Commentary
This is the speech delivered at the "China Business Summit 2018: Eyes Wide Open" in Auckland on May 14, 2018.
The fourth iteration of the summit explored and tackled the big issues as the ties between New Zealand and China become deeper than ever before.
The Summit attracted a strong array of insightful speakers and set an agenda for discussion on the vital opportunities, challenges, and on-going changes in the China market.
E ngā mana
E ngā reo
E ngā waka
Tēnā koutou katoa
Good morning Madam Ambassador, other distinguished guests, ladies and gentlemen.
It is a pleasure to be here today at the fourth China Business Summit. Events like this enrich the conversation around one of our key relationships.
Of course New Zealand’s economic relationship with China continues to boom. New Zealand businesses and innovators across the board – from dairy exporters, to tourism operators, to researchers – continue to find new opportunities between our two countries.
Today I will focus my comments on our strong and constructive bilateral relationship with China, the government’s priorities for trade and how these relate to China, before turning to comment on the interests we share in maintaining a global rules-based order.
China trade relationship
Last December, New Zealand celebrated 45 years of diplomatic relations with China. That occasion was an opportunity to chart the staggering development we have witnessed in the bilateral relationship since its modest beginnings.
China is now one of New Zealand’s most significant political, economic and cultural partners. And we are proud to have a strong and constructive bilateral relationship with China.
Trade and economic ties have proven to be some of the most vibrant and dynamic elements of our relationship with China. This year marks a decade since the last Labour Government signed a landmark Free Trade Agreement with China.
It is quite clear that the FTA brought about structural changes in our trading relations that in turn brought significant economic benefit to both countries. Two-way trade more than tripled in the intervening years.
China is now neck and neck with Australia as our largest export market for goods and services.
For New Zealand, our FTA with China is a clear demonstration of the fundamental importance of trade liberalisation, as part of the global rules-based order. This is a topic I will return to in a moment.
We have seen the tourism sector thrive between our two countries. China is our fastest growing source of visitors, and we were pleased to welcome over 400,000 tourists from China last year. New Zealanders visiting China are also at an all-time high. Next year, New Zealand and China will celebrate a bilateral year of tourism.
Education is another important way to grow the foundations for mutual understanding between our two countries. China is the largest source of international students in New Zealand, numbering over 34,000.
Investment is another important facet of the relationship. New Zealand welcomes foreign investment where it can be proven to bring productive economic growth to our country. This is where our screening regime comes in. It is a privilege, not a right, to invest in New Zealand. Our screening regime is open, transparent and country neutral and provides New Zealanders with the assurance that investment from overseas will bring benefits to New Zealand. We are upfront about this and feel that our regime, including the recent changes, is fair and responsible.
The Government has announced a range of changes to our foreign investment regime. The changes will modernise the process and bring the rules into line with the public attitudes of New Zealanders.
Political relations
The enduring strength of any bilateral relationship lies upon the relationships shared between peoples. Our two countries have many long-established people to people ties.
As the Prime Minister outlined earlier, New Zealand and China have enjoyed a strong relationship at the highest political levels. During the APEC meetings in Viet Nam last November, I met with China’s Minister of Commerce Zhong Shan. We agreed on the importance of close economic ties between our countries, and the opportunities presented by negotiations to upgrade our Free Trade Agreement.
Chinese consumers, students and parents, and travellers see New Zealand as a trusted partner. We are renowned for our high quality education, world-class tourism experiences, and agricultural practices and abilities in food production. We are proud of these credentials – but equally, we cannot take them for granted. They are hard earned, and easily lost. Our national reputation is at the core of the main pillars of our economic relationship with China.
Vision for the China economic relationship
Realising the opportunities for New Zealand in our relationship with China, in light of the fact that we are very different countries in approach, history and size, has relied upon the efforts of many people past and present in New Zealand and China.
I want to acknowledge the huge amount of work that takes place across the board in delivering this, from our technical experts across multiple agencies negotiating better market access for New Zealand exporters to the entrepreneurs, established businesses, and tourism and education providers who have taken risks investing time and money in forging new markets.
The government will be looking to build on this momentum in the year ahead.
One area of particular focus, given my role, is of course the upgrade of the New Zealand China Free Trade Agreement.
A lot has changed in the 10 years since the previous Labour Government signed the FTA. Advances in technology have opened up further opportunities, but also new issues in the trading relationship.
China has broadened its free trade policy to embrace new issues like e-commerce and competition regulation, and has increased its focus on areas such as the environment. And China’s commitments in some of its recent FTAs have resulted in better access for services exporters.
We want the upgrade of our 2008 Agreement to reflect these changed realities and build upon them. We are keen to address issues that will make a real difference for New Zealanders seeking to expand and deepen our ties with China, and take advantage of the growing opportunities in our largest export market.
We’ve had three rounds of negotiations so far and are looking to schedule the next meeting in the coming weeks. I hope both sides will be able to make quick and substantial progress over the next few months.
A successful FTA upgrade would bring obvious commercial benefits to a number of New Zealand businesses, but there are also wider considerations.
In relationship terms, we share Premier Li Keqiang’s ambition that our FTA continues to be China’s “highest level” agreement. A high quality upgrade will ensure this remains the case.
It would also demonstrate our shared commitment to trade and our view that trade agreements, designed the right way, benefit our communities in New Zealand and China. We are optimistic that our shared commitment to free trade and rejection of protectionism will be reflected in the upgrade.
China’s increasingly important role in international trade
Over the last forty years, China has gradually opened the door to international trade through a slew of economic reforms. These reforms were first envisaged by Deng Xiaoping and put in place in 1978, leading to China’s accession to the WTO in 2001. These reforms brought tremendous economic transformation and success to China, and created economic opportunities for many New Zealand businesses.
China’s leaders have been stressing that they are committed to these reforms, and we are hopeful that they will continue upon this trajectory. We have welcomed comments by President Xi Jinping in defence of the rules based international order, and to encourage free trade.
We have welcomed China taking steps to play a stronger role in defending and advocating for economic globalisation and open markets. China’s continued support for and investment in the rules based order is crucial. As part of this, we are participating in China’s International Import Expo which will be held in Shanghai in November this year. We will have both a National Pavilion and a Trade Pavilion; alongside a strong presence of New Zealand companies who are also committed to the China relationship and the opportunities it brings.
Global trade environment
There is a great deal of uncertainty around the global trading environment at the moment. We’ve seen trade friction between the US and China. The EU and the UK are also trying to decide what rules will apply after Brexit.
The New Zealand government is closely monitoring these developments, as is the rest of the world. It is clear that actions taken by such major trading nations, even if aimed at one another, will have significant indirect effects on New Zealand and the global trading system. You might ask, though, what can a small country do?
Budget spending announced last week, including $150 million to boost the Ministry of Foreign Affairs and Trade’s capacity at home and overseas, will be important to increase our trade capacity and presence. It is a signal of how important that is to us.
There are four ways this Government will be promoting New Zealand’s interests in this increasingly uncertain global trading environment and where we can use support from our trading partners including China.
The first, is defending the rules based system. There is no doubt that a robust, well-functioning rules-based international system, like the WTO, benefits all players large and small. It’s easy to forget that before 1994, there were no enforceable rules on agricultural trade. I encourage China to join us in defending the rules based order which has delivered so much benefit to both our countries.
The second, is accelerating our efforts to embed New Zealand in the emerging regional architecture. Agreements such as the CPTPP and RCEP are demonstrations of our commitment to open, progressive and predictable trade in the Asia Pacific.
The third, is actively building like-minded coalitions to sustain and support global and regional public goods. This reinforces the wider rules based system like the OECD, APEC and the Commonwealth among others.
The fourth is advancing what I call “open plurilateralism”, which includes supporting open accession to plurilateral agreements like CPTPP as well as support for WTO institutions.
So that’s what New Zealand will be doing. But it goes without saying that in times like this dialogue and engagement is crucial and we will maintain a close dialogue with China and our other trading partners so that we can find solutions that are consistent with international law and in the interests of the global economy.
In this regard we are particularly interested in improving outcomes for people in the Pacific. There is an increase in overseas development aid in this year’s Budget.
In advance of this speech I was speaking with the Minister of Foreign Affairs, the Right Honourable Winston Peters. With that extra funding we look forward to developing joint initiatives with China, and other partners, to improve outcomes in the Pacific.
Progressive Trade for All Agenda
This Government believes that everyone should benefit from trade and economic growth.
New Zealand is a trading nation and we always will be. Trade is a critical part of our economy, with some 620,000 New Zealand jobs depending on exports.
Last month, the Government announced consultations on a progressive and inclusive trade agenda called Trade for All. This will help ensure that our trade policy delivers for all New Zealanders and contributes to addressing global and regional issues.
New Zealand will continue to look to pursue better market access for our exporters through the WTO and vigorous negotiation of FTAs, including the upgrade of our FTA with China while maintaining a sustainable and inclusive national economic framework at home.
Given recent events a robust set of enforceable international trade rules are more important than ever And we need to be better at listening and explaining to New Zealanders about these important rules.
A wide-ranging public consultation with New Zealanders will be starting very soon, and I invite you all to provide input. The development of this agenda will be an opportunity for us to hear, acknowledge, and respond to the concerns and interests of New Zealanders in an ever more complex global trading environment.
Conclusion
The dynamism of our bilateral FTA is a reflection of New Zealand’s strong relationship with China. There are many links that underpin this, including many social connections. These connections improve our mutual understanding and allow us to navigate points of difference, when they occur.
This is meaningful, and even more so in the context of an uncertain international environment, in which China’s influence is increasing. China’s leadership on issues like climate change and trade liberalisation have the potential to add momentum to collective efforts in the region, and globally, and work to shore up the centrality of a rules based international system.
Thank you. I wish you a successful summit.
XieXie
Speech at the fourth China Business Summit, in Auckland
14 May
Hon David Parker
May 27, 2018