China could win from Cook Islands-New Zealand spat

Confusion and concern is mounting over a growing spat between New Zealand and Cook Islands, which analysts believe could result in stronger ties between the Pacific island nation and China.

New Zealand is withholding key aid, worth $A16.8 million, to its former colony after Cook Islands Prime Minister Mark Brown signed a pair of secretly negotiated agreements with Beijing earlier this year.

Kiwi Foreign Minister Winston Peters has defended the move as necessary after Mr Brown broke agreements it had with New Zealand.

"Trust and meaningful engagement are fundamental to free association," a spokesperson for Mr Peters said.

Mr Brown argues that New Zealand is acting cruelly, given that funding is worth more than four per cent of his country's budget.

"It is targeted, and has always been targeted, towards the sectors of health, education, and tourism," he told parliament this week.

Cook Islands is only semi-independent, governing in "free association" with Wellington after breaking away in 1965, with its citizens afforded Kiwi passports and the benefits of New Zealand citizenship.

However, those perks come courtesy of a promise to consult with New Zealand on defence and security matters.

Both sides agree there has been a breakdown in the interpretation of the key pact - the 2001 Joint Centenary Declaration - which underpins relations.

The rift is causing ructions both internally and in the region.

Locals have rallied alongside the Cook Islands opposition parties in support of keeping ties to New Zealand, given its deep historical ties, which extend to a majority of Cook Islanders living in New Zealand.

Pacific analysts, including Massey University associate professor Anna Powles, believe Mr Peters' call to withhold aid could deepen Mr Brown's ties with Beijing.

"(It) opens the door for increased Chinese engagement with the Cook Islands," she told Radio NZ.

"This could be a very good news story for China, and it certainly puts New Zealand in a weaker position, as a consequence."

Dr Powles described the situation as "pretty messy", which threatened to boil over at September's Pacific Islands Forum meeting in Solomon Islands.

"The negotiation between the two countries, between New Zealand and Cook Islands, needs to take aid as a bargaining chip off the table for it to be able to continue, for it to be successful," she said.

While the aid cut was made clear to the Cook Islands a fortnight ago, it has been made public this week as New Zealand Prime Minister Chris Luxon undertakes a state visit to China.

Speaking from Shanghai, Mr Luxon affirmed his support for the decision - but said it would not cloud his talks with the superpower.

"Our issue is really with the Cook Islands. It's between Cook Islands and New Zealand," he said.

"We were unhappy and dissatisfied with the fact that the Cook Islands government wasn't open and transparent about its international agreements."