David Lei Wang: NZ a pearl in China's string of deals

The One Belt, One Road project aims to lift the value of trade with more than 65 countries to US$2.5 trillion within a decade. Photo / Duncan Brown

Opinion

• David Lei Wang is chief executive of the Bank of China (New Zealand)

New Zealanders often pride themselves on how they "punch above their weight" and I have personally seen evidence of this ability, not only on the sports field but in the global commercial and diplomatic spheres as well.

The country has led the Western world in its development of its trade relationship with China, the second largest economy in the world and one that has embarked on perhaps the most ambitious infrastructural, cultural and economic project in history - One Belt, One Road (OBOR).

OBOR was announced by President Xi Jinping in 2013 and seeks to create economic and cultural trade corridors stretching from China to Russia and into Europe, across Central and West Asia and from China to South and Southeast Asia, down to Australia and New Zealand. It also connects to East Africa and the Middle East. New Zealand is a small but important part of the Maritime Silk Road, which with the Silk Road Economic Belt, forms the lattice of connections at the heart of the OBOR plan.

For many Chinese companies, New Zealand is a testing ground for the establishment of the type of cultural, economic and commercial connectivity needed as they reach out to the world and the world reaches back to China.

While there have been difficulties - more akin to growing pains than any serious injury - what we have seen is a mutually beneficial and developing relationship, encompassing a wide range of business sectors.

Haier's acquisition of Fisher & Paykel is emblematic. The world's biggest whiteware manufacturer has invested heavily in New Zealand innovation and it is bringing the fruits of that Kiwi research and development to the rest of the world.

OBOR's aim is to lift the value of trade with more than 65 countries to US$2.5 trillion within a decade and it is estimated that the total stock of Chinese direct investment abroad will reach US$2t by 2020 - up from about US$800 billion in 2014.

If the figures seem overly ambitious, then consider that Chinese direct investment abroad already threatens to rival direct investment in China - a turnaround achieved in less than a decade. The Bank of China has played a critical role, lending more than US$50b to Chinese firms conducting overseas mergers and acquisitions alone.

Spending of US$1t on the OBOR project is slated, US$100b of which will come from the Asian Infrastructure Investment Bank, of which New Zealand was an early member, a move demonstrating its commitment to this new model of growth under the aegis of China.

A US$40b Silk Road fund has been established, while funding from the New Development Bank (a BRICS initiative) may also be available.

OBOR also presents New Zealand, given its first mover in China advantage, with significant opportunity. The construction task alone brings innovative companies like Beca, Fletcher, Fulton Hogan and Infratil into the big global ball game.

The broader downstream benefits to New Zealand exporters from increased investment in trade routes and infrastructure are self-evident.

But the bigger target, and the basis of New Zealand-China symbiosis, is its skills and innovation. New Zealand is a proud exporter of its talent and skills to the world and, coupled with its people's uncanny ability to relate and empathise with others from very different cultures, is ideally suited to take a disproportionately large role in the development of the One Belt, One Road project.

The Bank of China already plays an important role in facilitating cross NZ-China trade and we are looking to expand our assistance to Kiwi exporters as they expand their operations along the Maritime Silk Road and Silk Road Economic Belt.

More than two millennia ago, when the ancient Silk Road was first established, New Zealand was an uninhabited archipelago. Today, it is a perfect pearl in the string of beads connecting it to China, Southeast Asia and the rest of the world. Now that's what I call punching above your weight.