The rush to be an Asian nation

As Prime Minister John Key flies out on a 10-day trip to Korea, China and Vietnam, JOHN HARTEVELT asks what he means when he says Asia "is where New Zealand must be".

Welcome to Asia. It's the continent that sheltered us from the storm in the global financial crisis. It is where at least 10 per cent of us come from. And it is where John Key says we belong.

The prime minister leaves today on a 10-day trip to Korea, China and Vietnam in a mission to develop deeper and stronger ties with the Asian powerhouses that are supposed to provide our future.

"I think the opportunities are almost limitless," Key says. "In the next 10 to 20 years the trend is almost irreversible."

But did anyone stop to check what this actually means for our country? Has anyone seen past the won, yuan and dong signs flashing before their eyes to notice that our Asian population will keep climbing, to be nearly one million by 2026?

Is no-one concerned at the rush to do business with China? If Asia is where we belong, isn't it time we got to know the neighbourhood?

In 1915, a political refugee named Chiu Kwok-chun landed in New Zealand. He belonged to the Kuomintang (the Chinese Nationalist Party) and had been sent originally to Sydney to promote political activism against President Yuan Shih-kai's government. Chiu was expelled from Australia and came to New Zealand, where he started a political newspaper, the Man Sing Times.

Fast forward to 2010 and his grandson, Graham Chiu, treats Wellingtonians for arthritis.

In a room on Lambton Quay, which he rents once a week to treat patients with sports injuries, Chiu explains that, despite his ethnic background in China, he feels more of a Kiwi. "Because they [China] are a communist nation, we don't share the same political ideals," he says. "I mean, they execute 5000 criminals a year and I hear that they use their executed criminals for transplantation purposes. That's really quite foreign to how we think here."

Chiu is one of the growing and highly qualified Asian workforce, which will make up 15 per cent of New Zealand's total labour force by 2026. He thinks Asian immigrants need to integrate to be successful in New Zealand.

As the years progress, however, it is increasingly becoming a case of New Zealand integrating into Asia. There were 400,000 Asian people here in 2006, but about 100,000 Asian New Zealanders will join the population every five years over the next two decades.

The top end of projections suggests there will be 990,000 Asian Kiwis by 2026. The 3.4 per cent annual increase in Asian New Zealanders far outstrips the 0.4 per cent rate for Europeans, 1.3 per cent for Maori and 2.4 per cent for Pacific Islanders. Asian Kiwis' median age is 28.5 and the Asian workforce is almost two times more likely than the national average to have a bachelor's degree or higher.

New Zealand now has free trade agreements with Thailand, Malaysia, China and Hong Kong. We are also part of a regional FTA with the 10 countries of Asean, and negotiations with Korea have started.

Australia remains, by some distance, the top destination for Kiwi exports, but Trade Minister Tim Groser says China could eventually become No 1. "My view is that we ain't seen nothing yet in terms of the importance of China to New Zealand."

In 2003, there were 96,654 Asian students in New Zealand - 80 per cent of all international students. The number fell to 55,733 last year, but the Government hopes for a return to well over six figures. Education Minister Anne Tolley and Tertiary Education Minister Steven Joyce led a delegation of 80 last month at the Shanghai Expo.

And although the numbers have fallen, Asian countries remain the largest contributors to New Zealand's export education market. China sent the most last year (20,780), South Korea was second (15,905) and the third- and fourth-ranked nations were also Asian - Japan and India.

There is no doubt the drum beat for Asia has become deafening, and there's no going back. So it takes, perhaps, an outsider's view to inject a dose of reality about what we're up to.

Professor David Shambaugh had never visited New Zealand until last week. He is internationally recognised as an authority on contemporary Chinese affairs and the international politics and security of the Asia- Pacific region.

He flew in to Dunedin for the annual Otago University Foreign Policy School last weekend. Professor Shambaugh says that, after 72 hours in the country, he was astonished by New Zealand's naivete about its relationship with China. He was particularly amazed by a comment from Foreign Affairs Minister Murray McCully that "most countries would give their right arms" to enjoy the relationship we have with China.

"Really? What's so special about New Zealand? What is it that you are doing that others aren't?" he asks.

He warns that New Zealand is walking into its relationship with China with its eyes shut.

Academic interest in Chinese studies, for instance, is very strong but has no real strategic direction, he says.

He believes certain strategic assets should be off-limits to foreign ownership. New Zealand ought to consider the possibility of China demanding access to extract minerals. And New Zealand has not, he says, properly considered that China might ask to formally call on Kiwi ports with its naval ships.

And remember the SanLu scandal? Since Fonterra, a 43 per cent stakeholder in SanLu, was implicated in a 2008 melamine contamination scandal that sickened 300,000 babies, New Zealand's dairy exports to China have increased by 72 per cent, from $521 million to $978m. During the same period, China overtook the United States to become our leading partner in the dairy trade.

Professor Jin Canrong, an associate dean with the School of International Studies at Renmin University in China, says the SanLu scandal demonstrated China's rough ride to becoming a market economy. "China is at the building stage of marketisation," he says.

Kiwis looking to cash in on China's huge and growing market can expect further bumps and scrapes - "we cannot escape from this period of history", Professor Canrong says.

Key acknowledges, too, that multinational giants, let alone tiny Kiwi start-ups, have had their fingers burned by taking a blase approach to operating in Asia.

"I think there are risks for New Zealand companies and we need to go in to those risks with our eyes wide open," Key says. "On the other side of the coin, should that be a deterrent? I think the answer is no. Those issues of businesses that can go wrong or inherent risks or corruption are present, actually, in a lot of countries around the world."

If there is the potential for catastrophe for Kiwis overseas, there must be concern, too, at how we will manage a significant shift in markets and social demographics at home.

The backlash against a bid by a Chinese consortium to buy the 8000 hectares of the Crafar family dairy farms points to a none-too-subtle undercurrent of Kiwi resentment at large-scale Asian investment.

Agriculture Minister David Carter was probably just sniffing the political breeze when he said, completely out of line with due process, there was "no show of that purchase ever taking place".

Key, at the time, rapped Carter over the knuckles for the comment. But this week, he seemed almost to endorse his colleague's remark. "I myself wouldn't want to see a wholesale sale of New Zealand's land productive sector, because I don't believe that would actually be in the long-term best interests of New Zealand," he said. "Now, that is a difficult thing to control because the Overseas Investment Act won't stop individual farms being sold, but it can provide some support around very large tracts of land."

If it is serious about making New Zealand an Asian country, the Key Government will face further similar political pickles over foreign investment. But are the four million Kiwis to whom it is accountable ready to see past cultural and ethnic differences to allow New Zealand to become a genuine partner of Asia?

Everyone knows there is a racist element in New Zealand. It is just quite difficult to pin down. A Statistics New Zealand report last year said crimes of prejudice were not easily identifiable, under-reported and not well defined. The best available data, in the New Zealand Crime and Safety Survey, suggests that, for every 100 Asian Kiwis, 15 "confrontational offences" are committed against them.

Khoon Goh, a senior economist at ANZ Bank, has been a victim. He came to study at Auckland University from Malaysia in the early 1990s. He says he can recall a couple of instances when abuse was hurled at him on the street. It was not enough to scare him off, however, as he believed it was not too serious and was probably to be expected. "I think for a large part of the population, change is always uncomfortable and therefore you see that expressed in some places."

Key agrees. "There will always be a degree of xenophobia that operates in any country." Key reckons it will be up to Asian immigrants to blend in.

"When people come to New Zealand, we expect them to bring, basically, a desire to want to see New Zealand not as a place they inhabit but as a place they truly call home."

The second generation of Asian immigrants, he says, are most of the way there because the language barriers are gone and the Kiwi values are installed. But European Kiwis, too, have a lot to learn about their new best friends.

We have made a start: the number of pupils learning a Chinese language in New Zealand schools has almost doubled in the past five years. New Zealand Central, a hospitality centre set up in Shanghai last year, has had 6000 Kiwi businesspeople book in to introduce themselves to their Chinese clients. We'll see more of each other, too, through tourism because Chinese visitors are projected to increase by the most of any country in the next five years.

And never mind the Russel Norman incident. Professor Canrong says last month's visit by Vice- President Xi Jinping was viewed as a success in China. He reckons global issues such as climate change, in particular, are ripe for more co- operation between the two countries. "At the moment, China feels very comfortable in dealing with this country. So people tend to see China and New Zealand's relationship as an ideal model," he says.

Goh wants to see Kiwi businesses more focused on quality, rather than quantity.

And Groser warns we cannot be complacent about our place at the front of China's queue of friends. "The problem with New Zealanders, especially European New Zealanders, is they are not used to thinking in multicultural terms," he says. "Four million New Zealanders have to get it because governments can't control these things."

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