Fran O'Sullivan: PM's turn to be gung-ho on China

Key's bilateral talks with Chinese premier Li Keqiang have a serious agenda

Prime Minister John Key cooks up a storm in Beijing with Gung Ho! Pizza's Jade Gray.
Prime Minister John Key cooks up a storm in Beijing with Gung Ho! Pizza's Jade Gray.

China's richest man, Zong Qinghou, is among a select group of Chinese VIPs invited to a private meeting with Prime Minister John Key in Shanghai.

Zong is chairman of major food and beverage conglomerate Wahaha Group which has been scouting Australasia for major agriculture deals. His company has long been a customer of NZ dairy giant Fonterra.

Others understood to be on tomorrow's guest list are Pengxin's Jiang Zhaobai, Bright Dairy's Guo Benhong, China Development Bank's Guo Lian and New Development Group's Ding Furu.

Most of these powerful businessmen are already invested in New Zealand or have sufficiently deep pockets and connections to back the co-ventures between China and New Zealand that Key is pushing in third markets.

In preparation for yesterday's Boao forum, Key had staked out the valuable proposition of putting Chinese capital together with New Zealand specialist knowhow to invest in agricultural ventures in countries with large land masses to produce top-quality food to supply Chinese consumers.

By today, he will have already re-established his relationship within Chinese president Xi Jinping.

Friday's inaugural partnership forum between New Zealand and China at the Diaoyutai State Guesthouse will cement bonds with new ministerial players.

But the real managerial power sits at the premier level.

His formal bilateral talks with Chinese Premier Li Keqiang have a serious agenda. "We will see where we can push the free trade agreement - there are aspects where we could do more." Key says.

One of those issues is the "safeguard' provisions in the China-New Zealand free trade deal.

Earlier this year, China Customs announced that China would impose an MFN (most-favoured nation) tariff on solid and concentrated non-solid milk and cream from NZ starting from January 31.

The issue will be raised in Key's formal talks.

Food security is a perennial issue. Key believes that if the Chinese officials have confidence that New Zealand's food security standards are high, "the more we can deflect a DCD problem when it comes along".

He is also expected to welcome the avalanche of new Chinese investment in the dairy industry. "I am going to say to them we're seeing more investment applications in areas like infant milk formula processing plants. They are welcome. They have to go through a process but in the end the Government thinks that is a step in the right direction.

"Massive blocks of land are probably more problematic from my point of view."

On the investment front, he cites the co-investment between China and New Zealand to build a water reticulation plant in the Cook Islands.

Much of the upside will come from leveraging natural resources in New Zealand.

Key also wants to explore what it would take for New Zealand to get Chinese tourist numbers from 200,000 to 2 milllion.

He supports Maori Inc's endeavours to get Chinese capital to invest in resource developments.

The reconstruction of Christchurch is also expected to be on the agenda. China Construction Bank - which is setting up in New Zealand - has already indicted to the Government that it "wants to put money in".

"The issue has been putting it to work - there might be more of a possibility on the PPP side."

"We're moving down that road - that has got to be the most obvious place. There are large assets they have to be built and have to be funded."

Key says the Government is on track to reach the goal he set with former premier Wen Jiabao to increase bilateral trade with China to $20 billion by 2015.

"The question is whether China can become New Zealand's largest market. The answer is: yes I think they can."

- NZ Herald

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Head of Business for NZME

Fran O'Sullivan has written a weekly column for the Business Herald since its inception in April 1997. In her early journalistic career she was a political journalist in Wellington and subsequently an investigative journalist who broke many major business stories including the first articles that led to the Winebox Inquiry in both NBR and the Sydney Morning Herald. She has specific expertise in relation to China where she has been a frequent visitor since the late 1990s. She is a former Editor of the National Business Review; has twice been awarded Qantas Journalist of the Year and is a multiple winner of the Westpac Financial Journalism Supreme Award.

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