China Business: New normal and new opportunities

Ambassador Wang Lutong.

New Zealand is well placed to reap the benefits of an ongoing relationship, says ambassador Wang Lutong.

China is the largest trading partner of New Zealand and more than 120 other countries. As the Chinese economy enters a state of "new normal" it draws worldwide interest and attention.

China has shifted to a new normal of economic development as the old model of credit and investment-led pattern of growth is no longer sustainable. It is shifting gear from high speed to medium-to-high speed growth; from an extensive model that emphasised scale and speed to a more intensive one emphasising quality and efficiency; and from being driven by investment in production factors to being driven by innovation.

As the economy continues to grow in size and in resilience - 7 per cent in 2015 - the momentum it generates will be larger than the double-digit growth in previous years.

Comprehensively deepening reform and structural adjustment is under way. China is streamlining government administration and mandating more power to lower-level governments to remove roadblocks and boost market vitality. It is also accelerating reforms of price, of the fiscal and tax systems, and of state-owned enterprises.

With the view to upgrading itself from a manufacturer of quantity to one of quality, China is implementing such strategies as "Made in China 2025", "Internet Plus", the Silk Road Economic Belt and the 21st Century Maritime Silk Road, seeking innovation-driven development, extensively applying information and smart technologies, and launching major projects on high-end equipment, information networks, integrated circuits, new energy and new materials.

This new normal of the Chinese economy will continue to bring more opportunities of trade, growth, investment and cooperation for other countries in Asia and beyond.

President Xi Jinping

As envisioned by a World Bank report, with its change of growth strategy and adaptation to new challenges, China is well positioned to become a modern, harmonious and creative high-income society by 2030.

As President Xi Jinping noted on the annual Boao Forum for Asia a few days ago, "this new normal of the Chinese economy will continue to bring more opportunities of trade, growth, investment and co-operation for other countries in Asia and beyond."

In this intertwined world, the old practice of "going it alone"and the mentality of "the winner takes all" is no choice for China.

The impact of the global financial crisis has not yet subsided. Primary factors impacting on global demand include the large number of developing countries that have not fully realised their economic potential, which has led to unbalanced regional development and a widening gap between rich and poor.

Those are the context for the "Belt and Road" initiative. The vision and action paper of the initiative has been developed. Substantive progress has been made in the establishment of the Asian Infrastructure Investment Bank. The Silk Road Fund has been launched. Constructions of a number of infrastructure connectivity projects are moving forward.

Being the first developed nation to join the AIIB as a founding member, New Zealand is well-positioned for the opportunity the "Belt and Road" initiative will bring.

Thanks to the successful implementation of the China-New Zealand Free Trade Agreement, the value of two-way trade is more than NZ$50 million a day. China's speeding up of a new type of industrialisation, IT application, urbanisation, agricultural modernisation and green growth, its US$10 trillion import of goods, US$500 billion outbound investment and 500 million overseas visits in the coming five years will create broader converging interest.

One of the agreements reached during President Xi Jinping's visit to New Zealand last November was to take positive measures to constantly promote bilateral economic and trade relations to a new level and ensure that the FTA remains relevant and current - that is to upgrade the FTA.

Trade Minister Tim Groser's visit to Beijing and the sixth Meeting of China-New Zealand FTA Joint Commission in Wellington last month kicked off initial discussions regarding negotiations to upgrade the FTA.

The China-New Zealand FTA was the first signed between China and developed countries. It's now the first one to be upgraded. An already-very-high-standard FTA, the Most Favoured Nation (MFN) status means New Zealand gains the benefit of commitments China makes in future FTAs that are more liberal than those in the NZ-China FTA.

Greater opportunities lie ahead for co-operation in goods and services, finance and investment, as well as people-to-people exchanges, to deepen our comprehensive strategic partnership. As for predictions? Why not let the future tell us.