NZ-China Trade: Choppy waters ahead?

The relationship between China and New Zealand has always been important to the New Zealand Chinese community.

That's not only because many local Chinese businessmen are involved in China-related business, but also because harmonious relations rather than tensions between the two countries mean a safe and friendly environment for Chinese New Zealanders. 

However, with the stand-off  intensifying between the United States and China, local Chinese business-people are among those having to think seriously about the relationship between New Zealand and China, especially after Prime Minister Jacinda Ardern's address to the Chinese Business Summit in which she admitted the differences between the two countries were “becoming harder to reconcile” and there were “no guarantees” inside the relationship.

New Zealand's trade relationship with China has been remarkably successful, developing to a point where China is now the biggest trading partner. New Zealand had a merchandise trade surplus of $6.8 billion in 2019 over China.

According to SamY,  a Chinese immigrant with experience in the Chinese import-export sector, “ China is willing to see New Zealand benefits from bilateral trade in exchange for a certain gestures of compromise by New Zealand. “

SamY, who now lives in New Zealand, said “China would regard it as a great victory even if New Zealand ‘s compromise is just lip service,  as long as New Zealand has a different tone than the United States, Australia, and the UK. “

“In China’s view, Zealand is seen as counterweight to undermine some western countries’ antagonism towards China." he said.

“Beijing wouldn’t bother too much as long as New Zealand does not make the biggest noise in criticizing the Chinese government among the Five Eye allies."

 As Foreign Minister Nanaia Mahuta told the UK media this week that New Zealand's economy relies heavily on China.

If it falls out with China, it will surely face a worse outcome than that of Australia.

Manufacturing cashmere garments for Chinese retailer J Kaishun | Photo: supplied

Another NZ-Chinese businessman, Mr Sunny Xu ,encouraged New Zealand to stand its ground. ” The economic relationship with China will definitely be affected by political factors, and lets try to avoid China's economic bullying in advance if it is possible, but never compromise when there is no way to avoid it.

Manufacturing cashmere garments for Chinese retailer J Kaishun | Photo: supplied

“The temporary pain is the price that must be paid to show the kind of nation we are, and the core values we hold.” he said

Mr Xu emphasized that “New Zealand’s eyes should never be blinded as one of the Five Eyes countries. “

He is among those in the NZ-Chinese business sector who say this country should take a chance during the current geopolitical crisis between the US and China to effectively diversify its global trade.

Mr.Benny Li, a retailer in the NZ souvenir industry believes America itself could do a lot to help New Zealand by signing a free trade agreement.

While New Zealand has secured FTA's with 12 nations (including China) , no such agreement seems on the horizon.

Mr Li suggests an FTA with US could go a long way to reducing  New Zealand’s reliance on China, but a roadmap for the current Biden administration in Washington towards possibly joining a multi-party agreement (like the TPP) seems way too difficult, given the Covid pandemic and the other substantial domestic issues facing the US. 

On the other hand, the Ardern government’s attempts to secure comprehensive and inclusive FTAs with the EU and UK are also a good way to expand New Zealand’s market opportunities, and move New Zealand away from the situation faced by Australia over recent months , with China erecting various trade barriers to Australian goods. 

Reports that the EU and UK may be closing a deal that would eventually phase out trade tariffs are encouraging.  

Dr. Hongzhi Gao, an associate professor of international business at Victoria University in Wellington believes New Zealand is in a difficult situation; having to balance its trade relationship with the desire to take a harder line on China’s anti-democratic crackdowns in Hong Kong and reported human rights abuses in Xinjiang. 

Dr Honghzi Gao , international business expert at Victoria University | Photo: supplied

Dr Gao said the best way to solve the dilemma is to reduce the economic reliance on China. He totally agrees with the NZ Foreign Minister's suggestion that New Zealand's business people should not put all their eggs in one basket.

"That's not going to be easy , but it is I believe a strategic imperative for New Zealand moving forward.".

Dr Gao feels the trade relationship between New Zealand and China has reached its peak, and with that comes some hazards regarding just how deeply the NZ economy gets involved with the Chinese economy.

“I definitely think New Zealand should reduce the integration of the food and high-tech fields with China's supply chains to ensure New Zealand's diversification in the industrial chain across the world.” he said.

Dr. Gao also suggests New Zealand companies take care to keep an appropriate distance from Chinese companies “linked to human rights violations in Xinjiang and Hong Kong or digital tech companies that are politically sensitive” in order to avoid levels of political risk which could easily rise in future."

The opinions expressed in this article are those of the author 

- Asia Media Centre