NZ could see major fallout from Huawei 5G decision - expert

There could be major consequences for New Zealand after the Government spy agency blocked Spark from using Huawei equipment, according to a political commentator.

Telecommunications company Spark wanted to use cellphone tower equipment from Huawei, a Chinese-owned company, to develop its proposed 5G network.

But the Government Communications Security Bureau (GCSB) has shut those plans down by notifying Spark it had identified major network security risks if the technology was implemented.

Political commentator Richard Harman said the New Zealand-China relationship may be hurt because of the decision.

"The frequency of contact between New Zealand and China, and the intimacy of that contact, might slow down for a while," said Mr Harman.

He also warned of the potential of major consequences for Aotearoa's tourism and education sectors.

"The worst case scenario might be that they might try and restrain Chinese students who come here for education," he said. "They might, at the very worst case scenario, take New Zealand off the preferred list of tourist destinations."

Using the technology, however, may mean getting offside with the Australia and the United States, which have also banned Huawei from their 5G networks.

"It does appear to be that New Zealand was faced really with a very difficult choice. Either you said no to China, or you said no to Australia, Britain, the United States and Canada," he said.

He didn't believe the announcement would come as a surprise to diplomats who probably would have "been surprised actually if the Government had made any other decision".

China is New Zealand's largest trading partner, with annual goods imports from the Middle Kingdom having increased $6.1 billion from the October 2008 year to $12.3 billion in the October 2018 year, according to Statistics New Zealand.

At the same time, annual goods exports to China have increased $11.2 billion to $13.5 billion. Milk powder, butter and cheese have driven that increase.

Mr Harman said the decision could be "the kick that New Zealand may need to try and diversify" who its trading partners are and what products are imported and exported.

After being informed of the security risks, Spark said it was disappointed by the decision but it would not affect its plan to launch the 5G network by July 2020.