Budget 2020: Our relationship with China


Budget 2020: Our trading partners

The importance of geographic connections to a COVID-19 recovery

Resilient trading partners are essential during times of crisis. Since the early 2000s, China has shown that resilience and has grown to become one of New Zealand’s most significant trading relationships. Two-way trade between our countries has developed from NZ$10 billion in 2007 to more than NZ$32 billion just before the outbreak of COVID-19.1 China is now New Zealand’s largest trading partner in goods and second largest overall including trade in services.2

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China was one of the few nations whose GDP annual growth rate remained in positive figures during the 2008 global financial crisis (GFC), outperforming the likes of the USA and countries across Europe. China continues to demonstrate its resilience today, now on the road to a steady recovery with its GDP already making significant gains, having moved through the worst of COVID-19.

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Rebuilding connections

COVID-19 broke links between various elements of our society. For businesses, these elements include links with their customers, suppliers and other stakeholders – and it is our Government that can help restore those relationships. How?

- Between New Zealand businesses and Chinese regulators

Chinese government regulators are stakeholders in a significant number of New Zealand businesses, including meat and infant formula exporters; however, overseas regulators can pose barriers to our businesses. For example, detailed product registration regulations in China limit New Zealand companies’ ability to source from alternative suppliers – making it difficult to resolve supply chain disruption, which we are seeing more of under COVID-19. To counter this, our government agencies, such as the Ministry of Primary Industries, could work with their equivalents in China to pursue joint regulation – building connections between New Zealand businesses and Chinese government stakeholders that allow for increased communication and problem solving. 

- Between countries and people

As economies shrink and competition for scarce resources (such as PPE) increases, we may see growing tensions between our trading partners. It is critical to our trading sector that we maintain a balanced, fair and independent foreign policy during this time. It is important New Zealand stamps out xenophobia directed towards our local Chinese community and towards our partners in China.

Government policy signals are also fundamental to robust business relationships. Developing new business relationships will likely be difficult, especially against the backdrop of travel restrictions eliminating face-to-face interactions. Government-led promotion and endorsement can help businesses continue to foster new relationships, important in an evolving global environment. 

Safely re-open the education sector

Our hard-earned COVID-19 elimination efforts can and should support New Zealand’s economic recovery. While strict international travel restrictions are essential, they must also be targeted and appropriate. A relaxation of the rules, where appropriate, for inbound travel would help our international education sector recover.

In 2018, New Zealand saw around 36,000 fee-paying students from China alone, totalling between $700 million and $1 billion in just tuition fees – besides the additional revenue created for our accommodation, service and travel industries.Establishing a robust travel and quarantine policy would help enable international students to return to the country, providing an economic boost across a number of sectors.

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As a result of COVID-19, online education may become the new normal. This approach to education creates alternative opportunities for our education sector because student numbers are not limited by resources or distance; however, New Zealand schools and universities are potentially on the back foot when competing with top schools and universities around the world already strong in their online capacity and capabilities.

Looking ahead, combining innovative education approaches with traditional education in a COVID-19 free environment will help our country stand out from its competitors and supports a positive relationship between the likes of China and New Zealand. Cooperation between China and New Zealand in the education sector also provides cultural and educational opportunities for young people in both nations, ultimately strengthening the ties between us.

Capitalise on technological infrastructure spending in China

To help overcome the impacts of GFC, the Chinese Government established a stimulus package worth RMB $4 trillion (NZ$939 billion). There is no doubt significant government spending will be on the table again and that a new stimulus package will include considerable infrastructure spending in technology, supporting China’s desire to transit into a high tech and service driven economy.

New technological infrastructure will bring a boost in online sales of goods and services (including education and healthcare). Our Government  should create a digital-ready strategy to help New Zealand businesses capitalise on this opportunity.

Now might be a good time for the Government to reinforce our ties with key trading partners such as China as we all look to increase the speed of our COVID 19 recovery. 

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