Fran O'Sullivan: New Zealand's tricky balancing act between two trading superpowers

United States President Donald Trump (left) and Chinese President Xi Jinping. Photo / AP

COMMENT: Are New Zealanders "panda huggers" (diplomatic speak for those who enjoy good relations which China) or are we skilfully balancing our relations with both the US and China during a period of strategic competition by the great powers?

I'm in the camp that thinks the latter. And I would like to see it remain that way.

But if New Zealand is to credibly hold to this position, it may require our politicians to turn a slightly sharper lens on China when it comes to intellectual property infringements and behind-the-border barriers in much the same way as they now do to US protectionism.

In March I took part in a think tank-led symposium on United States-New Zealand relations.

The conference was co-hosted by the Wellington Centre for Strategic Studies and the Washington-based Centre for Strategic and International Studies (CSIS), with support from the US State Department.

It was to cover bilateral relations, challenges to democracy and governance, regional security issues, trade and economics, and New Zealand, Australia and the South Pacific.

But the sub-theme was New Zealand and China.

Many of the US think tankers — some of whom had close links to the Trump Administration — clearly believed that New Zealand was too close to China.

There was little recognition — at least in the opening part of the conference — from US participants that the strategic partnership between New Zealand and the United States has been strengthened.

In the early 2000s, New Zealand and the United States began the decade-long process to rebuild a relationship which fractured over the 1980s ANZUS breakdown.

What was clear was that attitudes towards China had hardened in Washington.

Not simply in the political camp but also within business.

The resultant news coverage was hawkish.

The CSIS report — expected out in the next week or so — may surface some of those US attitudes.

But here is the balancing problem. New Zealand is a trading nation.

The US has never been that concerned about New Zealand's good diplomatic relations with China to offer this country a counter-balancing bilateral free trade deal.

At least not the kind it forged with Panama, Jordan and Colombia to keep those nations in its camp.

There's never been a US bilateral deal on offer like the ground-breaking agreement with China that we signed in 2008, although the TPP — which the US and NZ originally spearheaded — would have substituted.

But both Donald Trump and Hillary Clinton pulled away from it during the 2016 presidential election campaign.

Trade insiders joke that the US President's ego is such that renaming the CPTPP the Trump Pacific Agreement might just result in getting the US to join and result in a long-talked about Asia-Pacific deal.

Trump certainly flirted with the prospect but quickly pulled back.

What we do know is that under the Trump Administration there's been a tendency to talk up the bluster when it comes to trade.

But pragmatism does ultimately come into play as proven by the rescoped NAFTA deal which was not the one-way (America First) bet that the President earlier promised.

The US Midterm elections resulted in a predictable outcome. The Democrats now control Congress.

This gives them sufficient clout to stall the Trump agenda when it comes to major legislation including his policies on taxes, immigration, regulations, health care or trade.

If the US economic boom continues, that could be waited through.

But if it results in paralysis — or even worse, government shutdowns over the budget or debt-ceiling issues — there would be a rub off.

Trump and President Xi Jinping will meet again at the G20 summit but there is no sign that either side will reduce their punitive tariffs.

The US continues to see China as a strategic competitor and a direct threat to other liberal democracies.

It wants New Zealand to take a more forward-learning stance.

New Zealand wants the US to support multilateral institutions.

As a trade dependent nation this country simply wants free trade.