David Mahon: Mahon China Investment Management CEO on concerns that China's lost trust in trading with NZ

One expert has warned China has lost trust in New Zealand as a trading partner - and it could impact the current FTA.

Prime Minister Chris Luxon is leading a trade delegation to China, with a meeting with China's President Xi Jinping set to take place this coming Friday.

Mahon China Investment Management CEO David Mahon says Luxon's sending over a modest delegation over a short timeframe - and it's sending the wrong message to China.

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Episode Transcript

Speaker 1 (00:00):
And now the Prime Minister is on his way to
China this trade delegation as we speak. He's going to
meet with President Chijingping on Friday. David Mahn is the
chief executive of man China Investment Management, currently in Beijing
and with us. Now, Hey, David, hi, Heather, I have written.
I've read rather the paper that you've written, and it
doesn't sound like you think the Chinese are going to

(00:20):
be very impressed with this delegation. What are we doing
wrong here?

Speaker 2 (00:25):
The delegation is coming very late in the Prime Minister's tenure,
and there's an emphasis that he was in India before
with the largest trade delegation in New Zealand's history. He's
bringing an important but very modest one to China. So
and I think he's only thirty hours on the ground,
so it's almost perfunctory and sends a message to China

(00:47):
that although they're our largest trading partner, in a sense,
they don't matter so much to us and we can't
afford to do that.

Speaker 1 (00:56):
Is this US perhaps overthinking this or is this already
how they feel?

Speaker 2 (01:01):
Well, I've lived in Beijing for forty years and although
I don't have high level contacts. I know people that
work in the system and relate to getting with Oceania.
And quite clearly the Chinese government has watched this New
Zealand government announce its intentions to draw closer to America,
form alliances with America after forty years of being a

(01:24):
non allied country, and that means really working to contain
China or join war games against China. So we can't
have both if we want to be close to America
and under its wing. It's one thing, or trade freely
with all As a non allied country that makes its
own choices, we need to be careful of that. So
now I don't think Beijing's happy at all.

Speaker 1 (01:46):
Okay, So what are they going to do then to
express their unhappiness.

Speaker 2 (01:51):
Well, it's a very hospitable culture, and the red carpets
we rolled out, and there'll be good speeches, and I'm
sure that the Prime Minister will be treat with courtesy,
and I'm sure the whole delegation will have a good run.
I think it's possible that there will be messages of concern.
I don't know that, and we probably won't know because

(02:12):
in those meetings there are very few people. But It's
something which our foreign affairs, culture and business as a
hearing in China that China is worried about this country
that is a small country, but one that has been
its own person in a sovereign sense for so long,

(02:33):
and China trusted and relied on. We were the first
to have a free trade agreement with China is beginning
to go into this camp where it's like culture wars,
where you're dealing with a world where the post colonial powers,
governments run by I suppose Western anglophone white people, want

(02:54):
to retain some kind of primacy. And this is an
old idea, one that really has a character our politics
for many, many decades. So they look at this and
I think they're perplexed, but the legacy is so good.
My instinct and from what I'm hearing, is that they'll
wait for the next election and see what that new

(03:15):
government says and what kind of stance they'll take.

Speaker 1 (03:17):
Okay, So no tinkering with the FTA or anything kind
of punishment at.

Speaker 2 (03:21):
The moment, I don't think so. I think also China's
got so much on its hands with countries that are
far more important than that. We're probably not on the radar,
which has been to our benefit.

Speaker 1 (03:33):
David, do you think that we're doing the wrong thing though,
because I mean we have been told for a very
long time we need to diversify away from China and
that will be diversifying towards India and India need to
be formed over and that is what we've done. Is
that the wrong thing to do to prioritize India over China?
Do you think for the broadery New Zealand economy.

Speaker 2 (03:56):
Not at all. I think we go back to John
Key's administration considerable efforts towards India trying to get the
basis of a free trade agreement, and I think when
we look at the growth of our trade, of course
we should diversify. A prude in company does that, so
a country should. And India is far more complex than China.

(04:16):
India has far more internal barriers to trade with foreign
countries than China, but it is a huge economy, it's growing.
We should be I think giving more attention to Indonesia.
There's more work to be done in Vietnam as well.
But it has been a narrative about ten years now,
and this is a Wellington thing. This is not a
national labor thing that we should be doing less with

(04:40):
China because China's bad and I think a lot of
our officials are more comfortable going to Washington, Canberra, London,
Brussels than Hanoi, Beijing, Manila. So this is a mindset
that we need to get past for an Asia Pacific economy,
and I think China is important. We shall expand here

(05:02):
and yes, diversify elsewhere where we can.

Speaker 1 (05:04):
It's good to talk to you, David. I really appreciate
it this David Mann, chief executive of man China Investment Management.

Speaker 2 (05:10):
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