Pacific Tensions Drive New Zealand’s Largest Military Expansion In Decades

A country of 5.3 million people whose largest export is dairy is now spending $7 billion on strike capabilities, antitank missiles, surveillance drones, and Seahawk helicopters. New Zealand’s Defense Capability Plan will nearly double military spending to more than 2% of GDP over eight years. Its Prime Minister called it “the floor, not the ceiling.”

China made the decision for them. In September 2024, China launched an intercontinental ballistic missile into the Pacific Ocean for the first time in 44 years. The dummy warhead splashed down inside the South Pacific Nuclear-Free Zone. China called it “routine.” New Zealand intelligence said this marked a precedent. Six months later, a Chinese naval task force sailed around Australia and conducted live-fire drills in the sea between Australia and New Zealand.

New Zealand’s military isn’t ready for any of this. The country has about 8,700 active-duty personnel, compared to China’s 2 million. Most of the navy fleet will reach the end of its design life by the mid-2030s. Air bases have corroded runways. Recruitment has been declining as military personnel leave for higher-paying civilian jobs. The silver lining is that New Zealand-based companies are already manufacturing drones for Ukraine, so the industrial base for a buildout exists.

The plan is built around integration with allies. The defense strategy explicitly commits to “combine military forces in defence of shared interests, common values and territory” with Australia. New Zealand is a member of Five Eyes alongside the U.S., UK, Canada, and Australia. From Washington’s perspective, a stronger New Zealand presence in the South Pacific frees up American resources to focus on Taiwan and the South China Sea. For New Zealand, the complication is that China is also New Zealand’s largest trading partner. Wellington is rearming against the country that buys its milk, which means every military announcement has to be calibrated carefully enough to deter Beijing without provoking a trade response that would hurt New Zealand more than any missile.

New Zealand isn’t alone. Australia is buying nuclear-powered submarines and boosting missile production. Japan, South Korea, Singapore, and the Philippines are all increasing defense spending. Europe has been rearming since Russia’s invasion of Ukraine. 

The pattern is global: countries that spent decades assuming great-power competition was a relic of history are discovering it isn’t, and the bill for decades of underinvestment is coming due all at once.