Oth­ers eye­ing Belt and Road, re­port warns

Pur­su­ing host of new ini­tia­tives ad­vis­able to bol­ster strong NZ-China ties, says PWC

The New Zealand Herald - - BUSINESS - Liam Dann

New Zealand’s pref­er­en­tial po­si­tion in the Chi­nese mar­ket is at risk un­less we ac­tively pur­sue our place in its epic Belt and Road Ini­tia­tive, says a re­port by PWC.

Com­mis­sioned by the New Zealand China Coun­cil, Belt and Road Ini­tia­tive is pitched as a first step to­ward a strate­gic plan to max­imise the ben­e­fits of Bei­jing’s mas­sive global in­fra­struc­ture push.

The Belt and Road Ini­tia­tive (BRI) was an­nounced in 2013 by Pres­i­dent Xi Jin­ping, who de­scribed it as the project of the cen­tury.

It seeks to en­hance eco­nomic growth across the tra­di­tional Chi­nese trade routes — over land to Europe and by sea down through the Pa­cific.

It is es­ti­mated that China will in­vest as much as US$2.5 tril­lion ($3.5t) in in­fra­struc­ture across the re­gion dur­ing the next decade.

“The re­la­tion­ship we have with China has grown in­cred­i­bly rapidly un­der the im­pe­tus of the Free Trade agree­ment,” said New Zealand China Coun­cil chief ex­ec­u­tive Stephen Ja­cobi. “But some new mo­men­tum is needed.”

The rea­son for that was other na­tions were stak­ing their po­si­tions with trade deals and po­si­tion­ing them­selves in the frame­work of the BRI.

Planned projects like a fast rail link from Bei­jing to Europe had the po­ten­tial to shift the bal­ance in trade with China, Ja­cobi said.

“It re­quires us to take an­other strate­gic look at what we can do with China, par­tic­u­larly as Belt and Road be­comes the prism through which China looks at the rest of the world.”

The mas­sive in­vest­ment in in­fra­struc­ture through the re­gion was likely to be fo­cused on de­vel­op­ing na­tions rather than coun­tries like New Zealand, Ja­cobi said.

So the re­port fo­cused more on New Zealand’s con­nec­tiv­ity with China and the 69 BRI coun­tries.

The re­port iden­ti­fies eight spe­cific ini­tia­tives un­der four cat­e­gories where New Zealand can ex­pand its con­nec­tions.

Th­ese in­clude trade fa­cil­i­ta­tion in ar­eas like biose­cu­rity, cus­toms clear­ance and sup­ply chain hubs as well as a fo­cus on in­no­va­tion and the cre­ative sec­tor.

The re­port rec­om­mends quite spe­cific steps such as cre­at­ing in­ter­ac­tive video games to pro­mote New Zealand’s place within the BRI.

New Zealand should also use its ge­o­graphic po­si­tion to act as a con­duit and nat­u­ral con­nec­tion be­tween China and South Amer­ica.

“From a trade per­spec­tive, the NZChina path­way is al­ready well de­fined with a Mu­tual Recog­ni­tion Agree­ment and Joint Elec­tronic Ver­i­fi­ca­tions in place,” the re­port said. “Sim­i­lar pro­cesses should be ex­tended into South Amer­ica.”

As well as boost­ing trade the de­vel­op­ment of a con­nect­ing hub be­tween China and South Amer­ica would have a sec­ondary ef­fect of en­cour­ag­ing more tourists from both places.

Ja­cobi ac­knowl­edged there were diplo­matic is­sues which re­quired New Zealand to tread care­fully as it de­vel­oped the BRI re­la­tion­ship.

The US and Aus­tralia have con­cerns about the BRI be­ing used to grow Chi­nese po­lit­i­cal in­flu­ence in the re­gion.

Ja­cobi said he hoped the re­port would be use­ful to the Gov­ern­ment which was cur­rently work­ing on an of­fi­cial Mem­o­ran­dum of Ar­range­ment with China.

This was a process — be­gun in March 2017 — of up­grad­ing the FTA, ex­pand­ing trade and in­vest­ment and de­vel­op­ing a plan for New Zealand’s in­clu­sion in the BRI.

Pic­ture / Mark Mitchell

Fa­cil­i­tat­ing trade with China is one of sev­eral ar­eas the re­port cites as ripe for ex­pand­ing ties.

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