How to talk about diversifying our trade (to reduce a heavy dependence on China) without mentioning “diversification”
Was something missing from the PM’s speech to the China Business Summit?
Point of Order mused on that question after finding no mention of the need to diversify.
We recalled a Newshub report earlier this year headed Value in New Zealand diversifying trade beyond China, Chris Hipkins says, as Nanaia Mahuta flies to Beijing
The Prime Minister says New Zealand’s trading relationships are not diverse enough and Kiwi exporters should make sure they’re not putting all their eggs in one basket.
It comes as Foreign Affairs Nanaia Mahuta flies to China, New Zealand’s largest trading partner, for the first ministerial visit there since 2019.
And:
New Zealand has been encouraging exporters to diversify to ensure resilience.
Hipkins on Tuesday said our trading relationships are not diverse enough and he believes there is value in diversifying beyond China.
“Absolutely. Any trading nation, as New Zealand is, is wise to make sure we have got a diverse network of trading relationships. Under our Government, you have seen a real focus on that.”
He mentioned the Government’s work on the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, as well as the conclusion of negotiations on the United Kingdom and European Union Free Trade Agreements.
The latest speeches, statements and what-have-you posted on the government’s official website include news that the United Kingdom’s has joined the aforementioned Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
That’s in tune with Hipkins’ observation that “any trading nation is wise to make sure we have got a diverse network of trading relationships”.
And it’s fair to say that Hipkins was championing diversification in his speech to the China Business Summit without actually using that word:
My approach in the international sphere is not that dissimilar to my priorities at home – getting back to basics and dealing with the bread and butter issues in front of us.
In foreign policy terms, it means making sure we have greater economic resilience across our trade markets in a time of global uncertainty.
You will find the speech here…
It comes as Foreign Affairs Nanaia Mahuta flies to China, New Zealand’s largest trading partner, for the first ministerial visit there since 2019.
And:
New Zealand has been encouraging exporters to diversify to ensure resilience.
Hipkins on Tuesday said our trading relationships are not diverse enough and he believes there is value in diversifying beyond China.
“Absolutely. Any trading nation, as New Zealand is, is wise to make sure we have got a diverse network of trading relationships. Under our Government, you have seen a real focus on that.”
He mentioned the Government’s work on the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, as well as the conclusion of negotiations on the United Kingdom and European Union Free Trade Agreements.
The latest speeches, statements and what-have-you posted on the government’s official website include news that the United Kingdom’s has joined the aforementioned Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
That’s in tune with Hipkins’ observation that “any trading nation is wise to make sure we have got a diverse network of trading relationships”.
And it’s fair to say that Hipkins was championing diversification in his speech to the China Business Summit without actually using that word:
My approach in the international sphere is not that dissimilar to my priorities at home – getting back to basics and dealing with the bread and butter issues in front of us.
In foreign policy terms, it means making sure we have greater economic resilience across our trade markets in a time of global uncertainty.
You will find the speech here…
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Speech
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The United Kingdom’s accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is great news for the region and New Zealand.
Aotearoa New Zealand is increasing efforts to tackle climate change by joining with partners to support the Asian Mega-Deltas initiative that increases climate resilience and provides greater food security to the region.
Chris Hipkins and his Minister of Export Growth, Damien O’Connor, jointly signed off on the press statement which welcomed the United Kingdom’s accession to the CPTPP.
Worth $60 billion in two-way trade with partner economies, this agreement provides significant benefits and opportunities for our exporters, Hipkins said.
With accession of the UK complete, the CPTPP now covers more than 500 million people globally and is worth over 15 per cent of the worlds GDP.
Damien O’Connor said more than half a million New Zealanders are employed in firms that export to our CPTPP partners, and it continues to create new jobs.
The Agreement delivered tariff savings of more than $330 million on New Zealand exports in its first two years alone, and many more millions of benefits had flowed since then, he said.
O’Connor is chairing the CPTPP Commission meeting that is being attended by 11 Trade Ministers and delegations from CPTPP economies.
More information is available at www.mfat.govt.nz/cptpp.
In his speech on his government’s relations with China, the PM reflected on the trade mission he led there just three weeks ago.
He also noted the government has made a number of trade missions of this nature in the post-COVID period – to Singapore, Japan, Viet Nam, the United States, and Australia.
As PM, he said, he had been focussed on playing his part in strengthening and enhancing New Zealand’s range of existing relationships and to advance our trade opportunities.
This reflects my strong determination, as a trading nation, to continue driving a wide range of offshore opportunities to support our economic recovery and resilience.
It’s also why our Government has been focused on driving an active FTA agenda to open as many doors as possible for New Zealand exporters and businesses.
It was natural, therefore, that with China’s post-COVID re-opening earlier this year we led a trade mission to New Zealand’s largest offshore market.
The 2008 Free Trade Agreement has propelled two-way trade with China from $8 billion that year to more than $40 billion today.
While our top three exports to China are dairy, meat, and forestry, the export mix of products and services is becoming more diverse.
But the finalisation of Free Trade Agreements with the UK, the EU, and the CPTPP, provide our exporters with more favourable terms of trade than before in a wide range of other, equally significant and high value markets, Hipkins said.
The seven new or upgraded FTAs signed since 2017 had resulted in goods covered by a tariff-free FTA rise from 52 per cent of exports to almost three quarters, he said before setting out three key principles that guide his government’s relationship with China.
- We will continue to engage with China and cooperate in areas where our interests converge.
- We will always act to preserve, protect, and promote our national interests and our values.
- We will work with partners to advocate for approaches that reflect our interests and values.
China is a vital and significant trading partner, with a market of 1.4 billion consumers that buys around 20 billion dollars’ worth of New Zealand’s goods every year.
It’s also currently New Zealand’s 3rd largest market by value for services exports – worth 1.2 billion per annum.
At the same time, I’m aware that market concentration can bring risk.
We improve resilience when our businesses have access to a wide range of markets, and the New Zealand Government has continued to work hard on this, alongside our businesses.
That’s in tune with concerns expressed late last year by Gareth Kiernan, the chief forecaster for Infometrics.
Arguing for policies to diversify away from China, he said:.
Since New Zealand’s free-trade agreement with China came into force in late 2008, the share of our exports heading to China has increased from 5% to as high as 32% last year.
This well-documented trend clearly reflects the economic benefits to New Zealand of being hooked into the fast-growing Chinese market.
But the increasing concentration on a single market has also raised questions of New Zealand’s over-reliance on selling into a country where human rights and foreign policy tensions could easily lead to a breakdown in diplomatic relations.
Kiernan noted how the decline in Australia’s share of exports heading to China since mid-2021 shows how political directives in China’s centrally managed economy can have dramatic and immediate effects on trade flows.
Hence the need to diversify our markets, which Hipkins has acknowledged.
Point of Order is a blog focused on politics and the economy run by veteran newspaper reporters Bob Edlin and Ian Templeton
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