An intelligence and defence policy analyst warns New Zealanders could be held hostage by China as retaliation for our stance on Huawei.
Huawei has been banned from supplying 5G equipment in both Australia and the United States, and our own GCSB spy agency has raised concerns about the use of Huawei equipment in our 5G network.
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In a sign of apparent tensions, China has postponed a major tourism promotion at Wellington's Te Papa museum, citing scheduling issues, and put a visit by Prime Minister Jacinda Ardern on hold.
Speaking to Magic Talk host Sean Plunket on Tuesday, director of strategic assessment firm 36th Parallel Assessments Dr Paul Buchanan warns "things are coming to a head" and our people and economy could be directly targeted.
"The official mouthpieces of the Communist Party of China - that is, their press - have made no bones, have minced no words to say that there will be retaliation for these affronts," he says.
After Canada arrested Huawei's chief financial officer Sabrina Meng Wanzhou for extradition to the US on charges of fraud, China arrested two Canadians and announced plans to execute another.
Dr Buchanan calls the arrests "hostage diplomacy". While New Zealand hasn't arrested anyone to be handed over to the US, he says that might not be enough to save us.
Travel advisories to China have already been handed out by our allies, and Dr Buchanan says our government should consider issuing one too.
"The concern amongst the Five-Eyes partners - and particularly here in New Zealand - is that if you're doing business in China, if you're New Zealand resident in China, you might end up on the sharp end of a hostage-diplomatic move," he told Plunket.
"It may be advisable for MFAT to put out a travel advisory business people operating in China need to be aware that they may be at some risk as this thing escalates."
Ultimately, New Zealand is in a tough position. Dr Buchanan says we can't allow Huawei access into our sensitive telecommunications networks due to our Five-Eyes partnerships. At the same time the volume of our trade with China exposes us to retaliation. This leaves us "caught between a rock and a hard place".
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"I liken it to straddling a barbed-wire fence while standing on ice-blocks," he says.
While China can't retaliate against the US, UK or Australia in any meaningful way, Dr Buchanan says we're "too small" and "too vulnerable" to protect ourselves.
"What do we export to them? Milk powder. So they can cut us of in an instant. And if they cut us off the repercussions to our domestic economy will be huge and severe," he says.
"So I would hope the more far-sighted people in MFAT and Treasury are developing alternative trade scenarios and trade strategies in the event the Chinese decide to play hardball and make an example of us so that other small countries that do business with them don't dare to cause the type of affront that we're doing by challenging Huawei."
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