Govt's 2015 China Strategy in need of $50m

The Government is looking to grow tourism services trade with China by at least 60 per cent. Photo / Thinkstock

The newly launched 2015 China Strategy will need a $50 million investment to fully deliver on the Government's goals.

That was the estimate put in front of the business community when Ministry of Foreign Affairs and Trade officials road-tested their developing strategy last year.

The "whole of Government" effort was expected to involve about 200 officials - diplomats, trade officials, science, education and investment advisers, customs, police and more - when brought to fruition.

This is alongside a new Beijing Embassy to project New Zealand's identity in the Chinese capital.

For a strategy that has been promoted as a signature piece of the Government's economic growth agenda, it has taken an inordinately long time to get into the public domain.

The strategy wasn't finally signed off and launched until Friday, but it was "ready for implementation" last March.

It's not just the China strategy that has been moving at a snail's pace. Ministry working papers also indicate that the Australia and United States strategies were expected to be ready in the middle of last year.

They will not be launched until later this year.

This bureaucratic tardiness undermines the Government's plan to increase exports to 40 per cent of GDP (a one-third increase) by 2025.

A year ago, business people told MFAT that the free-trade deal with China created business and political opportunities but New Zealand needed to make the most of its "first mover advantage". New Zealand businesses were underperforming in China through a lack of capital and lack of specific Chinese knowledge.

There was a perception that China wanted to interact with "world-class" businesses and sectors, particularly agritech and food and beverage sectors.

The New Zealand brand has cachet in China for safe food and as a tourism destination but it needed clear definition and protection.

The strategy addresses elements of this.

New Zealand Trade and Enterprise has identified 50 firms that it will work alongside to increase their penetration of the Chinese market.

Education NZ has been refocused to concentrate on rebuilding the valuable Chinese student market. China Southern Airlines is already bringing many more tourists to New Zealand as a result of its daily services.

But the published strategy doesn't address the trade-offs that will need to be made between the interests of major corporates like Fonterra and Air NZ and New Zealand's broader market goals.

In particular, Fonterra's continuing concentration on bulk commodity exports to China when Chinese competitors, including Shanghai Pengxin, which the Government recently approved to buy the Crafar dairy farms, are concentrating their efforts on value-added products.

There is nothing in this strategy which questions whether Fonterra should be persuaded to follow suit.

Work has been underway to clarify the Overseas Investment Office rules for foreign direct investment into New Zealand - but they are still opaque.

The upside will come from persuading New Zealand businesses to move further into internationalising their operations to sell high-value products and services in areas where they have comparative strength.

But they need seed capital. This issue may be addressed in Finance Minister Bill English's up-coming Budget.

CHINA GOALS

* Retain and build a strong and resilient political relationship with China.
* Double two-way goods trade with China to $20 billion by 2015.
* Grow services trade with China (education by 20 per cent, tourism by at least 60 per cent) by 2015.
* Increase bilateral investment to levels that reflect the growing commercial relationship with China.
* Foster high-quality science and technology collaborations with China to generate commercial opportunities.