What Do the Chinese Pay For?

The Herald’s readiness to alert its readers to the important conclusions of the University of Canterbury research into the links between China and past and present New Zealand politicians and their family members is to be commended, not because there is anything necessarily sinister about such links, but because we need to know about their extent and their possible significance.

At the very least, we might regard their number and extent as flashing a warning light.  Why is it that so many influential Kiwis, with entrees nto the heart of the political, economic and trading establishment, find themselves in such demand from Chinese interests?

There is no reason, of course, why China – a global power of growing diplomatic and economic significance – should not seek to extend its influence by any means legitimately available.  In assessing that legitimacy, however, we need to take account of factors that many might be inclined to overlook.

There are aspects of China’s relations with other countries, such as New Zealand, that may not easily be appreciated without a deeper understanding of the Chinese world view.  We may not, for instance, fully grasp that China’s objective in its economic relations is not merely to secure essential supplies (and dairy products these days fall into that category) but to become self-sufficient – to control and own the whole supply chain so that they are no longer dependent on trade deals that may have only a limited life.

So, when we see the Chinese interest in buying up dairy farms, and setting up dairy factories to produce finished goods, and sending those products exclusively to Chinese markets, is this merely the consequence of individual business decisions being made by independent Chinese companies?

Or is it, rather, part of a much wider and centrally driven (as befits a centrally planned economy) strategy?  Is it not realistic to see the whole process as the equivalent of physically integrating a chunk of New Zealand real estate and productive capacity into the Chinese economy?  Those farms – whose production is totally directed to the Chinese market and whose profits are with equal certainty destined for Chinese pockets – might as well be re-located, as I said a couple of years ago in the Herald, into Zhejiang province.

Whether or not we think this is a desirable development, we would be naïve not to recognise it.  And we would also be naïve not to see that, for almost all purposes, no distinction is to be drawn between the objectives and initiatives of Chinese business and businesses, and those of the Chinese government.

Chinese businesses understand very well that the only way they can operate successfully is through acting as the agents and as an arm of the Chinese government.  They will do deals with foreign interests only if they are in line with the government’s objectives, and the deals they make should always be judged in that light.

Add to that the – sadly – well-documented information about Chinese attitudes to business dealings.  There is little regard for ethical considerations or legal rules, a readiness to get around restrictions and regulations to protect the public interest, and  a willingness to buy what is seen as necessary by way of influence and the inside running.

New Zealand businesses and individuals, operating as they do in a country that regularly tops international ratings for business probity and honesty, and for the absence of sleaze and corruption, are ill-prepared to function in a different cultural climate.

The willingness of prominent New Zealanders to sign up with Chinese paymasters should accordingly be judged in the light of these factors.  They – and we – should ask what it is that they are selling that is worth the remuneration they receive.

Is it their special business or professional expertise?  Or is it rather their closeness to the seat of power, their knowledge of how and by whom decisions are reached, and their ability to influence the decision-makers?

New Zealand will surely do better in the long run if we retain some sense of our own identity and of precisely where our own interests lie.  Our early days as a colony are surely well behind us.  There is no future for us in returning to that status in relation to China or anyone else.

Bryan Gould

21 September 2017