Leaders’ rapport a positive from Li visit

Warm relationship will be a plus with trade talks to hammer out

Bill English and Li Keqiang have clearly established a warm relationship based on an appreciation for sound economics and a mutual desire to ensure the global trading system remains open.

This is an overlooked — but quite important — outcome from the Chinese Premier’s visit to New Zealand.

At yesterday’s gala luncheon the Prime Minister acknowledged China as the “engine room” which had kept the NZ economy afloat during deep recessionary times in 2009/10. Both politicians were blooded in the aftermath of the Global Financial Crisis which roiled share markets and caused asset values to tumble worldwide. The GFC also led to a global credit crunch and protectionist backlash which had not entirely been rolled back before Donald Trump injected his own brand of protectionism this year.

English, then New Zealand’s Finance Minister, was in charge of the NZ economy at a time when several of our leading companies turned to China for new shareholders, bringing with them sorely needed equity. At that time Li was the first-ranked vicepremier. But his role also included economic management, finance and macroeconomic management. He became Premier in March 2013.

By profession Li is an economist and English’s professional career included a stint in the NZ Treasury — so it’s not surprising that there is a commonality.

The pair have met before during bilateral visits but this visit was the first “private time” they have had to establish a personal relationship. It’s not clear what Li and English talked about when they met with their wives for a private dinner. But — as tends to be the case with the Chinese leaders in their informal meetings with our leaders — the Prime Minister’s family (two of the English sons) also came to dinner after Li extended an invitation for them to join in.

Their relationship will not yet mirror the easy familiarity that John Key established with China’s top leaders over many years of official visits and bilateral meetings at Apec, the United Nations and the East Asia Summit. Key’s rapport with Xi Jinping resulted in him getting a personal invitation to speak at an event the President was hosting this year. But the former Prime Minister was unable to take up that invitation in 2017.

As expected, free trade talks for an upgrade of the 2008 China-New Zealand free trade agreement (FTA) will be launched on April 25.

But occasional friction will be inevitable as negotiators get down to hammering out another “first” in the bilateral relationship through the upgrade of the FTA. When these points of contention occur it is likely that officials from the respective countries will call on their ministers and leaders to give a steer.

When this happened during the original FTA negotiations, Prime Minister Helen Clark and then Premier Wen Jiabao effectively banged heads together to get the deal done.

There is little detail on the scope of the free trade upgrade at this point. But the Premier indicated it will go well beyond the focus on dairy products and other agricultural products which were at the centre of the 2008 agreement.

“The upgraded FTA — if compared to China’s FTAs with other developed countries — will represent the most advanced level,” Li said.

There is a strong desire by NZ and Chinese businesses to see the upgrade result in better dividends for SMEs, services exporters and those firms in the weightless economy. But there is also the potential to introduce some of the principles which underlie the Trans-Pacific Partnership; particularly around the digital economy and competition as a potential pathfinder for the Free Trade Area of the Asia Pacific (FTAAP). This is a prospective regional FTA linked by the Apec nations which China boosted when it hosted Apec in Beijing in 2014.

The foundations for this week’s visit were set before Donald Trump’s election as President of the United States.

As expected Li staked out China’s position that it remains committed to open trade and open markets. The Premier played down Trump’s influence stressing the mutual economic interdependence between China and the US. Again this positioning is a confidence boost for local businesses present who were pleased to hear there were no signs a trade war is pending.

Then there were the human touches. The most notable a gift to Li of a rugby jersey. But also by request from English for the Chinese to come up with a Mandarin name for rugby so that our national game is not confused with Australian rules.