New Zealand—a ‘Southern Link’ between China and South America?

In November 2021, the New Zealand China Council published a report entitled The Southern Link: Developing a Global Value Chain, which outlined the concept of a ‘Southern Link’ as ‘an extension of a global value chain (GVC) that involves the routing of multi-modal freight and passengers between ASEAN–North Asia and South America via New Zealand’. The plan intends that New Zealand will serve as an air and sea freight hub between East Asia and South America, facilitating e-commerce trade, tourism, and education and mediation services, and thereby providing an economic boost to post-pandemic New Zealand.

The associated media release states that ‘transiting via New Zealand offers the shortest air route between many major cities on the two continents, along with time zone advantages and efficient hubbing and servicing’. A podcast and an explanatory video accompanying the report suggest that New Zealand serves this purpose better than Australia (‘our biggest competitor’) because of lower costs and its deep-water ports.

Google maps image of New Zealand in relation to South America and China

Source: Google, Map data 2022, INEGI. 

The report has some history. On 25 June 2019, prior to the COVID pandemic, an initial conference, ‘Building the Southern Link’, was held in Auckland, New Zealand. Co-hosted by the New Zealand China Council, the Latin America NZ Business Council, China’s Fudan University, the Chile Pacific Foundation and the Argentine Council for International Relations, the conference was promoted by the New Zealand Ministry of Foreign Affairs and Trade as a way of highlighting ‘the opportunity to make New Zealand a major and natural connection point between China and South America’. The PRC Foreign Ministry also supported the event. Conference highlights are available on the website of the New Zealand China Council. The Briefing Document for the conference linked the ‘Southern Link’ with China’s Belt and Road Initiative (BRI) and asserted that the ‘BRI provides an opportunity for New Zealand to continue to develop its international connections as a global trader in a globalised age’.

Unlike Australia, New Zealand has signed a Belt and Road Memorandum of Arrangement with China and remains the only Five Eyes country to have done so. The agreement was ‘auto-renewed in March 2022 for a period of five years’. A PwC-authored report entitled Understanding Chinese Investment in New Zealand, commissioned by the New Zealand China Council, underlined how desirable Chinese investment is for New Zealand. Others have opined that the country is already excessively dependent on Chinese investment, potentially giving rise to unhealthy PRC political and economic influence. Indeed, the enthusiasm for engagement with China by successive New Zealand governments—both the earlier National and the current Labour Government—has led to intimations by intelligence officials from Five Eyes partners that New Zealand’s access to Five Eyes intelligence might be at risk. This has been rejected by Andrew Little, the New Zealand minister responsible for the nation’s spy agencies.

China’s enthusiasm for increased trans-Pacific linkages with South and Central America has long been known, with PRC Foreign Minister Wang Yi frequently underlining the Belt and Road Initiative as a new opportunity for China’s links with Latin America and the Caribbean. US concerns about China’s aspirations in Latin America have also been expressed.

China has certainly been investing heavily in Latin America—in ports, railways, power projects, highways and refineries, as well as other infrastructure, including cyber facilities and a space tracking station. Similar agendas are being pursued in the Caribbean.

The PRC is now seeking to expand air links across the Pacific. However, the distances are daunting. Shanghai to Santiago, for example, is a distance of some 19,000 km (Sydney to London is about 17,000 km). An intermediate base for such flights would make sense, particularly if it were a place where further economic influence was being sought. New Zealand is thus being discussed—both in China and in New Zealand—as a staging post for increased China-Latin America links. In June 2019, during his presentation to the ‘Building the Southern Link’ conference in Auckland, Professor Huang Renwei of Fudan University in Shanghai spoke of how the ‘Southern Link’ plan manifested a ‘Community of a Shared Future in the Southern Hemisphere’.

At the October 2019 Third International Forum on Belt and Road and International Governance, convened in Shanghai by Fudan University and the CCP Central Committee’s International Liaison Department BRI Think Tank, Sir Don McKinnon, then chair of the New Zealand China Council and a former New Zealand foreign minister, lauded the prospects of the Southern Link. He reportedly suggested the possibility (Chinese language source) of a 12-hour flight from China to Auckland followed by a 12-hour flight from Auckland to Rio de Janeiro, and argued that New Zealand would serve as a tourism and trade pivot between China and Latin America, offering New Zealand a new economic future.

In an interview on the forum with the PRC magazine Observer [Chinese language source], Professor Huang, the main organiser of the forum, noted that these Belt and Road Initiative projects show the world that ‘non-Western global governance is now growing’. He also spoke specifically of the Southern Link proposal:

Therefore, this initiative was put forward by New Zealand. Our Belt and Road Initiative Research Institute at Fudan University and the New Zealand China Council jointly held the first Southern Link Forum in New Zealand. Now this plan has been taken on by the New Zealand Foreign Ministry and is being formally turned into a part of the BRI through the New Zealand Embassy and the Chinese Foreign Ministry. In fact, this idea was also in China’s plans, but it was better to have it put forward under New Zealand’s name, because New Zealand is a western ally, and it is thus difficult for the Americans to oppose it. This is a form that we now advocate: That is, we transform the BRI into what is nominally a plan by other countries, but which is actually an element of the BRI. Thereby, the BRI has many different carriers and is diversified and multilateral.

China and New Zealand continue to discuss the possibilities of New Zealand being used as a staging post in the trans-Pacific linkages between China and Latin America, potentially making this a key element in the future of the New Zealand-China relationship. The potential commercial advantages of these developments for New Zealand and China are obvious. However New Zealand, like many countries, will continue to face the dilemma of navigating the line between China’s economic and trade ambitions and its strategic political agenda. This task becomes particularly difficult where business and the state are so interconnected, as in China.


Flagpost is a blog on current issues of interest to members of the Australian Parliament

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