarily happening between China and the United States at this stage.

“The East is rising and the West is declining,” is how Chinese President Xi Jinping called it at the recent National People’s Congress which endorsed the Chinese Communist Party’s (CCP) latest five-year development blueprint.

No surprises at the Xi rhetoric.

The latest plan advocates China should become more self-reliant on developing key technologies, and make big bets on innovations like hydrogen vehicles and biotech, as the country hitches its economic wagon to the green growth revolution.

That’s not the only Chinese game plan in play. There is a clear emphasis on boosting domestic consumption and continuing to reduce China’s status as the “factory to the world” by exporting cheap, low-quality goods.

As Bloomberg’s Andrew Browne observed: “There’s no question that the ‘West’, led by the US, is in relative decline. And the Trump administration’s botched response to Covid-19, in contrast to China’s ruthless efficiency, gave party propagandists plenty to crow about. But America still has powerful leverage.

“China must now reckon with an ever-tightening technology blockade. US President Joe Biden plans to exploit Beijing’s vulnerability in semiconductors, as well as artificial intelligence and next-generation networks, by building a coalition of techno-democracies to stand up to ‘techno-autocracies’ like China,” said Browne who is the editorial director of the Bloomberg New Economy Forum and a former Wall Street Journal China editor and columnist.

This is the salient point.

Expectations are that Biden will still call the “Summit for Democracy”, which he campaigned on around last year’s presidential election, as an opportunity to “renew the spirit and shared purpose of the nations of the Free World”.

But New Zealand should usefully hedge its bets.

The real issue is the failure of US democracy to deliver on its own people’s desires for their lives to improve. Instead, there has been a destruction of civility within the United States and a bifurcation of the US electorate into hostile and ideologically opposed camps.

What Browne has highlighted — the potential clash between the techno-democracies and the techno-autocracies — is a much more layered issue.

Particularly as the emergence of competing supply chains continues.

Within New Zealand it is notable that senior executives have retained a cautious optimism towards the Chinese market in spite of this geo-strategic rivalry between China and the US.

What New Zealand business has shared with the US is a concern about cyber security issues and the “pay for play” dynamic (also throughoutSoutheast Asia) where there is an emphasis on investing within country in return for trade access.

In 2015, the Herald’s Mood of the Boardroom survey showed CEOs were evenly divided on the question of whether New Zealand was placing too much reliance on the China market, with 42 per cent saying yes, and 41 per cent saying no.

By 2019, CEOs were learning that China’s rapid growth and dynamic business environment was not for the faint-hearted.

Yet it still presents compelling opportunities for businesses. The big issues remain: How do business leaders view the Chinese commercial landscape? What strategies are they using to gain and grow their companies’ own footholds in a rapidly changing and exceedingly competitive market? How is the move to greater environmental sustainability influencing their decisions in the China market? Has the trade war between the US and China had an impact on their own businesses? What are the big new ideas that New Zealand business can advance to foster and support China-related trade?

New Zealand businesses have built extensive commercial relationships with China. Two-way goods and services trade more than tripled from $9 billion in 2008 to $32b today.
Last year the global economy experienced unprecedented disruption to supply chains and demand due toCovid-19.

As New Zealand hosts Apec this year there is an opportunity to have an influence on these prime issues within a context which is positive, not hostile.

The New Zealand and Chinese governments had set a goal to increase bilateral trade with China to $30b by 2020.

But we did not know much about the New Era in China; the business environment for NZ firms trading and investing in China and the potential fallout from the Game of Thrones between the United States and China.

Others expressed caution about being “too optimistic about China, and as a result not preparing any “Plan Bs”.

“This is a risk that we must manage — over-reliance can translate to leverage being applied against us on other matters, in effect using commercial leverage to drive positions on foreign policy, immigration, capital flows, ownership of key assets and so it goes on”, cautioned a professional firm boss.

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