While the trade war between the US and China has escalated, New Zealand's economy remains well placed, with little fallout as yet, says ANZ chief economist for China, Dr Raymond Yeung.
Hong Kong based Yeung, who was in New Zealand this week, says the intense technology-sector focus of the trade war had meant consumer demand for New Zealand food products was largely untouched.
"I think sometimes we pay too much attention to the Chinese GDP number," he said. "The reality is that if you observe the Chinese import number, it's much more important. That's clearly reflected in the New Zealand export numbers."
In March, New Zealand exports rose $899 million (19 per cent) to reach $5.7 billion - a new record for any month.
Of our main export markets, China had the largest increase, up $522m (52 per cent) to $1.5b.
Broadly, China's topline GDP growth had been under pressure, Yeung said.
"Market sentiment is bad at the moment and we can't deny the impact of the trade war in some particular sectors," he said.
We were seeing a period of trade recession in first half of 2019, he said.
But that was to do with the trade war and the downturn of the Chinese electronic sector as supply chains were disrupted by US trade measures.
US President Donald Trump has imposed tariffs of 25 per cent on US$200b of Chinese products and banned US companies from trading with Chinese tech giant Huawei.
"In terms of numbers it [GDP growth] is lower than last year. But my forecast for the full year is still 6.4 per cent," Yeung said.
That was factoring in some of the government stimulus that had been introduced to offset the trade-war impacts.
"I expect the Chinese Government will continue to do a lot of infrastructure investment and channel their resources to the right sectors. I think the overall GDP number will still be pretty stable."
That meant demand was likely to hold up for New Zealand exports - in the short term at least.
"China is a domestically led economy, especially from a New Zealand perspective," he said.
"In the near term at least - over the next 12 to 24 months the trend for New Zealand to increase exports to China will continue."
Overall the big driver of the Chinese economy continued to be the story of structural reform and transformation to a more modern economy, he said.
Longer term the key would be whether China could successfully manage the economic transition and pass through the "middle-income trap".
This was something that had happened with other Asian economies, where a period of strong export growth had not been followed with a shift to more developed industries' ultimately higher incomes levels, Yeung said.
The trade war was important to the extent that the tensions with the US were focused on technology and China's attempts to move the economy up the value chain, he said.
"If China can tackle the challenge imposed by the US at the moment that will be a good sign."
But while the macro-economy of China was likely to stay stable the trade war risks for the commercial sector couldn't be ignored, Yeung said.
"This is a real issue that businesses will need to keep an eye on because it is very likely the current tension between the US and China will continue to drag on until 2020.
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