New Zealand can remain in open relationships with China and US, despite tensions between the two superpowers, says an Asia-New Zealand relations expert.
The BNZ Chair in Business in Asia at Victoria University, Professor Siah Hwee Ang, is optimistic the Trump era won’t see New Zealand forced to become monogamous and make a choice between whether it wants to further trade relations with China or the US.
“We’re balancing two superpowers - one that has a very big stock and the other that has a very big flow. That doesn’t necessarily mean they’ll conflict,” Ang says.
Speaking to interest.co.nz in a Double Shot Interview, he explains the US has the world’s largest economy and is the largest importer, so has a sizeable “stock”.
China on the other hand has a high growth rate that contributed to a third of the world’s growth last year. It has large “flow”.
Being two quite different beasts, Ang says the goods and services New Zealand trades with both countries are slightly different.
“We’re not choosing between the two parties. We’re choosing the matter of fact. The matter of fact is that New Zealand is part of Asia. We have to play Asia and if China is more into Asia (especially in the economic sense), then we have to play it,” Ang says.
He notes that while New Zealand has largely followed the lead of developed countries (ie Australia and Canada) when it comes to trade, we have also done our own thing, recognising Asia’s economic significance on our doorstep.
The Trump era won’t change our relationship with other Asian countries
Ang says it’s a common misconception that countries are turning to China as Trump pledges to make it more difficult to trade with the US.
The reality is countries have already been engaging with China, which remains a difficult market to enter.
Ang also believes Trump’s presidency - and the uncertainty it brings - won’t affect New Zealand’s relationships with other Asian countries.
“I don’t necessarily think there’s always going to be a diversification effect. We tend to have that discussion a lot because we want to believe that where there’s a difficult market, we walk away. We should ask the question - which one of them is not a difficult market?”
Ang says every market has its difficulties; be they political, regulatory, language-related or involving embargoes.
“There are always going to be difficulties for any New Zealand organisation in any country.”
Globalisation has always had its limits
Ang maintains lumping different countries and their individual interests together to try to form multilateral trade agreements, has been challenging.
He believes that in spite of Trump, the world was always going to revert back to bilateral trade agreements.
“There are a lot of challenges trying to believe that over time globalisation will make all countries equal, or the same... [They’re] never going to be the same.”
Ang cites the number of different provinces across the likes of China, India and Indonesia, which each want to maintain their independent regulations, customs and languages.
It’s difficult to create unity within countries, let alone between them. Along that same line of thought, he says business alliances are hard enough between two parties, let alone between many.
Ang therefore maintains we shouldn’t be worried, as the world eases back from the some of the principles of globalisation we’ve been striving towards.
“I don’t think we should be worried because the world will never be flat… We should be happy we are all diverse.”
Don’t panic, Trump’s just ‘testing the waters’
Furthermore, he believes we shouldn’t worry about Trump turning the world as we know it upside down.
“You can almost interpret whatever he says as pushing the boundaries”, Ang says, acknowledging Trump’s threat he would put a 45% duty on Chinese imports into America.
While Trump might impose a duty, he maintains it won’t be at 45%.
“He’s probably testing the waters.”
Trump has after all already made a U-turn on his stance on the One China policy, bowing to China’s interests and affirming that the US sees Taiwan as a part of China.
Ang maintains you can only trust 30% of what Trump says.
He says the US still has controls in place to block or slow down changes.
“It’s not a family business that you can say, ‘Let’s do this today and it’s done’. There’s no such thing. We’re talking about systems here. National system and international systems that you have to bypass.”
Ang admits Trump’s presidency poses challenges as his political stance is unclear, but acknowledges “he’s a very economic person”.
“[And economically] it doesn’t make sense for the US and China to be against each other. In fact, the rest of the world actually needs them to work together.”