The Dragon in the Tasman: The Upgraded New Zealand-China Free Trade Agreement and Australia

17 March 2021 Patrick Triglavcanin, FDI Associate

The upgraded Free Trade Agreement between New Zealand and China has agitated trans-Tasman relations but provides a potential example for Australia of how to engage Beijing.



On 26 January, New Zealand and China upgraded their existing Free Trade Agreement (FTA), further entrenching their economic ties through reduced export barriers, greater market access and new chapters relating to areas of co-operation, such as the environment and e-commerce. After the deal was signed, New Zealand’s Trade Minister, Damien O’Connor, urged Australia to speak with more ‘respect’ and ‘diplomacy’ towards China, comments that were not well received in Canberra.

New Zealand’s upgraded FTA with China is an interesting development, as it has unsettled the historically firm Trans-Tasman relationship. Moreover, it is evidence of a liberal democratic Indo-Pacific power engaging with China, and China engaging with it, for mutual benefit, despite its condemnation of the Chinese Communist Party’s (CCP) behaviour. Canberra should not let its acrimonious stance on China affect its relations across the Tasman and should consider how aspects of New Zealand’s independent foreign policy and diplomatic engagement with China could be adopted to help mend the Sino-Australia relationship.


Similar cultures, histories and geographic locations bind Australia and New Zealand, and have ensured that Trans-Tasman relations have historically remained cordial, even sibling-like. Both nations fought alongside each other in the two World Wars and committed themselves to the post-Cold War US-led liberal world order through the signing of the Australia, New Zealand, United States (ANZUS) Security Treaty in 1951. That treaty saw them further commit to major conflicts such as the Korean War (1950-53) and the Second Indochina (Vietnam) War (1955-75) alongside the US. Australia and New Zealand’s stance towards the US started to drift apart after the Second Indochina War, however, as policymakers in Wellington began to increasingly prefer independence from Washington amid anti-nuclear and anti-war sentiments at home, whereas Canberra still saw US security interests as intrinsically tied to its own, leaving the relationship indispensable and of paramount importance.

Australia and New Zealand share a multitude of vital security concerns with one another and the US, and the three still co-operate accordingly. When it comes to China, however, the effects of New Zealand’s drift towards a more independent foreign policy in the 1970s and ‘80s, together with Australia’s continued historical commitment to US interests in the Indo-Pacific, are evident, and subsequently provide insights for policymakers and diplomats in Canberra.

Sino-Australian relations are decidedly chilly and perceptions of China overwhelmingly negative among the Australian public. The deteriorating relationship is a symptom of a plethora of developments over the past year (see here, here, here and here for recent FDI publications). When reflecting on these developments, however, what stands out is Australia’s support for the US in disputes stemming from the increasingly bitter Sino-US relationship that are mostly unrelated to Australia’s national interest, apart from being an ally to the US, and being punished for that support by China.

New Zealand, on the other hand, engages with China differently, as its more independent foreign policy has granted Wellington fluidity in reacting to China’s rise. New Zealand is still deeply involved in the Five Eyes intelligence alliance between itself, the US, United Kingdom, Australia and Canada, despite its membership increasingly being questioned in recent months. New Zealand is also still a member of the liberal democratic community and ardently upholds its tenets, evidenced by Prime Minister Jacinda Ardern’s imposition of sanctions on Myanmar’s military in February and continued condemnation of the CCP’s treatment of its Uyghur minority. In conjunction with that, and unlike most Indo-Pacific powers allied with the US, Wellington has continued, however, to seek improved relations with China.

Shrewd diplomacy is key to the success of Wellington’s strategy, and it has been aptly demonstrated. Xi Jinping’s government has strong revisionist and neo-Confucian undertones, seeing a revival in Chinese beliefs of its social, economic, military and political superiority. China is thus very sensitive to foreign condemnation, especially when involving its own internal affairs, which are matters the CCP strongly believes are its own to solve. Ardern, like most liberal world leaders, has rightly condemned the CCP’s behaviour toward its Uyghur minority. She did that, however, while walking a diplomatic tightrope, and made sure to not condemn the actions too early or with too much vigour. New Zealand’s statements on sensitive Chinese issues are also almost always done unilaterally, instead of multilaterally through alliances like the Five Eyes. This diplomatic strategy is evident in New Zealand’s suspension of its extradition treaty with Hong Kong and approval for the independent inquiry into the origins of COVID-19, all done after other major powers, so not to isolate Wellington or have it perceived as “anti-China” in Beijing. The recent decision by New Zealand’s foreign minister, Nanaia Mahuta, to issue a separate statement from the Five Eyes Alliance on the arrest of pro-democracy agitators in Hong Kong further highlights this strategy.

New Zealand’s independent foreign policy has ultimately allowed it to manoeuvre between the informal US-led Indo-Pacific security alliance and China with relative impunity. The signing of the upgraded FTA earlier this year is further evidence of Wellington’s adroit diplomacy, and it may provide an example for Australia.

O’Connor’s comments rightly ruffled feathers in Canberra, as they were unnecessarily divisive and displayed a lack of political judgement. The signing of the deal may, however, herald New Zealand’s rise as a potential mediator between China and the US, Japan, India, South Korea and Australia; New Zealand is a liberal democratic Indo-Pacific power with a good rapport among those powers, and it has shown how to effectively work with Beijing while still being positively engaged in the international democratic community. This is, however, unlikely, as Wellington does not share the same pressing security concerns as India and Japan, which are engaged in territorial disputes with China, and South Korea, which is anxious about Beijing’s support for Pyongyang. Furthermore, it is doubtful whether Wellington will be able to change the Cold War mentality of great power politics and hegemonism that underpin Beijing and Washington’s policies towards one another.

Perhaps, instead, the example may come not from choice words or suspicious assumptions, but in the ramifications of the upgraded FTA itself. New Zealand has not allowed day-to-day issues with Chinese behaviour to arrest its domestic progress or continued flourishment on the international stage. As the world emerges from the pandemic and the wheels of the global economy turn again, New Zealand may find itself better poised than Australia to recover through better trade relations with China and a fluid international position. Relations with China need not be a zero-sum game and Ardern’s New Zealand is proving that. Australia should watch its “little brother” across the Tasman closely, not with a suspicious eye, but an inquisitive one.

About the Author

Patrick Triglavcanin is studying for the degree of Master of International Relations and National Security at Curtin University.

Any opinions or views expressed in this paper are those of the individual author, unless stated to be those of Future Directions International.

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