New Zealand-China Business Summit

Tēnā koutou katoa. Da jia hao.  Good morning everyone.  

Prime Minister Luxon, your excellency, a great friend of New Zealand and my friend Ambassador Wang, Mayor of what he tells me is the best city in New Zealand, Wayne Brown, the highly respected Fran O’Sullivan, Champion of the Auckland business community Simon Bridges, Dame Therese Walsh Chair of AirNZ,  Dame Fran Wilde Chair of Asia NZ Foundation, my hard-working colleagues MPs Nancy Lu and Carols Cheung, members of the diplomatic corps, members of the business community, distinguished speakers and guests, ladies and gentlemen. Thank you for the opportunity to speak to you all this morning.  

This Summit is an opportunity for us to share perspectives and discuss the importance of the New Zealand – China relationship.

This year marks a significant occasion - the tenth anniversary of the signing of our Comprehensive Strategic Economic Partnership – possible in this very hotel – when President Xi last visited New Zealand – it is certainly an occasion worth marking.

Like China we attach great significance to the increased trade, enhance political respect, expanded practical cooperation, development, and people-to-people relations.

While we often discuss the changes in the China market, it is important to note upfront that the foundations supporting our bilateral trade relationship remain steadfast – these of course being our robust bilateral trade architecture, including our high-quality bilateral FTA (further upgraded in 2022), regular high-level political and official engagement, and our – or, in this case, your - strong business and people-to-people connections.

The first time I spoke at this conference was in 2018, where I was on a panel to discuss the tenth anniversary of the signing of the China-New Zealand FTA. Six years later it is my privilege to be here as the Minister for Trade.

This morning, I’ll share with you some reflections on the term so far, as well as insights from my recent visit to China.  I’ll then conclude with some comments on the Government’s target for doubling export growth and how China fits into that strategy.

Reflections so far

As we have just heard from Prime Minister Luxon, this Government is bringing energy and renewed urgency to our international partnerships.  

We are putting New Zealand back on the world stage, seeking new opportunities for our businesses, and making sure that we maximise the benefits to New Zealand in all our international relationships. New Zealand is well and truly open for business, and we are committed to supporting our businesses in this global marketplace.

However, even though we are export-oriented and trade-dependent, the contribution of exports to New Zealand’s GDP is not particularly high.  

And, in fact, the percentage of our GDP from exports has actually shrunk over the past 10 years. At 24% we are well down the list behind such countries as Singapore (187%), Ireland (137%) and Norway (56%). I don’t need to point out that it is no coincidence that these countries are all economically advanced and highly successful.

We need to change our relative position in these rankings and to achieve this we have a set an ambitious target of doubling exports, by value, within 10 years.

As an outward looking Government, we have resolved to renew and sustain New Zealand’s international relationships and have undertaken a busy schedule of both inwards and outwards visits to achieve this.

In this relatively short time, I have travelled to some of New Zealand’s key export destinations including India, Singapore, and of course, China.

As a small, export-oriented economy the importance of maintaining and growing these connections cannot be overstated. It is vital that New Zealand tells its stories and maintains its presence internationally.

On China

China is one of New Zealand’s most significant trade, economic and people to people relationships. An important destination for both New Zealand’s products and people, China accounted for nearly 22 per cent of our good and services exports in 2023 and with 58 recently resumed direct connections between our two countries our people-to-people connections continue to grow.

This is a significant partnership for both countries, and it is important we continue to support its growth and assist our exporters to grow New Zealand's economy. New Zealand has placed a high value on direct interaction with our Chinese counterparts through successive governments from former Prime Minister Sir John Keys visit in 2008, to my most recently my trip to up in April.

As our largest export market, the China trade-relationship remains an incredibly important part of this picture.  

With a still growing middle class of over 500 million people there are significant opportunities for New Zealand. We continue to be a trusted and reliable supplier not only of high quality and safe dairy, meat and wood products to China, but also of innovative goods across health and nutrition, fitness and other sectors.

We are pleased to see a strong recovery in our services trade with China.

Prior to the pandemic, China was New Zealand’s second largest international visitor market. We are seeing a rebound in Chinese tourism to New Zealand, serviced by a return to 58 regular flights a week between New Zealand and China. Education links are also steadily recovering, with more than 21,000 Chinese students enrolled to study in New Zealand in the first eight months of 2023.

For this reason, and as part of this Government’s increased international engagement, it was important to me that I connected early with my Chinese counterparts.

I welcomed the opportunity to meet Commerce Minister Wang Wentao in Abu Dhabi on the margins of WTO’s 13th Ministerial Conference, and then last month I had the opportunity to travel to China myself to build upon my discussions with Commerce Minister Wang.

On that note, and in keeping with today’s theme of ‘Navigating today’s China’, let me offer some reflections on my visit to China last month.

This was the first visit to China by the Government this term, and an important opportunity to strengthen relationships, support New Zealand exporters, and promote New Zealand businesses on the world stage.

I undertook meetings with my Ministerial counterparts in the Commerce, Agriculture, and Forestry portfolios, as well as engagements with the Governor of Heilongjiang Province and the Mayor of Shanghai.  

In my discussions with Commerce Minister, Wang Wentao, we spoke about our complementary trade relationship, progress achieved so far implementing the 2022 FTA Upgrade provisions, and other areas of bilateral cooperation including in support of business environment reforms in China, and intellectual property rights protection.

Likewise, my meetings with my Agricultural and Forestry counterparts provided opportunities to highlight current bilateral cooperation programmes.

Beyond Beijing, I had the opportunity to visit other provinces.  In Heilongjiang Province I witnessed an agriculture and forestry-based economy deploying its education, industrial and technological assets to create world-leading products and add value in industries as diverse as meat processing, farming machinery, and wooden window framing.

In Shanghai, I had the chance to hear from New Zealand businesses on the ground; to better understand the opportunities on offer, and to see how New Zealand businesses are innovating and adapting to meet today’s challenges.

I came away from China with a clear view that New Zealand is maintaining its reputation as a world-leading producer of safe, healthy, nutritious, natural and sustainable food products. But beyond that, I also see further opportunities for New Zealand businesses in a range of sectors – such as gaming, sustainability, and the creative sector.

What was also evident is that the landscape in the China market is changing rapidly – businesses on the ground are continuing to navigate changes in the regulatory environment; meanwhile many of our firms have seen rising labour costs.

Chinese consumer confidence has not rebounded as strongly as expected post- COVID. However, China is not a monolith, and this is not the whole story. Across some sectors - companies I have spoken to have seen stronger market recovery in China compared to others.

We’re also seeing a heightened focus by Chinese consumers on, for example, health and well-being, and a greater emphasis on e-commerce platforms.

There’s also greater competition in the market, including from local Chinese companies. New Zealand firms need to hustle to respond to these consumer trends and remain nimble and agile to stay ahead of competition.

And what’s more - the global economic landscape continues to evolve, including in ways that are detrimental to New Zealand’s interests.

The challenge of economic headwinds is not unique to China-New Zealand trade. The global economic environment continues to be challenging.

Geopolitical tensions and strategic competition are having ripple effects across trade policy internationally – with countries increasingly turning inwards and towards greater protectionism.

Unfortunately, as I have seen first-hand at the WTO and more recently at the OECD meetings, enthusiasm for trade liberalisation is weakening. And countries are turning to greater self-sufficiency and subsidisation.  

As the world becomes ever more complex and contested, so we must become more dynamic and resilient.

New Zealand needs to work harder to strengthen our supply chains, to maintain our edge offshore, and to make sure we’re well positioned to navigate the economic headwinds moving forward.

Double exports by value

As I mentioned, my visit to China formed part of our efforts to deliver on this Government’s commitment to double the value of our exports over 10 years and to turn the country into an exporting powerhouse.

The best way we can ensure long-term advances in our living standards is by connecting New Zealand firms with international consumers. We must think and act boldly.

This is an ambitious target, and business-as-usual just won’t get us there.  

So how will we achieve this ambitious goal?

For a start, we need to take full advantage of the opportunities in our existing free trade agreements, which currently cover over 70 percent of our goods trade.

As I mentioned, exports as a percentage of GDP have actually shrunk over the past 10 years. So, we need more businesses to take up the opportunities from our trade agreements, which can drive them to grow, expand, and provide well-paying jobs for New Zealanders.  

For example, there is more we can do to help our businesses take full advantage of our long-standing FTA with China.

We must be relentless in tackling non-tariff barriers, which can affect billions of dollars’ worth of our exports and can artificially limit our market opportunities.

We also need to build our capacity and capability here at home, to better take advantage of these opportunities. This means ensuring that our policy settings around skills and education, infrastructure, and R&D are all aligned and supporting New Zealand companies to move up the value-chain.

Because that is what export double is about – increasing the value of our exports.

For too long, New Zealand’s gains in trade have come from increasing volume, rather than increasing processing and value-add. This has to change.  

It also means addressing regulatory settings that disproportionately constrain production and discourage investment into our companies.

Strengthening our connections with key markets will remain crucial.

China is a critical element in our strategy to double our export value. With tariff free access for all New Zealand goods into China, and a burgeoning services trade, our economic relationship continues to flourish.  We will continue to harness the opportunities presented in the China market.

While we remain fundamentally committed to developing our trade and economic relationship with China it is also vital that we work to spread our exposure across many markets: pursuing diversification and working hard to open as many doors as possible worldwide.

I’m excited to say that we are on the way towards undertaking more trade and business missions during this term than any other previous New Zealand Government and I hope to lead one to the Shanghai Expo late in the year.

This is the essence of our ‘China and…’ approach.

Let’s take India, for example. Developing a broad-based relationship with India across all spheres is a strategic priority for this Government. As part of this objective, I am committed to delivering a commercially meaningful FTA that opens this market to Kiwi exporters.

We are also pursuing trade agreements with other key partners, including the UAE, which I formally announced earlier this month, and with the GCC.  

Doubling exports will not be easy, and this is a journey that will require a collective lift from all of you in this room, with the government leaning in to help build your international connections and enable that growth.

We will support research and development that will help the export economy to grow. This will allow our areas such as our world-leading agricultural sector to become more productive and innovative than ever before.

We will build the infrastructure to support this shift – this Government is determined to lay strong foundations for future growth, and infrastructure is a key element of this vision. 

Concluding remarks

This is just the opening in our increased engagement with the world, of which China will remain a significant market. This Government is committed to a dynamic and energetic approach to the world and will remain nimble and resilient in our relationships.  

As part of my international engagement, I look forward to visiting China again later this year.

This Government will continue to look for opportunities for high-level engagements and to drive efforts that support New Zealand exporters and businesses.

Xie xie, thank you.