The risk of political interference from China

Political journalist Sam Sachdeva’s new book, The China Tightrope: Navigating New Zealand’s relationship with a world superpower, examines Aotearoa’s increasingly complex connections with China. In this edited extract he analyses New Zealand’s vulnerabilities to political interference.

As one of the world’s oldest continuous democracies, and the first country to give women the right to vote, New Zealand has long taken pride in its political traditions. Our system is far from perfect, of course, but its underlying principles remain sound, almost 170 years on from the establishment of the country’s first Parliament.

Yet as Prime Minister Jacinda Ardern acknowledged in her 2022 address to graduating students at Harvard University, those democratic principles are under threat in an increasingly volatile world – with New Zealand no exception. ‘‘This imperfect but precious way that we organise ourselves, that has been created to give equal voice to the weak and to the strong, that is designed to help drive consensus – it is fragile,’ Ardern said, warning that trust that took years to be built could be ‘‘torn down in mere years’’.

The main focus of the former prime minister’s remarks was the threat posed by social media platforms, accelerating the spread of misinformation and disinformation online without sufficient safeguards.

But there is another threat playing an increasingly prominent role in the minds of politicians and other observers – that of external meddling from foreign actors, such as the Chinese government, who want to tilt the scales in their favour when it comes to the internal political decisions of other states.

In a 2017 white paper outlining the country’s main foreign policy challenges, the Australian government expressed its concerns with ‘growing attempts by foreign governments or their proxies to exert inappropriate influence on and to undermine Australia’s sovereign institutions and decisionmaking’ – a shift that it suggested was part of a wider trend affecting democracies around the world.

The paper didn’t name China specifically, but Canberra’s subsequent crackdown against foreign interference – and the swift retaliation delivered by Beijing – went some way towards suggesting where our trans-Tasman neighbours saw the greatest threat.

Nor is Australia alone in having publicly grappled with such issues. In November 2022 Canadian news outlet Global News revealed that intelligence officials had warned Prime Minister Justin Trudeau of a ‘‘vast campaign of foreign interference’’, including the placement of ‘‘agents’’ into MPs’ offices and secret payments to at least 11 candidates who ran for office in the country’s 2019 federal elections.

It was a startling revelation, and Trudeau did not shy away from criticising China’s actions despite the diplomatic sensitivity of the issue. ‘‘Unfortunately, we’re seeing countries, state actors from around the world, whether it’s China or others ... continuing to play aggressive games with our institutions, with our democracies,’’ the prime minister said, in remarks that led to a heated exchange with Xi Jinping on the sidelines of the G20 summit in Bali.

Earlier in 2022 the United Kingdom’s MI5 intelligence agency took the extraordinary step of naming a woman, Christine Lee, who it alleged had been conducting ‘‘political interference activities on behalf of the Chinese Communist Party’’.

Lee had met British leaders across the political spectrum, donating almost $1 million to one Labour MP and apparently attempting to lay the ground for a new generation of China-backed candidates in the country. Lee was not prosecuted by authorities, apparently due to the lack of any specific criminal offence, and the Chinese government dismissed the claims as unfounded and sensational: ‘‘Perhaps some people, after seeing too many James Bond movies, are imagining links where there [are] none,’’ a Chinese foreign ministry spokesperson said at the time.

But China experts such as Australian analyst Alex Joske say the country has long had an interest

‘‘The CCP tapped into the weakness of political parties when it comes to political funding, and use that very successfully to either influence people or get people who they already support into more important positions within political parties.’’

Alex Joske

Australian analyst

in currying favour with politicians in other nations who may be able to support its goals.

‘‘They’ve [the CCP] tapped into the weakness of political parties when it comes to political funding, and use that very successfully to either influence people or get people who they already support into more important positions within political parties.’’

Jian Yang and Raymond Huo’s twin resignations remain the highest-profile case of potential Chinese interference within New Zealand’s political system, albeit one with plenty of remaining uncertainty. But whatever concerns may have been resolved by their departures from Parliament, our officials remain on guard against outside actors with nefarious intent.

In 2021, after Yang and Huo had already retired from politics, New Zealand’s intelligence agencies took the unusual step of issuing public guidance on how Kiwi politicians could protect themselves against foreign interference.

‘‘Not every foreign state actor who seeks to engage with you will have benign intentions,’’ the spies warned, citing the value of politicians’ inside knowledge, access to sensitive information and ability to steer policymaking. There was also a thinly veiled reference to the risk of blackmail, or kompromat as it is sometimes known thanks to its early use as a Russian KGB tactic: ‘‘Engaging in inappropriate activities, even if they are not illegal in New Zealand, could leave you vulnerable to coercion.’’

Former Cabinet minister Ron Mark says he made a point of staying vigilant during his trips overseas, whether to China or elsewhere, given the risks associated with any misstep. ‘‘You’d be a fool to believe that you could be a minister of defence going somewhere and that you wouldn’t have been assessed, analysed ... as to who you were [and] what your strengths and weaknesses were, and where your vulnerabilities lay.’’

The BBC has previously reported on the Chinese use of ‘‘honey traps’’ – secretly recorded encounters with women to collect blackmail material – and one former Kiwi business executive remembers feeling a sense of unease during a work trip to the country. ‘‘You’d go out to dinner, and there would be plenty of ‘‘Ga¯ nbe¯ i’’ [the Chinese equivalent of ‘‘cheers’’], then it would be off to a club with girls there to look after you and wipe your brow.’’

Such efforts to gain leverage may not be restricted to the direct political or business targets, either. A massive data leak in 2020 from a Chinese company with ties to the country’s intelligence system included the personal information (gathered primarily from public sources) of family members of Jacinda Ardern and Sir John Key, along with other high-profile figures and some Kiwis convicted of fraud and other crimes.

If China – and any other foreign state, for that matter – will probe for potential points of weakness in the systems of others, what are those vulnerabilities in New Zealand politics?

The answer, perhaps unsurprisingly, is money. Elections are expensive exercises, and with candidates and party officials regularly on the hunt for new donors, due diligence may not always be their foremost consideration.

Such concerns were a subtext to the trial of Chinese-New Zealand businessman Yikun Zhang and others over allegedly fraudulent donations to the National and Labour parties, even if the Serious Fraud Office opted against putting foreign interference at the forefront of its case.

In her unused expert evidence, Kiwi academic and China expert Anne-Marie Brady said Zhang had built ties with both major parties, providing large donations and trying to get his associates accepted as candidates for election.

‘‘There is hardly a minister or senior figure from those parties who did not attend an event with him and the Chaoshan General Association of New Zealand and have a photo to prove it,’’ Brady said. Brady’s claims were supported by a recording that rogue National MP Jami-Lee Ross made of a conversation with the party’s then leader Simon

Bridges, discussing Zhang’s desire for his business partner Colin Zheng to enter National’s candidates college. ‘‘Two Chinese [candidates] would be more valuable than two Indians, I have to say,’’ Ross said in remarks that seemed to explicitly reduce the value of ethnic candidates to the amount of money they might be able to bring in.

It’s not a good look, says former diplomat Charles Finny. ‘‘Both major political parties have a lot of soul-searching to do over the extent to which they’re prepared to reach out to those communities for funds, because it exposes them – even if nothing’s happening for them, no strings attached, it looks bad.’’

The semi-anonymous nature of New Zealand’s donations regime, coupled with the obvious problems tracking the provenance, means it’s difficult to assess the significance or otherwise of donations from the Chinese community as a proportion of political parties’ overall funding. However, there have been more than enough highprofile scandals to suggest Finny and others have a point.

In 2014 National MP Maurice Williamson resigned as a government minister after the New Zealand Herald revealed he had called police as they investigated domestic assault allegations made against Chinese businessman and National Party donor Donghua Liu.

While Williamson insisted he was not attempting to interfere, his request that police make sure they were ‘‘on solid ground’’ given Liu’s financial investments in New Zealand was questionable, as was an earlier government decision to grant the businessman citizenship against the advice of officials.

The citizenship decision echoed an earlier controversy involving William Yan (also known as Bill Liu), a donor to both Labour and National who was granted citizenship by the Labour government in 2008 despite opposition from immigration officials. Yan, who claimed he was at risk of persecution from Chinese authorities due to his support of the Falun Gong spiritual movement, in 2016 settled allegations of money-laundering against him and several associates by agreeing to forfeit almost $43 million in assets – a record figure in New Zealand.

Then in 2014 came the Oravida scandal, when it was revealed that National minister Judith Collins had taken a detour during a ministerial trip to China the previous year to the dairy company’s Shanghai offices, with a photo of her visit later used (without her permission) to endorse one of Oravida’s products. The problem was primarily one of a perceived conflict of interest, given that Collins’ husband was a director on the company’s board – but Oravida had also donated more than $80,000 to National in the years leading up to Collins’ visit, with more money to come.

During his years leading the National government, Key appeared to benefit significantly from the financial support of Chinese donors with questionable affiliations: Brady has claimed that nearly $1.4 million of the party’s publicly declared donations between 2007 and 2017 came from ‘‘proxies of the CCP’’.

But Key himself is less convinced about the nefariousness of such money: ‘‘All political parties, it doesn’t really matter ... have they run very successful fundraisers with, for instance, the Chinese communities and Chinese residents? Absolutely. Is it because there’s someone in Beijing writing a cheque? I think not a chance, right. Funnily enough, I think there’s quite a lot of migrants that vote with the party they think are actually going to win the election because they come from countries [where] the perception is that if there was an election, the Government would know how they voted, and they don’t want to be on the wrong side of it.’’

The Government clearly has concerns of its own. In 2019 Justice Minister Andrew Little announced a de facto ‘‘ban’’ on foreign donations, reducing the limit from $1500 to $50 to guard against foreign interference. But as I wrote at the time for Newsroom, there was little evidence to suggest such a ban would have a meaningful effect: less than 0.25% of all party donations in 2017 would have been affected by the ban, as various loopholes remained entirely untouched.

With an independent panel due to provide recommendations on potential changes to our electoral laws by the end of 2023, some are calling for New Zealand to consider ramping up state funding to political parties – with support coming from unexpected quarters.

‘‘I know this will mean that none of my friends at the National Party will ever speak to me again,’’ says Finny, ‘‘but… we should probably be thinking seriously about state funding up to a certain level…

‘‘We have been naive in this space and laid ourselves open for foreign interference, and it’s amazing it’s taken so long. If the Chinese or Russians wanted to intervene and support a political party, until recently, they probably could have quite easily.’’