The Chinese Ambassador contends China and New Zealand stand on the cusp of a new chapter in the bilateral relationship.
But achieving the new stretch targets for bilateral trade that are being promoted along with a renewed push to join the CPTPP is no simple feat.
Ambassador Wang Xiaolonghas suggested New Zealand should set its sights on an ambitious $50 billion target for two-way trade with China.
It’s a facet of the relationship that stretch targets for bilateral trade have in the past been promoted by successive New Zealand Prime Ministers and China’s leadership.
In an address to mark the 50th anniversary of diplomatic relations between New Zealand and the People’s Republic of China, Wang promoted the new target as a mechanism to maintain robust momentum in the growth of bilateral trade.
Reaching the $50b figure would be a ballast to New Zealand’s economy.
The New Zealand Government wants to build more resilience in the country’s external relationships by diversifying the trade footprint.
Not necessarily by reducing bilateral trade with China but by expanding trade through developing new markets and opening doors further through new bilateral regional and trade relationships.
This policy was first developed in 2019 when political leaders became concerned New Zealand had “too many eggs” in the China basket.
It was heightened when China took a retaliatory response against Australia when its foreign minister demanded an inquiry into the emergence of Covid-19 in China.
Already NZ Trade and Enterprise is seeing an expanding focus on three markets among its clients: The United States, Britain and Australia.
Wang made four observations which underlined his address to a Vision 2023 seminar held by the China Chamber of Commerce in New Zealand (CCCNZ) mid-week.
Firstly, New Zealand products have positive national branding in China — “those to push the shopping carts are the most powerful drivers of growth of the New Zealand trade”.
Wang’s contention is that this national branding is a “hard-won intangible asset that delivers tangible commercial value”.
He noted that total bilateral annual trade in goods hit the $10b mark in 2009; by 2014 it had hit $20b and $30b in 2018. In the year to October 30, 2022, it was nudging a new high of $40b.
CCCNZ had produced a survey of its members suggesting 60 per cent believed bilateral trade could exceed $50b by 2030. Wang’s contention is this could be achieved even earlier once the tourism and education sectors pick up again after the disruption of Covid.
The problem is that while exceptional price points are being achieved for agricultural exports such as beef, they may diminish if Chinese consumers’ pockets are hit by reduced economic growth. This will require careful management.
A second focus is on newer areas of co-operation such as the digital and green economies.
Pointing to the size of China’s digital economy in 2021 — some 45.5 trillion yuan — and the growth of New Zealand’s own tech sector, Wang contended this could add depth to the economic relationship.
Ambassador Wang Xiaolong. Photo / Getty Images
On the green economy front, China and New Zealand had accumulated experience with electric buses, and the carbon footprint for New Zealand’s beef and lamb exports was amongst the lowest in the world.
He also wanted to encourage greater networking and co-operation among sub-national organisations such as local councils and chambers of commerce and more people-to-people engagement.
But his major diplomatic focus is on the rules-based international trading framework and for China and New Zealand to look ahead at how to strengthen that.
New Zealand is a founding member of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership — an 11-strong Asia-Pacific trade agreement which includes Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, Peru, Singapore, and Vietnam.
This country is also one of three nations to develop the Digital Economic Partnership Agreement (DEPA).
The CPTPP was a leading addition to the regional trade architecture offering added market access and reducing behind-the-border measures.
Wang said China was now seeking membership of both organisations as part of an effort to build a modern domestic economy and further open up.
He pointed to Chinese forecasts that if China joins the CPTPP it will generate huge dividends and a global income gain of US$632b ($987b) annually by 2030.
The CCCNZ members supported China’s accession.
Trade Minister Damien O’Connor has said New Zealand will take over as chair of the CPTPP from Singapore next year.
He believes this will provide an opportunity to further highlight New Zealand’s progressive approach to international trade as set out in the Trade for All agenda, as well as underlining this country’s commitment to open, trade and regional economic architecture.
“Continuing to build on our export growth is a key part of the Government’s economic plan. Our two-way trade with the CPTPP bloc accounts for 27 per cent of our total trade, and growing this further will better secure the economic future of all New Zealanders,” O’Connor said.
“It is the world’s premier open, multi-party free trade agreement, signed by 11 economies, which represent over 13 per cent of the world’s GDP. Around $20b a year of our exports go to CPTPP partners.”
Already Britain is wanting in, and South Korea and Uruguay are also signalling major interest.
Wang’s comments this week indicate that as New Zealand moves into the CPTPP chair’s role, China will step up its push to join the agreement.
It will take agreement by all 11 CPTPP partners for China to progress to a full negotiation.
Against a background of heightened geo-strategic sensitivities, this will be no simple matter.
