Geopolitical tensions between China and Australia could affect New Zealand in a number of ways, and not all of them bad, industry expert Tim Hunt says.
In the short term, there were opportunities for New Zealand to increase trade to China in products such as beef, lamb, red wine and rock lobster.
However, the current situation between China and Australia was "very much a cautionary tale" for New Zealand, Hunt, who is Rabobank's GM Food & Agribusiness Research, told The Country's Jamie Mackay.
The relationship between the two nations has been in decline since the US began a trade war with China in 2018. Australia is a close ally of the US.
Since then the feud escalated, with Australia banning Chinese smartphone Huawei from its 5G network, and Prime Minister Scott Morrison calling for an independent inquiry into the origins of the Covid-19 pandemic.
China then retaliated with trade sanctions on products including barley, timber and rock lobster, and recently imposed tariffs of up to 212 per cent on Australian wine imports.
In the short term, there were opportunities for New Zealand to increase trade to China in products such rock lobster. Photo / File
"It is getting ugly and the door is starting to close on a large lucrative market for Australian exports and agriculture in particular," Hunt said.
While Australia appreciated Prime Minister Jacinda Ardern and New Zealand's support, Hunt also advised caution when dealing with China.
"Your Prime Minister certainly has stood shoulder to shoulder with Australia but I think there's a real opportunity for New Zealand here to be a little bit smarter than Australia on the diplomatic front."
Hunt said New Zealand had already illustrated this caution by standing up for its values "without poking the bear."
"Now New Zealand really has the chance to look at the experience of Australia and learn from that and eke out something better."
The Chinese Embassy recently released a list of 14 specific problems it had with the way Australia was behaving, and this was a "pretty easy road map" for New Zealand to follow, so it could stand up for its values but also keep trade open, Hunt said.
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So far the affect on Australia's agriculture exports hadn't been too damaging "depending on what else is happening in the market and how easy those products are to redirect," Hunt said.
For example there had been a drop in shipments of barley and cotton, but those producers should still have "a pretty good year" if China was buying from other markets, Hunt said.
"In those products the global market is tight - we have other markets we can ship to - as long as China's buying those products from someone else and taking that off the market actually those producers should have a pretty good year this year."
However, there would "be some pain" for products such as rock lobster and wine which were tougher to redirect, and especially iron ore, which was more than 40 per cent of Australia's exports to China, Hunt said.
"There will be economic pain and that becomes a test as to how important this is to Australia politically to stand up for the things that have got us into trouble with China."
