Luxon sworn in as NZ's PM, vows to rebuild economy

Eight weeks after elections, New Zealand's new government headed by Prime Minister Christopher Luxon was sworn in on Monday.

Luxon, a former businessman who has only been in politics since 2020, has an unenviable task ahead of him, as he tries to rebuild the country's economy while balancing a three-party coalition government, political analysts and commentators say.

The two junior coalition partners will share the deputy prime minister's role, with New Zealand First party leader Winston Peters for the first half of the parliamentary term and ACT leader David Seymour taking over for the remainder.

The new Cabinet will have 20 members: 14 National ministers, three ACT ministers and three New Zealand First ministers.

In a congratulatory message sent to Luxon on Monday, Chinese Premier Li Qiang said he stands ready to work with the new government led by Luxon to maintain high-level exchanges, strengthen mutually beneficial cooperation and enhance friendly exchanges.

The two sides should push for new progress in the bilateral comprehensive strategic partnership and greater benefits for their people, Li said.

China and New Zealand are each other's important partners, he said, and the bilateral ties have long been at the forefront of China's relations with Western countries.

Richard Shaw, a politics professor at Massey University in New Zealand, said the cost of living will be the key focus of the new government.

But as was the case with the previous government, "there are relatively few levers the government has at its disposal to influence this", he said. "The government's primary response will be via tax cuts, which may fuel rather than dampen demand."

On foreign policy, Shaw said he did not expect any major changes.

Geoffrey Miller, a geopolitical analyst at the University of Otago in New Zealand, said Luxon's National Party, with its business-friendly position and strong rural base, "should help to keep in check the more ideologically driven, pro-US position likely to be taken by Winston Peters who will be looking to resume the 'Pacific Reset' strategy he began as foreign minister in 2018".

"China remains New Zealand's biggest trading partner by some margin and is likely to remain so for the foreseeable future," Miller said.

"We should expect an economic-focused foreign policy from the new government, which will dovetail with voters' concerns over cost of living issues."

Alistair Crozier, executive director of the New Zealand China Council, said China remains a very important bilateral partner for New Zealand, a fact that has been recognized by successive governments in the country over the past 20 years and more.

Stephen Jacobi, executive director of the NZ International Business Forum, said the new government has "an ambitious policy program made up of three parties election commitments".

"This is going to be a lot of work and difficult to implement, especially as they aim at the same time to cut government spending by reducing the size of the public service and deliver a sizeable tax cut," Jacobi said.

Shaw said New Zealand has never had a three-party coalition before, and there is "considerable room for tensions to emerge" given Luxon's inexperience, the historical antipathy between the two deputy prime ministers, and the policy differences between the parties.

Jacobi said the new government will be working off the basis of separate and detailed coalition agreements among the three parties.

"Luxon has expressed confidence that the three parties and their leaders are fully aligned around delivery," he said.

Xu Wei in Beijing contributed to this story.