What to expect from Chinese Premier’s visit
China is proving a counter-balance to Donald Trump’s protectionist sentiments
Prime Minister Bill English will hold his first official meeting with Chinese Premier Li Keqiang on Monday. There will be plenty on the agenda. Particularly as China is poised to overtake the United States as the world’s economic superpower.
It seems counter-intuitive that the political leader of an authoritarian state like China should now be leading the regional commitment to open markets and free trade.
But China is proving a counterbalance to Donald Trump’s protectionist sentiments.
Expect the official communique to cover the joint imperative of both nations in ensuring the region does not retreat into a fortress mentality.
Here’s three areas which will come in for focus.
Open markets and the FTA upgrade
Premier Li and Prime Minister English will make progress on the upgrade of the path-breaking 2008 free trade agreement (FTA) between New Zealand and China.
There has been a strong push from the NZ dairy lobby for the upgrade to include the removal of safeguards in the current FTA.
These mean higher tariffs kick in on NZ dairy products (milk powder) once certain import thresholds by volume are passed.
Other agribusiness lobbies have also been vocal.
But in the new economy other interests have emerged.
Trade officials are keen that the FTA upgrade also covers services, e-commerce and other aspects of the digital economy.
Points of contention
There has been considerable Chinese angst over the years about New Zealand’s foreign investment regime. The wrinkles are being ironed out through a more focused and transparent approach by the Overseas Investment Office (OIO).
But there are also concerns from the NZ side. Kiwi exporters don’t tend to make a public fuss about the nontariff barriers (NTBs) that prevent them from realising the promise of the vast Chinese market.
They are essentially coaxed to let the diplomats front their concerns with major markets — particularly one as powerful as China.
But behind the scenes there are concerns about the NTBs and the myriad of import rules which NZ exporters allege prevent them from getting a fair go.
The entry of chilled meat into the Chinese market is one issue vexing meat exporters.
One problem has been the past tendency of the bureaucracy to focus on opening up new trade doors — through forging free trade deals with other nations — rather than ensuring no blockages emerge to frustrate trade once the deal is done.
Trade Minister Todd McClay and Ministry of Foreign Affairs and Trade (Mfat) officials have been working through an upgrade of New Zealand’s trade policy to cover this.
This is expected to be unveiled by English at a breakfast in Auckland this Friday.
Infrastructure
Chinese construction companies funded by the massive Chinese banks are keen to play a role in developing New Zealand’s infrastructure.
But they have found it difficult to get a toehold in the existing alliances that make up the local construction industry.
New Zealand’s rapid growth has created an infrastructure deficit. With Fletcher Building experiencing difficulties it is inevitable that other companies will take up some competitive slack.
China’s One Belt One Road initiative which is designed to link the Asia-Pacific region with Europe by land and sea is also a significant opportunity for infrastructure and logistics companies.
Then there is the Ministry of Business, Innovation and Employment probe into allegations of alleged steel dumping by Chinese manufacturers in New Zealand. This resulted in significant tension between the two nations when the initial complaint was leaked to media last year.
Political leaders tend to gloss over points of contention — everyone wants to herald a successful meeting before it’s time for “wheels up” — so the official communique is more likely to focus on the positive outcomes than the remaining bones of contention.