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The signing of the New Zealand China FTA in Beijing on 7 April marks the highpoint in New Zealand’s modern links with China. It demonstrates the strong political underpinning to the relationship – without which there could have been no FTA. It shows that China sees New Zealand as being a country with which it is able to do business, and with which it finds value in doing so: we are the country, we are told frequently, of the “four firsts”. That political relationship underpins all that New Zealand does in China. And so it must. For no other major economic power has such a close linkage between its politics and its trade and economic decision making.
At NZ$7 billion p.a. China is New Zealand’s third largest trading partner; our fourth largest export market and the second largest source of our imports. Its importance is only growing as tourism numbers rise – 126,000 now, predicted to reach 260,000 annually in seven years; as Chinese investors start to take an interest in New Zealand; as more New Zealand firms open up in China; as Chinese scientists and educational institutions pay growing attention to New Zealand as a useful partner for China, and see us as a place for their better quality students to study. The Chinese community in New Zealand – our third largest ethnic community – connects with China in ways that offer as yet largely unrealised opportunities for New Zealand.
China sits prominently in New Zealand’s vision of our global strategic interests. We work together in the UN, the WTO, in APEC and regional institutions, potentially importantly in the EAS. We share regional interests – in the Pacific, over points of security concern such as North Korea, in the development of a stable and prosperous Asian region. China’s US$1.5 trillion in foreign exchange holdings gives it the power to influence capital markets and general economic performance world wide. New Zealand’s sustainability objectives can be realised globally only if China comes on board.
But New Zealand’s relationship with China has only so much that we share. We have no common constitutional history or shared political, legal or free speech philosophy. The disparity in size between the two countries inevitably affects the way we do business with each other. The challenge is to make sure China does not ignore us. Almost no part of New Zealand’s economic future will be without a Chinese dimension.
One of the original Asian tigers, Taiwan is regaining the spring in its step with proposals by the in-coming administration (to assume office on 20 May) to re-energise the economy through expanding economic links with mainland China and boosting domestic spending on a series of infrastructure projects. The top initial priorities identified are to open up direct cross-straits flights, to develop tourism from the mainland and to ease restrictions on cross-straits investment. The objective is to promote Taiwan as a competitive service economy and a research and development hub for the region.
As New Zealand’s eighth largest export market (NZ$772 million in 2007), Taiwan is a significant market for dairy products, beef, kiwifruit, apples, lamb, aluminium and malt extract. It is a sophisticated market, seeing good growth in health foods and functional foods. It is also a good fit for New Zealand companies in some areas of specialised manufacturing, in biotech and in ICT/digital content. There are also active education connections (around 4,000 students each year), a steady tourism flow (around 28,000 visitors per year) and a popular working holiday scheme (600 young Taiwanese each year).
With respectable growth rates of around 4-5% per annum in the past few years, Taiwan is aiming even higher under the in-coming administration. There will be likely to be new opportunities for New Zealand business, including possible triangular partnerships into mainland China. The emphasis on tourism development suggests increased opportunities in food and beverage and hospitality. A more vibrant economy also promises further opportunities in biotech and ICT/digital content (where links are developing), as well as in a broader range of S&T and education areas. New Zealand – a respected Asia/Pacific partner, known for its reformed economy, its emphasis on quality and safety and its strong environmental credentials – is well positioned for these new opportunities, but must keep up its profile to avoid being overshadowed by larger players, applying more resource.
Singapore remains at the cross-roads of international trade and commerce. It successfully promotes itself as a regional hub for many diverse activities – banking, engineering, research, transportation, healthcare to name a few.
But it’s a crowded marketplace. While there is room for any competitive country and company, the struggle for profile and recognition is intense.
New Zealand needs to “raise the tempo” of its engagement with Singapore and consequently the region. The challenges are:
