Shane Jones: We need to maximise our trade potential with China

New Zealand and Chinese flags fly outside the Yashili New Zealand Dairy plant in Pokeno. Photo / Jason Oxenham, File

OPINION

Nineteen years ago, then Prime Minister Helen Clark spoke at the Auckland launch of the "Seriously Asia" report from the Asia NZ 2000 Foundation.

She described it as a reality check and observed Kiwis had not maximised the relationships and opportunities afforded by Asia.

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In the run-up to that pioneering report, open seminars were held around different New Zealand locations. One item fed back was the desire for a free trade deal with China.

Fast-forward and that goal has been kicked.

Globalisation was the temper of the time - the borderless world; free movement of capital, people, goods, and services.

Covid-related fiascos in too many capitals mean nations will boost production at home. The Ukraine conflict will expedite change. Globalisation may have been deflationary, delinking will show us the other side of the coin.

The model of logistics, just-in-time inventory systems and manufacturing in the lowest-cost location is mutating. The capacity to manoeuvre and adapt will attract a premium. Sadly, our officials struggled during Covid. Exporters had to solve their own shipping woes.

Our Asian neighbours are not fazed by adaptation, even though it foreshadows significant changes to the Chinese economy.

Logs being loaded at Centreport in Wellington, bound for China. Photo / Ross Setford, File

Global firms are sizing up their dependence on China. Geopolitical uncertainty around the ascension of President Xi Jinping and potential Western sanctions are the new risks in their international business models.

Such variables need to be factored in by New Zealand's foreign affairs officials.

The most recent 2022 export data illustrates how our economic fortunes have changed since 2003. Exports from our primary sector generate $52 billion. Over 50 per cent is sent to Asia, with China accounting for $19b worth, up from $16.5b in 2021.

Fortunately, we enjoy an enviable reputation as producers of quality food. Chinese consumers are discerning and our food products are trusted.

Export flows, however, don't rest on consumer appetites, they depend on solid relationships. Irrespective of the drift towards a bipolar US-China system, NZ has always acknowledged improvements Beijing has delivered for its people.

Given our close relationship with Canberra and its more strident approach to China, we need to focus on our own economic interests. When Prime Minister Jacinda Ardern recently visited Europe and the US, there was a sense our traditional security partners felt we were not with them on China.

Recent surveys from the Asia NZ Foundation show Kiwis hold no rosy view of China. A part of this is the possibility of economic coercion should our Government annoy Beijing, as occurred with Australia.

Previously, Chinese ambassadors have commented positively about NZ's role in Asia, praising our sincerity and willingness to deal on the merit of the issues. Wolf diplomacy jars with the Kiwi ear and does nothing to engender bilateral warmth.

Shane Jones. Photo / Stephen Parker, File

Australia has a trade deal with both the US and China. We don't have that option. Our EU trade deal is no hedge against our reliance on Chinese trade. The ratification process will be protracted while we have creditors and urgent needs. The annual growth in our China export income exceeds the alleged value of the Brussels promise.

Now we grapple with inflation. Equally worrying, however, is our current account deficit. Imports pile up despite the ongoing appetite for our exports. Our tourism revenue is tepid; international education has faltered. Foreign exchange earnings have to be multiplied.

The Government must renew its efforts in Asia. Our national balance sheet depends on it. But such a priority is not evident from ministerial itineraries.

US Secretary of Treasury, Janet Yellen, with her "friend-shoring" strategy has laid out the challenge. They seek partners who share norms and values while operating in the global economy.

They hunt for new sites of low-cost production. Perhaps Latin America will finally fulfil that role, although Wall St probably knows China is already there.

Fonterra UHT milk branded "Country Goodness" in a Chinese supermarket. Photo / Supplied / File

Where does this leave us with our economic fortunes in Asia but security links in Canberra and Washington? One hopes the Prime Minister discussed this at length when she was in Singapore.

As the Māori proverb says: kanohi kitea, hononga ora, the seen face, the healthy relationship. Or as they say on the marae: you boogie with those who turn up to the party.

Our current offerings to Asia are predominantly food, a strategic resource. Their people are also well settled here now. As their families grow, they are our people.

For the Prime Minister, the heartstrings might be in Europe but that won't pay our bills. As the earlier Labour Prime Minister said, time for a reality check.

The purse is in the capitals of Asia. Exporters and tourism leaders need to see a fresh blueprint from our Government to maintain and grow our position.

• Shane Jones is a former Labour MP and NZ First MP, and was Ambassador for Pacific Economic Development from 2014-17.