Face-time in Beijing a priority for Prime Minister
Australia’s agribusinesses will soon have lighter tariffs than New Zealand.
Australia’s Trade Minister Andrew Robb is keen to see Australian business leverage the Chafta.
The plain speaking Robb has also endorsed the new business mantra in Australia which seeks to paint that country as the “food bowl for Asia” with active exploration now taking place to cement some mega investments with powerful China firms in the agriculture sector.
Key will be hoping that an official visit will spur Beijing to also make significant new trade concessions and move quickly to upgrade New Zealand’s FTA with China.
Under the 2008 deal, key sectors like dairy achieved phase-outs of tariffs over lengthy periods.
But the Chinese also capped the financial returns through the exports, with safeguards which kick in at relatively low volumes compared to the overall volume of imported dairy products from New Zealand.
Ambassador Wang Lutong has said New Zealand is expected to be the first developed country to update its free trade agreement with China.
But it is important that Key uses all his considerable advantages — including his relationship with Xi — to get the new deal over the line.
Second, follow the numbers. China’s now back as New Zealand’s major export destination.
This will hearten confidence at a senior government level that the joint goal between China and New Zealand to increase bilateral trade to $30 billion by 2020 is not a pipedream.
But the more important statistic for New Zealand is the increase in agricultural trade Australia can be expected to score from January 1.
Third, the relationship is now much more granular at both the political and business levels.
The rapid growth in Chinese tourist numbers has been a major spur to the New Zealand economy.
It also brings closer the day when Auckland will be a serious hub linking tourist and business traffic between China and Latin America.
The “people to people” emphasis strengthens the relationship.
But the Chinese appetite to buy residential housing in Auckland has also heightened concerns that too many New Zealanders are being priced out of the prime market.
Finally, focus on the factors that are disrupting China.
Fonterra chief executive Theo Spierings recently highlighted five issues: demographics, technology/ e-commerce, an ageing population, greater global connections and Beijing’s own adjustments to its plans.
To this I would add Xi’s focus on corruption.
Wang Zongnan, a former chairman of Bright Food Group — whose subsidiary invested in Synlait Milk — was recently sentenced to 18 years in prison for embezzlement and bribery over transactions that pre-dated his Bright role.
The new mood is also impacting on other prominent Chinese businesspeople.
Guo Benghen — the Chinese executive who led Bright Dairy’s original $82 million investment in Synlait Milk — left his job after coming under investigation.
Hong Kong magnate Li Ka-shing — whose firm owns lines company Wellington Electricity — also faced criticism for the sell down of his mainland Chinese assets.
And the chairman of Fosun — whose group has a minor investment in New Zealand — disappeared altogether for a period with no explanation given.
All in all, this will make for a much more complex arena during the year ahead.