In recent times there has been considerable speculation in the New Zealand media about the future of our country’s vitally-important trade and cultural links with China.
The NZ Business Roundtable in China (NZBRiC) believes the repercussions have been overstated, particularly as we have just celebrated the first decade of bilateral free trade under the New Zealand-China FTA.
NZBRiC represents New Zealand’s leading exporters and experts on the ground in China.
“China remains a priority market for New Zealand exporters. I have just spent a week in New Zealand meeting with a number of these and there appears to be strong interest to continue to invest in the market and build stronger relationships to create a win-win situation for both New Zealand and China,” says Kevin Parish (pictured), chairman of NZBRiC.
Concerning the bilateral economic situation, Parish says:
- New Zealand primary products continue to clear the China border as usual. The Ministry of Primary Industry (MPI) has said that food import non-compliance issues leading to product rejection at the Chinese border were the lowest on record and that no products had been rejected in December.
- It is also worth noting that the trade frictions with China are not unique to New Zealand. A number of China’s major trading partners have recently experienced issues but most have continued to see strong export growth. Despite the US-China trade frictions which started mid-2018, Chinese tourism to the US increased by 2%. Following a politically challenging year in 2018, Chinese tourist arrivals in Australia increased by 6.2% for the year ending November 2018 to hit a record 1.43 million.
- There are a number of positive news stories in the New Zealand-China trade relationship. Many of our largest exporters and SMEs have experienced record export volumes and value on the back of China export growth.
- An example of China benefitting from the two-way trade relationship is this month’s KiwiRail deal with CRRC for an additional 450 flat-top rail wagons, bringing the total to 1,800. The cooperation between Kiwirail and CRRC is of major benefit to both the modernization of the New Zealand rail fleet and providing a major boost to the economy of Qiqihar in China’s northeast province of Heilongjiang which had negative GDP growth in 2017. Most of KiwiRail’s locomotives and rail wagons are now from China, and these are used to transport New Zealand milk powder destined for China.
- Overall bilateral trade is booming. In the decade since the Free Trade Agreement came into force, imports from China are twice the value they were in the 2008 year, while exports have more than quadrupled. The PRC is now New Zealand’s largest overall trading partner with 18% of the total value of goods and services trade, and ahead of Australia.
- As the total volume of trade has grown, New Zealand’s trade with China continues to grow faster than the overall export trend. Last year goods exports to China grew at 15% last year across most product categories. There was also significant growth in services, driven by Chinese visitor arrivals to New Zealand which were up 7.3% over 2017 – more than twice the growth rate in total visitor arrivals to New Zealand.
- China has also benefitted strongly from the developing of the trade relationship with New Zealand. China’s exports to New Zealand grew 15% last year, the same rate as New Zealand’s exports to China. Two areas which have seen rapid growth are mobile phones and computers which topped nearly $800 million last year. Huawei has been a major beneficiary being the largest Chinese mobile phone brand. To put the mobile phone trade in context, China’s exports to New Zealand are now larger than New Zealand’s total fruit exports to China.
The NZ Business Roundtable in China advises a pragmatic and grounded approach to businesses trading, investing and working with China. The organization advocates open discussion with a more holistic view of the benefits, opportunities, risks and challenges from our relationship with China. We hope this will help form a more articulated China strategy from Government with sustained investment and business continuity in mind.