Most businesses are satisfied with how Christopher Luxon has managed New Zealand’s relationship with China, but dissent is growing

New Zealand businesses in China feel diplomatic relations between the two countries have worsened over the past year but are still highly optimistic about growth prospects.

The NZ Business Roundtable in China (NZBRIC) survey found 70% of its members thought the bilateral relationship was strong, down from 84% last year. This is the worst result since the survey started in 2023.

Satisfaction with the NZ government’s handling of the China relationship dropped nine percentage points to 69%, with 12% of firms saying they were “very unsatisfied” compared to none in prior years.

The Chinese government scored a bit better, with 78% of Kiwi businesses reporting being satisfied with how they were managing the relationship and only two saying otherwise.

A majority of 60 firms in the NZBRIC survey said they had high or very high confidence operating in China, with most others feeling moderately optimistic.

Overall, the results suggest businesses think the NZ-China relationship remains strong, but it also reveals a growing concern that political differences could eventually harm trade.

NZBRIC said geopolitical dynamics can significantly influence trading conditions and consumer behavior within China. The data showed businesses were sensitive to perceived shifts in the bilateral relationship.

This survey was taken before Prime Minister Christopher Luxon began his first visit to China on Wednesday, where he told reporters he did not think the relationship had cooled.

“We have a strong relationship with the political leaders here in China. I want to continue to strengthen those relationships because that's how we get to do the two things we need to be able to do,” he said.

The two things he referred to was to drive job growth in both countries and to make sure China used its influence as a global power to address global challenges.

Fair-weather friend

In an article on Tuesday, prominent businessman David Mahon criticized Luxon for appearing to support the United States’ attempt to block China’s economic and political rise.

“There will be the customary red carpets, handshakes and smiles when Prime Minister Luxon is in Beijing this week, but sources in the Chinese Government have been clear that they have lost trust in their fair-weather trading partner,” he wrote.

Mahon said larger businesses should call out the clumsy handling of the critical relationship, but it is unclear how many Kiwi exporters share his view. Those who spoke to Interest.co.nz on Wednesday said the relationship was either good or stable and were happy with Luxon’s performance.

That said, members of the business delegation are invited or approved by the Prime Minister’s office and are reluctant to openly criticize government policy while on the trip.

One China expert, who was not part of the delegation, said the NZ–China relationship had clearly deteriorated but there wasn’t any reason to think trade retaliation was on the cards.

It was likely Chinese officials would use the trip as a chance to assess whether NZ’s more hawkish policy was driven by Foreign Minister Winston Peters, or if it was becoming a consensus view within the National Party.

The expert said Luxon should use his upcoming meetings with President Xi Jinping and Premier Li Qiang to signal his personal commitment to protecting the relationship.

New Zealand had built a lot of political capital with China over the years, but it wouldn’t last forever.

Business-as-usual

Meanwhile, Kiwi businesses continue to grow in China and see the market as a top priority for investment. A majority surveyed by NZBRIC said revenues and profits were up relative to 2024, despite an “economically challenging year”.

The trade war with the US has made export-led growth more difficult and encouraged China to accelerate efforts to make its economy more self-sufficient and to grow domestic consumption.

Local government officials are reportedly asking these foreign businesses seeking market access how they would contribute to these goals, as well as create jobs and innovation in China.

This is both a help and hinderance. Most Kiwi businesses sell high-end products which may promote new consumption and employ Chinese staff to help them navigate the local market.

However, China policymakers would prefer consumers to buy domestically produced products and encourage them to do so. NZ businesses say increased local competition is the biggest challenge they face, not geopolitical tensions.