Editorial: Key's visit to China gives reassurance of lasting link

John Key. Photo / Dean Purcell

Opinion

A recurring worry about this country's economic wellbeing is the potential for it to be rapidly undone by a change of heart in Beijing. This concern was underlined by the woes across the Tasman when China chose to rely less on Australia as a source of iron ore. New Zealand is no less vulnerable given the way in which China has so quickly become its biggest trading partner. In that context, the Prime Minister's visit there has provided a welcome degree of reassurance. Various pointers emerged to suggest this will be an enduring relationship, rather than one that could fall victim to fickleness.

The most obvious was the new goal for two-way trade of $30 billion by 2020. Last year, that stood at $18.2 billion, up more than 25 per cent on 2012 and well on the way to achieving a $20 billion target by 2015. The figure, as ambitious as it is, does not represent the key feature in this. That lies in the willingness of the Chinese leadership to put their names to it. They could conceivably have declined to countenance such a statement after the botulism false alarm from contamination at one of Fonterra's factories. Likewise, they could have ruled a currency exchange agreement out of bounds.

Indeed, another of the reassuring aspects of the visit has been John Key's continued access to President Xi Jinping and Premier Li Keqiang. For a country of New Zealand's size, this can never be taken for granted.

It confirms that the advantage bestowed when New Zealand became China's first partner in a free trade agreement in 2008 remains intact. This was re-emphasised when President Xi confirmed that he planned to accept an invitation to visit this country shortly before or after the G20 in Brisbane in November.

There is, obviously, huge potential for New Zealand in the new trade goal. Historically, it has run a deficit with China, but last year it sold almost $2 billion more to China than it imported. The respective populations of the two countries suggest that gap should increase much further in New Zealand's favour over the next few years. China will have to, as Mr Key suggested, "drink a lot more milk, and they're up for that".

Not all is totally straightforward, however. New Massey University research, based on a survey of 531 people in the city of Lanzhou, has found Chinese consumers regard New Zealand milk products as less safe than those produced by the United States, Australia and Europe.

Just over 28 per cent of respondents rated our dairy products "not very safe", a far higher percentage than for products from its competitors. One of those rivals, Switzerland, the home of Nestle, now also has a free trade agreement with China.

That underlined the importance of Mr Key successfully reassuring China all was well with this country's food safety rules. This included emphasising the botulism scare had been a false alarm. Clearly, this outcome had not been appreciated by many Chinese.

Hopefully, the Prime Minister's media blitz, his meeting with President Xi, and the message implicit in the new trade goal will have changed their perception.

Equally importantly, Mr Key outlined steps to reinforce the safety message and to smooth the path towards the 2020 target through the increased resourcing of New Zealand's presence in China. A new embassy will be built in Beijing at a cost of $40 million, and the Ministry of Foreign Affairs and Trade will set up seven new positions. The Ministry of Primary Industries will also add a further nine people to its China office. That support entails a small outlay for a potentially massive gain provided unforeseen hiccups are carefully handled.