Former West Coaster Warrick Cleine lives in Vietnam and is a member of KPMG’s Global Council and Asia Pacific Board, and chairperson and CEO of KPMG in Vietnam and Cambodia. He is also an Honorary Advisor to the Asia NZ Foundation. Views here are his own.

OPINION: China’s recent diplomatic foray into the South Pacific generated considerable media attention in New Zealand and Australia, with an outpouring of concern from foreign policy pundits in both countries.

The Australian reaction was perplexing and, at times, alarming. Amid the heat of a general election, politicians were almost beating the drums of war and the public being primed for conflict. Candidates were committing to taking Australia to battle. And most jarring of all, that war was apparently going to be in Asia.

Little of this was being felt in the war zone. Life was going on as normal on the streets of Tokyo, Hanoi and Taipei. Football matches were proceeding with relish. Pho was being served over noisy tables of beer. Citizens were not sheltering in bunkers, stockpiling supplies, or bidding farewell to their sons and daughters.

While Australian politicians were sounding their bugles, Asia’s consumers were paying the bills, fretting about the price of petrol, booking holidays in Europe, and moving their lives beyond Covid. Governments were thinking about inflation, infrastructure, climate change and tax reform. Asia was missing the news, and it didn’t make sense.

It is odd, therefore, as some calm returns with the new government in Canberra, to see a level of alarmism in New Zealand, too. There is no need for this. As China seeks a greater role in the Pacific, we can look to Asia to understand what is happening and chart a path forward. Like us, many Asian economies are trade dependent, capital importers and exporters, and culturally distinct from their massive neighbour to the north and west. They know that China is here to stay, that competitive tension must be managed, and that peaceful co-existence is a preferable outcome to any other alternative. We are about to experience what is business as usual in Asia.

Like New Zealand, Asia knows that engagement with China has massive economic upside, with its huge consumer market and integral role in global supply chains. Even as countries around the globe de-risk by diversifying markets and building greater resilience into supply chains, China remains the largest importer and exporter in the world. For the rest of Asia, this phenomenon has generated economic prosperity, has driven industrial growth in both developed and developing Asia, and has lifted millions of people out of poverty. China’s rise has lifted all boats.

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Engagement with a new player is not a zero-sum game. In Asia, engagement with China has not come at the expense of competing alliances and trade. While there is perpetual pressure to “choose sides” in various forms and forums, many Asian countries manage an independent foreign policy, pursuing trade, commercial and social relationships with each other, with China, and with its competitors.

Even Asian economies with their defence and foreign policy firmly oriented towards the United States have massive trade and investment ties with China. For much of Asia, membership of the CP-TPP and trade agreements with the EU, the UK, the US and Australia and New Zealand, do not preclude similar engagement with RCEP (the Asia-Pacific trade agreement) and bilateral agreements with China. Social, educational and cultural ties between Asian countries and China co-exist alongside those with the West, and enduring government-to-government connections run deep across the region.

Maintaining balance does not come without tension, high defence spending and even occasional conflict, and requires dexterity on the part of all players. But calm heads and a long term perspective have prevailed to ensure both peace and prosperity across the Asian continent.

Asian countries have had to build institutional capacity to protect their own interests against those of their dominant trade and investment partner. This includes their ability to enforce the rule of law, to regulate business, to protect workers’ rights and the environment, and to collect tax.

The business sector across Asia has had to strengthen its capacity to deal with competition, fair and unfair, to compete for resources such as capital, labour and land. Trade, diplomatic and defence alliances are given new prominence, as going it alone is neither prudent nor sustainable. Groupings – such as ASEAN – have endured as external engagement with larger powers has increased across South East Asia.

New Zealand and the Pacific can learn the lessons of Asia. We should ensure both ourselves and our neighbours capture the economic benefit of engagement with major powers, old and new, while ensuring economic and supply chain security. New Zealand has allowed concentration risk to accrue in our export sector, and we should fix this while ensuring others do not repeat our mistake.

We should build institutional capacity at home and in our partner nations to ensure local interests and communities are protected. We should strengthen businesses at home and in the Pacific to ensure they can compete for resources, and we should celebrate alliances of common interest.

China’s rise has coincided with an extended time of peace and prosperity in Asia, and we should aim to emulate this in the Pacific.