Bernard Hickey: Blind spot on our economic highway

China is NZ's biggest trading partner. Photo / Thinkstock

I've learned over my 30-plus years of driving to be very careful about the blind spot behind my right shoulder because the mirrors I usually rely on don't show me everything. So I always swivel and check before changing lanes.

A couple of weeks ago, one of New Zealand's most experienced and successful business leaders, Sir Henry van der Heyden, forgot to check New Zealand's biggest blind spot before commenting.

His now famous comments about "never, ever" trusting businesspeople in China sparked quite a storm. He quickly apologised and put it in the appropriate context of Fonterra's misplaced trust in its joint venture partner Sanlu.

But the intensity of the reaction threw a spotlight on a vulnerability in New Zealand's current economic strategy. Just like the blind spot for a driver; we all know it's there, but we hardly ever talk about it. And just like the truck that seems to appear out of nowhere as we move into the next lane, China is looming very quickly up behind our economy.

New Zealand is betting its economic future on a country with which we have few durable cultural or political ties. We don't know its history, we don't understand its political system and we don't really know how it "works". This has happened much, much more quickly than the previous shifts in our economic and strategic landscapes. China has jumped from being our third-biggest partner to our biggest in less than five years.

The last major "lane change" in New Zealand's economy took 30 years, through the 1970s, 80s and 90s. We switched from having Britain as our main trading partner to a Western mix dominated by Australia and America.

They shared New Zealand's cultural DNA, with all the institutions we understood such as democratically-elected governments, independent judiciaries and free media. We spoke their language and shared their history.

Shared institutions and culture are the things people fall back on when the going gets tough. They help smooth troubled waters and resolve disputes without everything going pear-shaped. Our unease about the lack of these supports with China explains why we were so sensitive and embarrassed by Sir Henry's comments. It's why John Key was sensitive this week when refusing to say in Parliament whether he ordered Chorus to block Huawei because of cyber security fears.

We know in our bones that our largest trading relationship is based on the whims of unknown and unaccountable leaders over whom we have little power to influence.

China is New Zealand's economic blind spot. We need to get bigger mirrors and be careful to look over our shoulder early and often.

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