Finance Minister Nicola Willis says the government has to balance criticising China's South Pacific missile test with the reality that China is New Zealand's largest trading partner.

Speaking on RNZ's Morning Report, Willis said Pacific countries needed to present a united front. "We as Pacific countries need to stand together and say uh-uh, not in our backyard, not okay," she said. But she was equally clear the response could not be one-sided. "We have to walk a careful path of our own, where we do speak up for our values, speak up for our interests, but also recognise that those interests are multiple. We do have economic interests, we do have trade interests, we do have interests in a nuclear-free Pacific," Willis said.

China test-launched a long-range ballistic missile carrying a dummy warhead into the South Pacific on Monday. Beijing described it as routine and consistent with international law. Wellington's political leadership rejected that characterisation. Prime Minister Christopher Luxon called the test unacceptable, unwelcome and concerning, and said the government had told Chinese officials directly. Deputy Prime Minister David Seymour used similar language, describing it as "extremely unwelcome behaviour".

Willis linked the incident to the case for deeper defence cooperation with Australia, saying the missile activity showed the need for forces that can work together across the Pacific. Luxon went further, saying New Zealand and Australian militaries would become more aligned over time and that work was already under way. Neither leader gave a timeline or committed to specific military capabilities — the comments read more as a signal of intent than a formal announcement.

Notably, the government's response has not split along party lines as might be expected on a China security question. Labour's deputy leader Carmel Sepuloni said there was cross-party agreement on how the government handled the test. "Our priority is the protection of our Pacific region, and I think that we're on the same page," Sepuloni said. On most economic and social policy questions this government and Labour disagree sharply, but on this specific test the opposition has chosen not to challenge the coalition's position.

The tension Willis is describing is not new to New Zealand foreign policy, but it is more exposed now than usual. China is New Zealand's single largest trading partner, a status that shapes export returns across dairy, forestry and horticulture — something governments of both sides have been reluctant to risk. At the same time, successive governments have held to a commitment to a nuclear-free Pacific dating to the 1980s, and have increasingly seen China's naval and missile activity in the region as a strategic concern shared with Australia and other Pacific partners. Willis's comments make explicit what Wellington officials have generally preferred to keep implicit: that the trade relationship and the security relationship pull in different directions, and neither can be allowed to completely override the other.

What remains less clear from the government's public statements is what concrete diplomatic or economic consequences, if any, will follow the test. Luxon's language — unacceptable, unwelcome, concerning — is forceful by the standards of New Zealand's usually restrained diplomatic style, but it does not signal any specific retaliatory step, whether through trade measures, diplomatic downgrades or coordinated action through the Pacific Islands Forum. Willis's own remarks stayed at the level of principle rather than policy detail.

The timing and context matter here. Whether "standing together" as Pacific countries will translate into a joint statement, a Forum-level response, or simply aligned statements from individual governments will likely be worked out over the coming weeks through talks with Canberra and Pacific Island governments. Luxon's suggestion that the two countries' militaries will become "more aligned" builds on an existing conversation about closer trans-Tasman defence cooperation, including past discussion of New Zealand potentially associating with parts of the AUKUS framework's non-nuclear pillar. Neither Luxon nor Willis mentioned AUKUS directly in these remarks, and it would overreach to read the missile test as triggering a formal decision on that. But the timing — within days of the test — suggests the government sees the incident as useful support for an argument it was already inclined to make about working more closely with Australia on military capability.