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The economies of North Asia are becoming increasingly linked to New Zealand’s economic growth and prosperity. As these large economies develop, new opportunities in a variety of sectors are opening for New Zealand businesses.
This paper examines New Zealand’s total economic relationship with the North Asian economies of Japan, China, Korea, Taiwan and Hong Kong. In 2003 these five economies combined accounted for:
This study looks at New Zealand’s complete economic relationship with North Asia, not just the direct exchange of goods. The balance of payments records New Zealand’s broader economic transactions with the rest of the world. In addition to merchandise trade, the current account shows trade in services and income derived from international investments. The capital account examines the balance of New Zealand’s international investment position.
Trade in services is an important and often overlooked component in bilateral
economic relationships. The value of New Zealand’s services
exports is roughly equivalent to one third of merchandise exports. Although
trade in services statistics are difficult to calculate for individual countries,
we can gain some insight into New Zealand’s services exports by
looking at the two big-ticket items- tourism and education.
Tourists from North Asia contributed over $1.9 billion [1] to the New Zealand economy in 2003. Of the 2.1 million tourists who visited New Zealand in 2003, 18% (380,000 tourists) came from North Asia. This was despite the fact that all North Asia countries (except Korea) experienced a reduction in tourist numbers in 2003. Overall the region experienced 11% reduction in tourist numbers.
[1] All values are in New Zealand dollars unless otherwise stated.
Figure 1: New Zealand Visitor Arrivals
Over 44,000 Chinese students studied in New Zealand education institutions in 2003/04 down 4.6% (46,000) from 2002/03. China continues to be New Zealand’s largest international education market (by $ value) at 54%. In total the number of students from North Asia countries decreased from 87,000 in 2002 to 78,000 in 2003 (down 11.5%). Korea 19,023 to 16,509; Japan 16,509 to 14,303; Taiwan 4,033 to 2,189; Hong Kong 1,600 to 1,183. About three quarters of international students enrolled in New Zealand secondary schools were from China and Korea.
Figure 2: International Student Numbers
The Ministry of Education estimates that international students contributed more than $2.3 billion to the New Zealand economy in 2003 with more than $1.8 billion coming from North Asian students.
Figure 3: Source of Revenue
from International Students (total $1.8 billion)
Total overseas investment in New Zealand was valued at $178 billion on 31 March 2003 with Australia, the EU and the US being the major investors. Approximately 7% of investment came from North Asia, down from 10% in 2002.
Figure 4: Total Foreign Investment in New Zealand (total $178 billion)
For outward investment North Asian economies are emerging investment destinations, although New Zealand companies are cautious, with 4% of investment by New Zealanders overseas going to North Asia in 2003. Japan is the largest investor in New Zealand with $4.6 million in 2003, and Japan is the main destination for New Zealand investment, at $1.8 million.
Figure 5: New Zealand’ Total Investment Abroad
With New Zealand exports to North Asia dominated by primary produce and around 98% of imports from the region being non-agricultural, New Zealand and North Asia are a prime example of natural trading partners. In 2003 New Zealand’s merchandise trade with the North Asian economies totalled $14.9 billion, or 25% of total New Zealand trade. In comparison, 22% of trade is with Australia, 18% with the EU and 16% with NAFTA countries. New Zealand’s trade with North Asia was three times greater than the trade with the ASEAN region.
New Zealand faced a trade deficit in North Asia of $1.6 billion in 2003 as negative trade balances with China, Japan and South Korea outweighed surpluses with Taiwan and Hong Kong.
Figure 6: Total Trade with Selected Destinations
In 2003, $6.7 billion worth of exports or one quarter of total New Zealand exports went to North Asia down from $7.7 million in 2002. This contraction was primarily due to an appreciating New Zealand currency but was still a greater decline than the 8.5% fall in New Zealand exports to the rest of the world.
Figure 7: Exports to Selected Regions
Japan is still by far New Zealand’s biggest economic interest in North Asia despite exports falling $450 million in New Zealand dollar terms last year. Receiving $3.1 billion worth of exports in 2003, Japan was New Zealand’s 4th largest export market (when including the EU as a single market). China overtook the United Kingdom and Korea to become New Zealand’s 5th export destination with exports worth $1.4 billion. Korea was New Zealand’s 6th largest export market while Taiwan was 7th and Hong Kong was 8th.
Figure 8: Exports to North Asian Markets
While Japan will continue to be New Zealand’s largest North Asian market in the near future, the fast growing Chinese market is becoming increasingly more important for exporters. Since 1995, New Zealand exports to China have increased by 61% compared with growth in total New Zealand exports of 27%. Over the same timeframe, growth in exports to all other North Asian markets has decreased, expect for Taiwan.
Exports to North Asia in 2003 covered the full range of New Zealand’s primary product outputs with aluminium, forestry products, dairy, meat and kiwifruit being the main items. Unwrought aluminium remains the number one New Zealand export to the region despite decreasing 17% to $618 million in 2003. Sheep meat exports showed the strongest (and only) growth in 2003.
Merchandise imports from North Asia were up 3% in 2003 to be worth just over $8.3 billion. Total imports into NZ were down 1.8%. Over the last three years North Asia has been growing in importance as a source of imports substituting for a fall in imports from North America. In 2003, one quarter of New Zealand imports came from North Asia.
Figure 9: Imports from Selected Regions
Japan was the source of 12% of total New Zealand imports in 2003 while 9% came from China, 2.7% from Korea, and 2% from Taiwan and 0.5% from Hong Kong. Imports from North Asia grew significantly in 2003 (except for Japan, down 4.2%).
Figure 10: Imports from North Asia
Motor vehicles made up more than a quarter of total imports from North Asia in 2003. Japan alone supplied over half New Zealand’s motor vehicle imports with passenger vehicle imports increasing 1.8% to total $1.7 billion. Imports of vehicles from Korea increased by 107% valued at $53.5 million.
An appreciating New Zealand dollar significantly impacted on the value of exports in 2003. Over the year the kiwi rose 19.6% against the US dollar while the trade-weighted index increased 9.8%.
Figure 11: The NZ Dollar 2002-2003
Appreciation in the New Zealand dollar negatively impacts on New Zealand exports in two ways. Payments for New Zealand products (in US dollars) were worth 19.6% less to New Zealand in 2003. At the same time New Zealand exports became more expensive on the international market relative to products from competitor countries. Some exporters would have benefited from cheaper imported production inputs however, this positive is less significant for producers of primary produce. New Zealand also becomes a more expensive country to visit and study in.
Figure 12: Growth in New Zealand’s Exports to North Asia (US$)
Exports to China rose 19% in 2003, while exports to Taiwan were up 14%, up 10% to Hong Kong, and up 9% to Japan. Exports to Korea were still down, falling 10%.
Table 1: Comparative Economic Statistics
| Description | Japan | China | South Korea | Taiwan | Hong Kong | New Zealand |
|---|---|---|---|---|---|---|
| GDP (US$bn) | 4,299.4 | 1,446.9 | 521.4 | 283.9 | 1,361.0 | 78.2 |
| GDP growth (%) | 2.6 | 9.1 | 2.7 | 3.3 | 3.2 | 3.4 |
| Annual Inflation (%) | -0.3 | 1.2 | 3.5 | -0.3 | -2.6 | 1.8 |
| Total external debt (US$bn) | 195.1 | 140.1 | 51.7 | 59.3 | 37.5 | |
| Foreign exchange reserves (US$m) | 663 | 408 | 155 | 202,630 | 118,360 | 5,083 |
| Population (millions) | 127.2 | 1,295.2 | 47.9 | 22.6 | 6.9 | 4.0 |
Source: Economist Intelligence Unit Forecasts
Table 2: Summary of Bilateral Economic Statistics
| Japan | China | South Korea | Taiwan | Hong Kong | World | |
|---|---|---|---|---|---|---|
| NZ exports to (NZ$m) | 3,123 | 1,376 | 993 | 626 | 559 | 28,397 |
| % of total NZ exports | 11.0% | 4.8% | 3.5% | 2.2% | 2.0% | |
| NZ$ Export growth 2002/2003 (%) | -12.50% | -3.76% | -27.84% | -8.02% | -11.12% | -8.50% |
| NZ$ Export growth 1997/2003 (%) | 4.81% | 111.95% | -0.27% | 2.46% | -8.47% | 20.41% |
| NZ Imports from (NZ$m) | 3,718 | 2,848 | 849 | 693 | 153 | 31,782 |
| % total NZ imports | 11.7% | 9.0% | 2.7% | 2.2% | 0.5% | |
| NZ$ import growth 2002/2003 | -4.06% | 9.93% | 8.05% | 6.51% | 9.41% | -1.75% |
| Total investment in NZ (NZ$m) as at 31 March 2003 | 4,628 | 1,666 | 187 | 1,998 | 4,349 | 177,949 |
| Total NZ investment abroad(NZ$m) as at 31 March 2003 | 1,822 | 124 | 279 | 31 | 876 | 77,526 |
| Visitor arrivals ('000) | 151 | 66 | 113 | 25 | 26 | 2,104 |
| Visitor arrival growth (%) | -13.09% | -13.78% | 2.48% | -34.80% | -8.75% | 3% |
| International student numbers | 16,215 | 53,606 | 20,978 | 3,823 | 1,501 | 118,684 |
| NZ exports to (US$m) | 1,816 | 799 | 578 | 362 | 325 | 16,527 |
| US$ Export growth 2002/2003 (%) | 9% | 19% | -10% | 14% | 10% | 14% |
Source: Statistics New Zealand, Ministry of Education
C =
confidential
Table 3 New Zealand Exports to North Asia (NZ$million, FOB)
| Description | Exports 2002 | Exports 2003 | %of North Asia Total | 2002/2003% Change | % of Total NZ Exports | Total NZ Exports |
|---|---|---|---|---|---|---|
| North Asia Total | 7,685 | 6,677 | 100.0% | -13% | 24% | 28,335 |
| Aluminium | 747 | 618 | 9% | -17% | 84% | 738 |
| Logs | 707 | 571 | 9% | -19% | 93% | 615 |
| Milk powder | 512 | 487 | 7% | -5% | 19% | 2,629 |
| Confidential | 500 | 362 | 5% | -28% | 47% | 767 |
| Frozen beef | 227 | 300 | 4% | 32% | 21% | 1,427 |
| Cheese | 303 | 238 | 4% | -21% | 25% | 963 |
| Kiwifruit | 251 | 228 | 3% | -9% | 44% | 516 |
| Wool | 224 | 190 | 3% | -15% | 25% | 751 |
| Sheep meat | 160 | 167 | 2% | 4% | 8% | 2,216 |
| Fibreboard | 188 | 154 | 2% | -18% | 67% | 231 |
| Timber | 192 | 150 | 2% | -22% | 21% | 698 |
| Raw skins, sheep | 145 | 131 | 2% | -10% | 69% | 188 |
| Crustaceans | 143 | 121 | 2% | -15% | 91% | 133 |
| Frozen fish | 167 | 119 | 2% | -29% | 46% | 259 |
| Wood pulp, mechanical | 135 | 113 | 2% | -16% | 92% | 123 |
| Casein | 145 | 113 | 2% | -22% | 14% | 830 |
| Chemical wood pulp | 145 | 112 | 2% | -23% | 41% | 274 |
| Offal | 110 | 109 | 2% | -1% | 69% | 158 |
| Crude oil | 135 | 106 | 2% | -22% | 29% | 360 |
| Plywood | 96 | 95 | 1% | -2% | 63% | 151 |
Table 4: New Zealand Imports from North Asia (NZ$million, CIF)
| Description | Imports 2002 | Imports 2003 | %of North Asia Total |
2002/2003% Change | %
of Total NZ Imports |
Total NZ Imports |
|---|---|---|---|---|---|---|
| North Asia Total | 8,042 | 8,260 | 100% | 3% | 26 | 31,799 |
| Cars | 1,717 | 1,775 | 21% | 3% | 53% | 3,334 |
| Trucks and Vans | 428 | 420 | 5% | -2% | 48% | 869 |
| Computers etc | 332 | 318 | 4% | -4% | 33% | 960 |
| Transmission apparatus | 144 | 295 | 4% | 104% | 74% | 400 |
| Petroleum oils | 69 | 221 | 3% | 217% | 21% | 1,048 |
| Bulldozers etc | 198 | 161 | 2% | -19% | 73% | 222 |
| Machinery; parts | 148 | 155 | 2% | 5% | 34% | 452 |
| Television receivers | 85 | 113 | 1% | 32% | 56% | 201 |
| Suits etc women | 98 | 103 | 1% | 5% | 72% | 143 |
| New tyres | 102 | 100 | 1% | -2% | 59% | 171 |
| Photocopying apparatus | 99 | 95 | 1% | -5% | 86% | 110 |
| Toys | 79 | 82 | 1% | 4% | 78% | 106 |
| Jerseys etc | 76 | 74 | 1% | -2% | 88% | 84 |
| Footwear | 74 | 73 | 1% | -2% | 55% | 132 |
| Motor vehicles parts | 69 | 71 | 1% | 3% | 28% | 253 |
| Electric heaters and dryers | 64 | 67 | 1% | 5% | 51% | 133 |
| Telephone equipment | 82 | 67 | 1% | -19% | 25% | 270 |
| T-shirts etc | 66 | 65 | 1% | -1% | 79% | 83 |
| Trunks and Cases | 60 | 60 | 1% | -1% | 67% | 89 |
| Electronic games | 65 | 59 | 1% | -9% | 47% | 124 |
Source: World Trade Atlas
New Zealand Merchandise Exports to North Asia
(NZ$millions)
| Destination | 1990 | 1995 | 2000 | 2001 | 2002 | 2003 |
|---|---|---|---|---|---|---|
| World | 15,760 | 20,787 | 29,257 | 32,670 | 31,034 | 28,397 |
| China | 152 | 530 | 930 | 1,349 | 1,430 | 1,376 |
| Hong Kong | 234 | 631 | 791 | 786 | 629 | 559 |
| Japan | 2,560 | 3,396 | 3,952 | 4,083 | 3,569 | 3,123 |
| Korea, South | 673 | 1,080 | 1,315 | 1,440 | 1,376 | 993 |
| Taiwan | 267 | 606 | 702 | 711 | 680 | 626 |
| North Asia | 3,886 | 6,244 | 7,689 | 8,370 | 7,685 | 6,677 |
Source of Data: Statistics New Zealand
New Zealand Merchandise Exports to North Asia
(% of total NZ Exports)
| Destination | 1990 | 1995 | 2000 | 2001 | 2002 | 2003 |
|---|---|---|---|---|---|---|
| China | 3.9% | 8.5% | 12.1% | 16.1% | 18.6% | 20.6% |
| Hong Kong | 6.0% | 10.1% | 10.3% | 9.4% | 8.2% | 8.4% |
| Japan | 65.9% | 54.4% | 51.4% | 48.8% | 46.4% | 46.8% |
| Korea, South | 17.3% | 17.3% | 17.1% | 17.2% | 17.9% | 14.9% |
| Taiwan | 6.9% | 9.7% | 9.1% | 8.5% | 8.9% | 9.4% |
| North Asia | 24.7% | 30.0% | 26.3% | 25.6% | 24.8% | 23.5% |
Source of Data: Statistics New Zealand
New Zealand Merchandise Imports
from North Asia (NZ$million)
| Destination | 1990 | 1995 | 2000 | 2001 | 2002 | 2003 |
|---|---|---|---|---|---|---|
| World | 15,896 | 21,251 | 30,767 | 31,700 | 32,349 | 31,782 |
| China | 190 | 752 | 1,925 | 2,209 | 2,591 | 2,848 |
| Hong Kong | 191 | 228 | 171 | 156 | 140 | 153 |
| Japan | 2,468 | 2,948 | 3,447 | 3,495 | 3,875 | 3,718 |
| Korea, South | 256 | 363 | 677 | 726 | 786 | 849 |
| Taiwan | 398 | 553 | 678 | 659 | 650 | 693 |
| North Asia | 3,504 | 4,844 | 6,898 | 7,244 | 8,042 | 8,260 |
Source of Data: Statistics New Zealand
New Zealand Merchandise Imports
from North Asia (% of total NZ Exports)
| Destination | 1990 | 1995 | 2000 | 2001 | 2002 | 2003 |
|---|---|---|---|---|---|---|
| China | 4.9% | 12.04% | 25.03% | 26.39% | 33.71% | 42.65% |
| Hong Kong | 4.92% | 3.65% | 2.22% | 1.87% | 1.82% | 2.30% |
| Japan | 63.51% | 47.21% | 44.83% | 41.75% | 50.43% | 55.68% |
| Korea, South | 6.60% | 5.82% | 8.81% | 8.67% | 10.22% | 12.71% |
| Taiwan | 10.25% | 8.86% | 8.82% | 7.87% | 8.46% | 10.37% |
| North Asia | 22.24% | 23.30% | 23.58% | 22.17% | 25.91% | 29.09% |
Source of Data: Statistics New Zealand
