China Is Strong, New Zealand Is Inept

Everyone is entirely wrong about the meat import delays in China. The only person who has come slightly close to the truth is Stephen Franks. This is because China is strong, but New Zealand is inept. Our officials project how they wish the world worked onto their interpretation of events, resulting in weakness and poor policy decisions.

New Zealand is inept because our officials actually think that there are rules that countries must abide by. They act as if realpolitik and Machiavellian strategies cannot possibly exist because of the fairy godmother of international law emanating from rotten organisations and fake courts like the International Court for Criminal Justice.

Further reinforcing the evidence of their inability to see the world as it is, look at how the United States has treated the World Trade Organisation (of whom we are the best behaved country in the world) with respect to dairy and meat products. And then, spending $250,000 to get Tim Groser to the top of the WTO completely ignoring how economic power has shifted in the world from the Anglosphere to Asia & Latin America, was an act of folly that must have made us a laughing stock in the cocktail party circuits that matter.

China is strong because they care deeply about their national interests. They also care deeply about protecting the current Chinese power structure – which involves supporting state owned enterprises primarily. In a two player game, if they have an incentive to decide between something that harms their national interests or does not, they will prefer to protect their national interests. Cheating enables short-term gains at the expense of the other party.

We have to remember that countries do not have friends or allies – they have strategic interests. Because of the way wealth is distributed in China, their elite is perfectly positioned to ensure that their interests are protected. New Zealand, on the other hand, has a gaping chasm between its elite and its officials. I’m not saying this is bad, but it has to be considered.

Our officials and our business executives might both listen to Radio New Zealand and share similar preferences, but they inhabit vastly different worlds. They might attend breakfasts with Ministers and working parties held by MFAT and MBIE, but they simply do not have the ability to influence the agencies of the state to the extent that the Chinese princelings and their hangers-on do.

They can lobby, and many special interest groups in New Zealand do get a lot of handouts from the government. But it is a whole order of magnitude different from how special interest groups in China interact with their government. New Zealand is inept, much in the way that provincial accountants can be inept when dealing with wideboys north of the Bombay Hills. (See: South Canterbury Finance).

At the heart of the Chinese meat import holdup is a simple truth – China doesn’t want to rely on imports. They need imports to tide their massive population over until they’ve set up their own industries. They’ll happily learn from our industries and replicate their technology at a fraction of the cost.

While that’s wonderful for them, and wonderful for New Zealand firms trading with China, when the knowledge transfer process is complete a lot of officials who thought that trade with China would be a never-ending game of fully-laden container ship tag will have egg on their faces.

China is a strong, New Zealand is inept. Remember – we could have been trading with the Chinese since the 1950’s but the farmers back then thought trading with Communists in the aftermath of the Korean War was heretical! Oh what a farce our foreign policy, trade policy and protection of our national interests has been.

Trade is welfare-enhancing, but we need to remember that we’re not dealing with business to business trade here. We’re dealing with business to quasi-government owned business trade, which is a whole different ballgame to manage expectations within.

The Trans-Pacific Partnership Agreement is more of the same. Trade is welfare-enhancing, but ignoring blatant capture of trade officials in some free trade agreements borders on criminal negligence for TPPA cheerleaders.