An influential United States Congress hearing has been told "one of the major fundraisers for Jacinda Ardern's party'' is linked to the Chinese Communist Party and it showed China had penetrated New Zealand's political networks.
As a result, US lawmakers needed to consider whether New Zealand should be kicked out of the Five Eyes intelligence alliance because of problems at its "political core''.
The bombshell testimony included claims from a former CIA analyst that "anything on China that was briefed to Bill English was briefed to Mr Yang Jian'', the National MP revealed last year as having trained spies for China.
The hearing of the US-China Economic and Security Review Commission was aimed at gathering evidence on China's relationship with traditional US allies.
UN Senator James Talent - once touted as Donald Trump's pick for Secretary of Defence - raised concerns about "a sharp rise in political donations'' from Chinese Government-backed bodies to political parties in Australia and New Zealand.
China's actions included getting people linked to the Communist Party or People's Liberation Army elected and had made it worth the while of political figures "to parrot its line on issues it deems important''.
"It's important for the United States to consider that China may be testing methods of interference to probe for weaknesses in democracies in order to use the same techniques against Western countries in the future.''
The hearing heard testimony from former CIA analyst Peter Mattis, who said the Chinese Communist Party had worked "very close to or inside the political core'' of Australia and New Zealand.
However, he said New Zealand had "denied that there's a problem at all'' and failed to follow Australia's lead in setting up an inquiry into China's activities.
As a result, he said New Zealand's Five Eyes partners (Australia, Canada, the United Kingdom and the US) "need to have a discussion about whether or not New Zealand can remain given this problem with the political core''.
He said "it needs to be put in those terms so that New Zealand's Government understands that the consequences are substantial for not thinking through and addressing some of the problems that they face''.
New Zealand's membership of Five Eyes has been considered by successive governments as a cornerstone of our security.
Prime Minister Jacinda Ardern said the Five Eyes relationship was strong.
"None of them have ever raised such concerns with me, nor have I heard that they've ever been raised with anyone else.''
Labour's general secretary, Andrew Kirton, said the party followed the law on donations and had no idea which donor the Congressional testimony referred to.
"We have no knowledge whatsoever of what or who this is referring to,'' Mr Kirton said.
Opposition leader Simon Bridges rejected claims Mr Yang received improper briefings from the former prime minister.
He also said National followed the law on political donations and had seen no sign of improper influence.
- By David Fisher
