China trade powers up

So says NZTE’s Group General Manager - North Asia, Rod MacKenzie.

New provisional trade figures just released for the year till August 2009 show a massive increase in trade between our two countries, and it’s on an unstoppable upward trajectory, MacKenzie believes. New Zealand’s exports to China went up a whopping 59 percent in the year to August, reaching a high of $3.49 billion.

In the six months to June this year, China overtook Japan to become New Zealand’s third biggest export market.

“We’re now inextricably wedded to China in trade terms”, he says.

“I think China may well overtake Australia to become our biggest trading partner in five to 10 years - something I wouldn’t have said a few years go. The Chinese think so too.”

Last year’s massive trade increase is unlikely to be repeated, however, because it was partly due to global conditions, increased commodity prices - which may reduce again - and the Chinese purchasing more dairy products from New Zealand. Dairy products, meat, wool, fruit and timber accounted for most of our exports to China.

Stuart Ferguson, Chairman of the NZ China Trade Association, warns that the impressive figures for the first year following the FTA signing are not sustainable.

“There were one-off corrections in that, and we won’t see anything like that next year. Neither should we - a steady growth curve is much better overall than boom or bust.”

He says that proviso doesn’t detract from solid growth in all of the sectors exporting to China. Both seasoned China hands who were already in the market, and new players, who have taken advantage of the reduction or removal of trade barriers are seizing the opportunities the FTA presents in China.

Rod MacKenzie says there’s no doubt that a lot of the huge bilateral jump in trade (up by 23 percent over the last year) is partly due to much greater engagement by New Zealand companies in China - and that will increase.

“China’s growth continues to be phenomenal, and with 1.3 billion people, it can’t feed itself. New Zealand is an obvious partner to provide it with food.”

As well as exporting food, China is increasingly looking to us for agricultural infrastructure, training and help with pastoral production. Services like education and tourism, niche technology companies and New Zealand consulting companies like BECA are also doing well there.

China is warmly disposed to us, since we were one of the first countries to recognise them as a market economy, he says.

Niche products are also finding good markets within China. Mud House Wines from Waipara set up an office in Southern China a year ago, and is now planning to expand into Northern China shortly. Its CEO Baden Ngan Kee says its investment in developing the Chinese market has been sizeable for a company with a turnover of $30 million.