New Zealand in the Asian Century: Peace and Prosperity - Asia New ...

New Zealand in the Asian Century: Peace and Prosperity
Speech by John McKinnon, Asia New Zealand Foundation executive director, to the Australian
Institute of International Affairs
Sydney, 26 February 2013
Thank you very much for the opportunity to speak to you this evening. I have been a member of the
New Zealand Institute of International Affairs for many years and have participated in many of its
events and contributed to its various publications. My career, as has been outlined to you, has
largely been in the international space, and with my new appointment to the Asia New Zealand
Foundation, continues to be so. It was thus with great pleasure that I accepted Geoff Miller’s
invitation to visit you. Cunningly, he extended this invitation last year, at which time my 2013
calendar looked rather empty. That is no longer the case, but happily this event was able to remain
a fixture in my schedule.
Geoff gave me wide range of topics to choose from. I have taken him at his word, as the title of this
address indicates. But I should have added a question mark at the end of the title. Peace and
prosperity are both legitimate and natural aspirations for the international order. But they are not
to be assumed. We have to work to create and sustain them. What I wish to do this evening is to
provide you with my views on how we can do so, and to do that from a New Zealand perspective.
Geoff will know – better than most – that this perspective differs in some respects from that of
Australia or Australians.
I should also apologise in advance to any in the audience tonight who were at the RUSI seminar
earlier today. I spoke at that conference and some of what I say tonight I said this morning – but
packaged differently. Of course I don’t want to apologise too much – if any of you have chosen to
listen to me twice in one day….well, I am both flattered and amazed.
My reference to the Asian century is a deliberate reference to the white paper the Australian
Government issued last year. While New Zealand’s interaction with Asia obviously differs in scale
and content from that of Australia, in many ways the challenges and opportunities that are set out in
that paper are very similar to those that are presented to us. And some of the initiatives set out in
that paper are ones which I am recommending to the Foundation’s board that we introduce to New
Zealand.
The Asian century headline understates, as many have observed, some more critically than others,
that Asia had been a reality in both our national lives for a very long time, indeed ever since we
came into existence as modern nations. Even on a shorter timeframe, certainly for New Zealand,
since the cataclysm of Britain’s entry into the then European community, Asia has loomed larger and
larger in our external profile. I was in Australia in the 1980s when Ross Garnaut produced ‘Asia and
the Northeast Asia ascendancy’ so one can understand the frustration of some who felt that this has
all been said before. My own Foundation was established in 1994, precisely to address what was
seen then as a shortfall in our ability to operate effectively in Asia.
Yet despite these very valid observations, the reality is that we constantly need to be reassessing our
relations with Asia, not because we have been asleep on the job, but because Asia itself is changing
more rapidly than we can always comprehend.

That change is comprehensive, but let me identify three critical components of it.
1. Asia is getting richer, and getting richer faster. The statistics for this are legion. Let me just
pull out two:
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The economic transformation in India and China is happening at a scale and pace
unprecedented in history. Average incomes are growing at 10 times the pace and
on more than 200 times the scale of their increase during Britain’s industrial
revolution.
That revolution is not confined to those two giants. For example, the proportion of
Indonesians living in urban areas, a proxy for industrialisation, could reach 71% in
2030, up from 53% today.
Australia has been holding its own better than New Zealand, but for both us there has been
a huge change in our relative position in world rankings of wealth since certainly my younger
days.
2. Asia is getting more powerful, not just China and India, but all countries with increased
wealth are devoting part of that to building up their military capabilities. It is natural this is
so, but it is changing not only the global balance of power, but the balance of power within
the region.
3. The principal beneficiaries of these changes are the educated, prosperous members of
society who now have the wherewithal to think and live in ways which we conventionally
call ‘middle class’. Even if they are only a portion of the total national population, the
absolute numbers, by our standards, are staggering.
The reason I want to highlight those three aspects of the rise of Asia is that we have to keep all three
in the picture if we are to make an accurate assessment of what our future with Asia will be. We
could depict them as a triangle because they all relate to and reinforce one another, while at the
same time they are set at different angles.
Wealth is a necessity for power and power enables a country to protect wealth. The
relationship between the two has been a staple of Asian philosophy since the
earliest records. It features in Sunzi’s Art of War and was recycled by Japanese and
Chinese thinkers in the 19 th century. ‘Rich country, strong army’ is one such
formulation and there are equivalents in other cultures. This concept is probably
more readily comprehended in this country than in mine, but it is absolutely vital
that we do grasp its significance. For all the countries of Asia, whatever their
history, increased wealth is both an end in itself but also a means to assure and
enhance national power.
These dimensions then intersect with the third. The emerging ‘middle classes’ in
their aspirations for their children, in their interest in overseas travel, in their
consumption patterns, and their lifestyles, are ‘more like us’. They are also, judging
by my own experience, very committed to their respective national projects.

Nationalism is alive and well in Asia, and as with most human phenomena, this has
both a positive and a negative charge.
So, in sum, we have a region on our doorstep which is growing more like us in some ways, with all
the benefits that that brings in terms of exchanges of goods and services, people-to-people
interactions, at the same time as it is creating its own modes of modernity. Modernisation, we have
realised, if we had not already apprehended that through our knowledge of Japan, does not equate
to Westernisation.
This is the world in which we are navigating. Everybody in our world wants peace and prosperity.
Can we sustain or attain these together, rather than through zero sum games?
Prosperity is the easier nut to crack, because inherently the creation of wealth provides more
options. Put very simply, in New Zealand, and here in Australia, we benefit very directly from Asia’s
prosperity. Ever since that cataclysmic event I referred to, a major theme of New Zealand’s external
policy has been to extend and deepen our economic interactions with key global markets. In this we
have been successful, if one simply compares the diversity of our trade patterns now with that in the
early 1970s.
Within that framework Asia has taken an increasingly vital role. For New Zealand this change has
been very significant. During the time when I was assigned to China, 2001 to 2004, China was our
fourth or fifth-largest trading partner (the others being Japan, the US and Australia). In 2012, China
is our second-largest trading partner (Australia is still first) and amongst our other leading partners
six of eight are in Asia, and all are in APEC except the UK. This is a seismic change and on current
projections those patterns which are now set are likely to continue for the forseeable future. This
pattern is reflected in tourists, students and immigrants, although not in investment, the stock of
which is still dominated by what we call our traditional partners.
We have a variety of free trade linkages with Asia, including bilateral agreements with China,
Singapore, Thailand, Malaysia and Hong Kong; and plurilateral agreements with ASEAN (with
Australia as a partner), and with Brunei. On the horizon is the Trans-Pacific Partnership (TPP) and
the various initiatives taking place under the umbrella of the EAS. It would be reasonable to say that
without growth in China and Australia the New Zealand economy would have had a much more
difficult time of it. And leaving aside the particularities of the global financial crisis, on any
reasonable projection, the Asian economies will proportionately and absolutely play a larger and
larger part in our lives.
But they will not be alone. One of the features of the world, which can sometimes get lost as we fix
our gaze on the region to our north or northwest, is that other parts of what was the developing
world are getting richer too. In particular Africa, which for so long seemed to be bypassed by the
strong currents of economic growth, is now entering the fray and some of its countries are now
following the path of other emerging economies. That is good news. We have many eggs in the
Asian basket, and some very large eggs amongst them, but there are other baskets.
On the other side of the ledger, what is happening in Asia is of as much interest in Europe and North
America as it is to you and us. The Trans-Pacific Partnership negotiations and APEC before that
reflect that level of interest from the United States, and now Canada. The rather unwieldy Asia-

Europe Meeting (ASEM), to which we both now belong, reflects a similar impetus from Europe.
There is another grouping which links Asia and Latin America.
Many of these groupings are aspirational, but they manifest an important point, that today’s
regionalism by and large is open, not closed. This is excellent news for New Zealand. We are
regionalism’s outsiders and stand to suffer if any part of the world turns in on itself. It is also a
reflection of the more banal point, that so many issues in the 21 st century, whether climate change
or human trafficking, can only be resolved globally, not regionally.
The other conclusion to draw is that we do not have the Asia-Pacific region to ourselves. I was much
struck by a reference in the Asian century white paper that a minister of education in Sweden
suggested a year or two back that all Swedish school students should learn Chinese – in addition, of
course to Swedish, English and French or Spanish. We are not the only developed countries seeking
to ride the wave of Asian prosperity.
But the messages are largely positive. And beyond that, we have goods, services, environments,
ways of living which increasing numbers of our neighbours to the north find attractive and wish to
enjoy. We are innovative and creative. Our societies are, again by and large, open and welcoming
to peoples from all over the world, whether as tourists, students, investors or immigrants. The
English language and the transparent and accountable rule of law are huge and important assets.
The diversity of the principal cities of Australasia is probably almost unprecedented, and yet our
social cohesion remains strong.
As I indicated earlier, when we turn to the geopolitical order, we are faced with a different set of
circumstances. I’m an historian by inclination so forgive me if I turn the clock back at this point, but
not too far back, really only the length of my lifetime, and that I suspect of most people in this room.
Despite what happened in Singapore in 1942, we emerged as amongst the groups of victors in
World War II.
The aftermath of that war, if not quite a restoration on the scale of the Congress of Vienna, did
represent a return for us rather than a new beginning. It was the exact opposite for most of our
northern neighbours. Independence for India, Sri Lanka, Myanmar and Indonesia, a new and divisive
beginning for China, rehabilitation for Japan, partition of Korea – all of these took place in the first
six years after the end of World War II. These are ancient civilisations but new states. In comparison,
although we may not think of it much like that, while our societies are new, politically we are old.
The New Zealand Parliament first met in 1854 and has had an uninterrupted history ever since.
It is thus not surprising that some of the perspectives that we have differ from Asia and that this can
represent a policy challenge. When we were writing our 2010 defence white paper, some parts
were relatively easy.
We knew what to say about the national defence of New Zealand – it did not differ from what we
had said in many previous similar documents over several decades. We could not identify any direct
threat to New Zealand’s sovereignty but there were a variety of ways in which encroachments could
take place, such as in our maritime domain or through cyber space. The capabilities, military and
other, we needed to deal with these are more of the same.

We also had clear precedents for how New Zealand contributed to international forces in far-flung
parts of the world. We had been doing that for most of the 20 th century, and could readily forecast
that there would be further such calls on our highly professional armed forces in the decades to
come, even if we could not pinpoint when or where.
There was also plenty of precedent for how we would support our South Pacific neighbours. The
interventions in Timor in 1999, Solomons in 2004 and Tonga in 2006 gave us ample material and –
more than just by the way – some confidence from recent developments that such interventions can
be successful.
But the larger Asia-Pacific region was more of a conundrum. This is a region of immense importance
to New Zealand, as I have already outlined, increasingly the major source of our wealth and
prosperity. Yet it would be drawing a very long bow to suggest that what was happening in the
region represented a direct threat to New Zealand. This simply would not be credible to our people.
Equally the Asia of today is not a theatre in which there would be much call for New Zealand forces
to engage in the expeditionary assistance that has been such a strong feature of our military history
(and yours), including in Asia in the 1950s and 1960s. Asia is now a region of strong states, not weak
states, states which are more than able to look after their internal and in most cases external
security, states which are using their economic wealth to reposition themselves in the region and
the world.
Yet at the same time we did not, and decided we should not, stand aside from the security
challenges of the region. Quite apart from our continuing relationship through the Five Power
Defence Arrangements (FPDA) with Malaysia and Singapore, we had a very direct interest in a region
which was not only prosperous but also peaceful and stable. This is not just because an unstable
region would disrupt trade flows and thus affect our economic wellbeing, although that is important.
At a more fundamental level, tension and conflict challenge the very premises on which our world
operates, they are symptoms of illness in the global body politic. We cannot ignore them. As a
responsible member of the regional and international community of states, we see ourselves as
under an obligation to sustain a stable and peaceful state of affairs.
Are peace and stability threatened? Maybe not as such but I would identify at least two risks:
The growth of China, India and the other countries of Asia is affecting the balance of power
in our region, and globally. There has been much analysis, some of the most trenchant
coming from Australia, of whether such shifts can be peaceful, or almost always end in
conflict, or simply in themselves presage a prolonged period of instability and uncertainty.
Specifically this then turns on the role and position of the United States, as the incumbent
power, and of China as the strongest of the rising powers.
Second, within the region, there are a number of unresolved issues of sovereignty. The
islands and places may not be important in themselves (although some are) but they can
readily become proxies for national rivalry. There are risks flowing from divergent
interpretations of the rules of the road (or of the high seas in this instance), or from the
behaviour of trigger happy local actors.
If those are the risks, what can New Zealand, or Australia for that matter, do to mitigate them?

In the 2010 white paper we set out a number of ways in which we could. They range from
supporting open and inclusive regional security and defence structures, to being willing to assist in
terms of natural and humanitarian disasters. While our military contributions will never be large in
quantity, we do have high performing assets and units which are able to make a significant and
welcome contribution. The Special Forces are probably the best known of these, but equally
valuable are our surveillance aircraft and frigates.
A number of premises underly our approach.
Every nation has a place in the region, legitimate national security interests to protect, and a
contribution to make to regional (and global) security. Policies premised on containing one
country (China) or excluding another (the US) are undesirable as well as unlikely to succeed.
All countries have at their disposal rules and practices to deal with international disputes,
ranging from the provisions of the UN Charter to those of the International Law of the Sea.
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These provisions may sometimes seem to be honoured in the breach and not the
observance, but we should certainly not lose sight of them.
Transparency in military affairs is a powerful means of building mutual confidence
nonetheless.
Regional security arrangements can do the same, although they cannot reach far beyond the
political will of their constituent members. One of the most valuable initiatives in recent
years has been the establishment of the ASEAN Defence Ministers Meeting Plus, which
brings together all the countries of the region, including ourselves, and which this year,
under Brunei’s chairmanship, is undertaking practical exercises in military cooperation.
For our own part, we maintain defence relations with nearly all the countries of the region. Our
defence relations with the United States, which were long constrained for reasons which will be well
known to this audience, are now in as healthy a state as they can be, given the policy difference
which still exists. Singapore and Malaysia hold a special position for the reasons I have mentioned,
and in nearly everything we do in the region we find ourselves alongside Australia.
In taking this approach we are doing what most of our neighbours are doing – recognising that we
have equities in all our relationships, albeit of different kinds, and that we do not want to find that a
burgeoning relationship with China inhibits us from a revitalised defence relationship with the
United States, or vice versa. Keeping this balance may at times require determined optimism, and
hard work, but in my view that is much to be preferred to the alternatives.