New Zealand faces potential retaliation for its stance on Taiwan and the World Health Organisation whichever way it turns. The problem is that New Zealand has waded into the middle of a super-power showdown and shows no signs of backing off. One way or another, we are likely to lose.

China has already made its objections clear and has lodged a formal protest with New Zealand over comments made by Foreign Minister Winston Peters supporting Taiwan. In a hint of what a worst-case scenario could turn out to be, China yesterday banned imports of beef from four Australian abattoirs.

China and Australia have been involved in an escalating war of words over China’s responsibility for the spread of Covid-19. But the United States is involved as well. It is leading the campaign to have Taiwan re-admitted as an observer to the World Health organisations World Health Assembly which opens online next Monday. On March 26 the US Congress passed the “Taiwan Allies International Protection and Enhancement Initiative Act” which requires the US State Department to strengthen Taiwan’s diplomatic relations with other partners in the Indo-Pacific region and alter United States’ engagement with nations that undermine the security or prosperity of Taiwan.

In effect it says it should retaliate against countries who don’t support Taiwan. Russell Hsiao, executive director of the Taiwan-aligned Washington think tank, the Global Taiwan Institute,  says the legislation should help Taiwan’s international standing by reinforcing the policy of the United States to advocate for Taiwan’s participation in international organisations.   In other words, it could be applied to New Zealand if it failed to support Taiwan at the WHA. It could (conceivably) put an end to Peters’ dream of a Free Trade Agreement with the US.

But on the other side,  China is resolutely opposed to the admission of Taiwan as a WHA observer. Responding to a question about New Zealand’s position on the matter, the Foreign Ministry spokesperson, Zhao Lijian, said China’s position on Taiwan and the WHO was clear and consistent. “The one-China principle must be observed,” he said. “The Taiwan authorities chose to play up its so-called participation in WHO events and return to the WHA at this moment. “The timing reveals its true motive, which is to use the current outbreak to seek “Taiwan independence”. “It is out-and-out political manipulation.” And using almost identical language to the Chinese Ambassador to New Zealand, Wu Xi, he said: “The one-China principle is the political foundation of China-New Zealand relations. It is the fundamental underpinning of the progress achieved in bilateral relations since the establishment of diplomatic ties.

“China urges New Zealand to strictly abide by the one-China principle and immediately stop its wrong actions on Taiwan-related issues to avoid damaging bilateral relations.” Those comments are now posted on the Wellington Embassy’s website. The problem is that it has become clear that though Peters initially said support for Taiwan on the WHO was his personal position; last Friday Finance Minister Grant Robertson said it was the Government’s position. “We think as an observer at the WHO, Taiwan has a lot to offer,” he said. And to further complicate things, peters took it upon himself to insult the Ambassador in a sexist and patronising way.

• CHINA Suspension of Hong Kong extradition treaty not interference from New Zealand
• The ‘new normal’ in the South China Sea
• How to stop Chinese takeover of South China Sea
• One day China will 'wake up to the fact' it cannot take us all on
• New Zealand, China row escalates over Taiwan World Health Organisation bid

Claiming that China’s Foreign Minister Wang Yi had privately assured him, China would never retaliate against New Zealand; he said she should “listen to her master.” Zhao’s response was blunt: “I wonder how he came to that assumption? “I want to point out that China is committed to developing friendly cooperative relations with New Zealand based on mutual respect and equality,” he said. “But we are firmly resolved to uphold our sovereignty, independence and territorial integrity. “No one should entertain any illusion when it comes to matters concerning China’s core interests.” It is that statement that is worrying China watchers and businesspeople here dependent on the China market.

National’s Trade spokesperson, Todd McClay, last night said it was important that our relationship with China remained respectful. “As the primary sector looks to do their part to help rebuild the economy and protect jobs through trade, it is imperative that trade routes are kept open, and trade relationships that underpin New Zealand jobs are protected,” he said. Peters has made no secret of his concern that New Zealand is too dependent on China.

Last week he told Newstalk ZB that New Zealand had become too dependent on China. “We went into one product, namely milk; one company, Fonterra; one buyer, China and the rest is history,” he said. “Anyone who thinks post-Covid-19 is going to be business, as usual, can forget it. “If they think we are going to go back to what we used to do, they are wrong; this is a new world we are facing. “We’ve all; learnt a dramatic lesson here.”

The argument that we are too dependent on China does have some heavyweight support. Charles Finny, a former Ministry of Foreign Affairs and Trade trade negotiator and Deputy Head of Mission in Beijing and Head of Mission in Taipei has written a paper for a University of Canterbury project arguing that we need to diversify our trade from China. The paper, published on Monday warns that while New Zealand’s response to Covid-19 has come at an enormous economic cost.

If we don’t move very fast, that cost will increase greatly.  “And if we are not careful we will be left with a really perverse result. We will be even more dependent on one market – China, and on one sector – agriculture, than we were before going into this crisis,” he said.  “China will be an important market for us for many years to come, and agriculture is critical to our future – but we don’t want all our eggs in a couple of baskets. “Particularly as China has in recent years shown a propensity to use trade dependency as a political lever.”

It is that last point that reinforces the need for any discussion on relations with China to be phrased very carefully. Peters, with his natural inclination to prefer Washington to Beijing, is increasingly not bothering to observe those subtleties. As one person deeply involved in our relations with China said to POLITIK yesterday: “fasten your seatbelts!”