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The New Zealand- China relationship Material for New Zealand-China Council Delegation.

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Presentation on theme: "The New Zealand- China relationship Material for New Zealand-China Council Delegation."— Presentation transcript:

1 The New Zealand- China relationship Material for New Zealand-China Council Delegation

2 China is a central part of a huge structural shift in the global economy… 2 Source: OECD

3 …and New Zealand is responding to that shift 3 Source: Statistics New Zealand Goods exports to China have risen from $2 billion to $7 billion in 5 years during a global recession

4 From humble beginnings… 4 Source: Statistics New Zealand

5 …China is NZs hottest export market and eased the pain of the global financial crisis 5 China is responsible for $4.9bn of NZ's additional $9.5bn of exports since 2007

6 Trade is becoming more balanced 6 Source: Statistics New Zealand

7 Strong growth in top 7 exports to China 7 Source: Statistics New Zealand

8 An increasingly important source of imports… 8 Source: Statistics New Zealand

9 …that are used by households and New Zealand firms for further production 9 Top 10 = ~82% of total Source: Statistics New Zealand

10 Exports of services are growing too: Chinese tourism spending has risen strongly 10 Since GFC hit, Chinese tourism spending has risen by $380 million. Total spending by all tourists fell by $720 million.

11 11 Expect visitors from China to double by 2018 Tourism market is changing rapidly, driven by Chinese income growth Source: NZIER, MBIE New Zealand tourism operators needs to think carefully about Chinese visitors demands

12 Commercial services exports are small but widespread and growing 12 Source: Statistics New Zealand Overall, China is now New Zealands 3 rd largest services market, worth over $1 billion per year and growing

13 New Zealand remains a popular place for Chinese students to learn 13 Sources:; Infometrics Chinese students accounted for $560 million of GDP in 2011: 27% of the total GDP generated by overseas students

14 Investment has risen – both ways 14 Source: Statistics New Zealand Only 0.61% of New Zealands total stock of foreign investment is from China… …compared with 16% of our total imported goods Of New Zealands total investment abroad, China received 0.59% in 2012, up from 0.13% in 2007

15 FTA provides a competitive edge 91% of tariff lines are duty free By 2016, all imports from China will be duty free By 2019, 96% of New Zealand exports will be duty free Leaders goal of doubling exports within 5 years from 2010 is an ambitious but feasible target 15 Total trade withGrowth since 2000 Growth since 2008 Growth since 2010 World55%2%9% China411%62%26%

16 But FTA preferences wont last forever: we need to maximise our first-mover advantage Chinas signed FTAs In negotiation or being considered* ASEANGCC PakistanAustralia ChileIceland New ZealandNorway SingaporeSACU PeruIndia* Hong KongJapan and Korea* MacauSwitzerland* Costa RicaRCEP 16 ProductNZ FTA tariff 2013, 2019 MFN tariff 2013 Milk & cream5%, 0%10% Kiwifruit6.7%, 0%20% Chilled lamb5%, 0%15%

17 Chinese economic challenges present opportunities for New Zealand firms ChallengePotential implications for New Zealand Environmental pressuresMore demand for exports of environmental goods, services and technology (e.g. energy-efficient materials) Rapid urbanisationDemand for New Zealand building products Food security and availabilityFood exports; technical cooperation to boost Chinese agricultural productivity; greater exports of experts Rebalancing of economy away from investment towards consumption Should boost Chinese demand for imports of consumables, including foodstuffs, wine, fashion, etc. Fiscal pressures related to healthcare and education spending Enhanced demand for health technologies, opportunities for education via JVs/commercial presence Regional integration models: TPP vs. RCEP New Zealand has a strong interest in TPP accession clause accommodating future Chinese entry; can act as neutral bridge between RCEP and TPP 17

18 Key takeouts The economic relationship has developed rapidly and is maturing well Its more than just goods exports – the services, investment and people links are deepening The FTA has generated real momentum But preferential tariff advantage will be eroded over time as both countries sign more FTAs with other competitors Opportunities abound for New Zealand firms to help address big structural challenges in China 18

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