Middle-ground advantages

By deepening cooperation, China and New Zealand can have a far-reaching impact on regional peace and development, and even the evolution of the international order

China and New Zealand are significant stakeholders, active participants and important contributors in Asia-Pacific regional economic cooperation. Whether at the bilateral or multilateral level, both countries have achieved a series of accomplishments in promoting the well-being of their peoples, regional economic development and global economic growth through practical cooperation.

In recent years, in spite of the COVID pandemic and intensifying US-China strategic rivalry in the region, China and New Zealand have maintained strong stability and pragmatism in their policies toward each other, and their trade relations have demonstrated strong resilience. In 2023, the total bilateral trade volume reached $21.36 billion, nearly five times the scale in 2008.

At the regional level, China and New Zealand were among the first 10 members that completed domestic approval procedures and made the RCEP officially come into effect on Jan 1, 2022. Additionally, China submitted the application to New Zealand, one of the founding members to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership in September 2021, and has been actively communicating with New Zealand on related follow-up work. All these efforts reflect the determination of both countries to jointly promote the development of economic cooperation in Asia-Pacific.

However, with "Indo-Pacific" replacing Asia-Pacific as the "main battlefield" for the United States to comprehensively engage in economic competition and strategic games with China, the development of regional economic cooperation has been facing more challenges in recent years.

In May 2022, the US officially launched the "Indo-Pacific Economic Framework for Prosperity". The membership of the IPEF overlaps with that of the RCEP but deliberately "bypasses" China, an active participant in regional economic cooperation. Its scope of cooperation does not involve trade and investment liberalization and facilitation, but mostly focuses on key strategic industries related to the US-China strategic competition and exclusive institutional arrangements targeting China's Belt and Road Initiative. These fully illustrate that the essence of the IPEF is not only an attempt by the US to create an "anti-China economic circle" in the region, but also a tool for the US to counterbalance China's increasing regional influence, rather than truly serving the development of the region.

In order to accelerate the IPEF negotiation process and persuade neighboring countries to "decouple" from China, the US is not only playing up the "China threat theory", but also launching a strong diplomatic offensive against various regional member states. This not only intensifies the sense of insecurity and vigilance among neighboring countries toward China, but also increases their contradictions and difference in policies toward China and the US.Moreover, it may further exacerbate competition and opposition between the IPEF and existing mechanisms such as the RCEP, CPTPP, and 10+3, and accelerate fragmentation of global supply chains and international division of labor.

To alleviate the pressure of "taking sides "caused by great power rivalry, small- and medium-sized regional countries such as New Zealand tend to engage in pragmatic cooperation with both China and the US in different areas and strategically participate in cooperation mechanisms led by different countries. In this way, not only can they maximize their economic benefits and hedge against potential risks, they can also enhance their own influence in regional cooperation. From this perspective, these countries have great potential to become the crucial "middle ground" for buffering China-US competition, and important forces in maintaining regional peace and stability and advancing regional economic cooperation.

In this light, by further strengthening cooperation under bilateral and multilateral frameworks, China and New Zealand can not only promote their own interests, but also have a far-reaching impact on regional peace and development, and even the evolution of the international order.

For China, first, it is important to deepen its understanding of neighboring countries such as New Zealand and respect their difficulties in dealing with China-US relations. China should maintain a pragmatic and friendly approach toward them, and avoid forcing them to take sides. Second, China should further develop and open up the Chinese market, take more practical measures to achieve substantial results in economic cooperation and actively participate in regional climate governance together with New Zealand to enhance mutual trust between them. Third, China should fully leverage New Zealand's advantages in institutional design, and enhance exchanges and cooperation in regional institutional construction, making the RCEP more aligned with the development needs of all members.

For New Zealand, first, it should strive to maintain a pragmatic and relatively independent policy toward China, avoiding becoming a pawn of the US in containing China in Asia-Pacific. Second, it should deepen its understanding of the Chinese market and related regulatory policies. It should localize and improve its products exported to China based on Chinese consumers' preferences to enhance their competitiveness in the Chinese market. Third, in the process of seeking its own low-carbon economic transformation, it should strengthen exchanges and cooperation with China and other regional stakeholders in clean technologies, renewable energy, green finance, carbon emissions, and other areas, proposing more constructive solutions in promoting economic cooperation in the Asia-Pacific region.

The author is an assistant research fellow of the Institute of World Economics and Politics and the National Institute for Global Strategy at the Chinese Academy of Social Sciences. The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.

Contact the editor at editor@chinawatch.cn.