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Trade with China nearly tripled in past decade

New Zealand’s trade relationship with China has nearly tripled over the past decade, with two-way trade rising from $8.2 billion in the year ended June 2007 to $23 billion in the June 2016 year. Annual exports to China have quadrupled and annual imports from China have doubled since the June 2007 year.

China is New Zealand’s second-largest trading partner for exports and third-largest for imports. In the year ended June 2016, 17 percent of our goods and services exports went to China and 16 percent of our goods and services imports came from there.

Ten years ago, exports to China accounted for only 5.9 percent of New Zealand’s total exports. Imports from China accounted for 10 percent of New Zealand’s total imports.

In October 2008, New Zealand became the first developed country to enter into a free trade agreement (FTA) with China. The FTA outlined incremental tariff removal on New Zealand exports to China, allowing for freer trade, as well as improved visa processing for New Zealand business people entering China.

“We have traded more with China since the FTA entered into force in 2008 than in all our previous history, and growth is faster with China than any of our other major trading partners,” the Ministry for Foreign Affairs and Trade has said (NZ-China Free Trade Agreement).

Graph, New Zealand's total trade in goods and services with China, rolling annual, 2007-16

While changes in our trade relationship have significant impacts on New Zealand’s overall trade, it is a different story from China’s perspective. New Zealand’s goods exports to China accounted for only 0.4 percent of the value of total goods imports into China in 2015. Our goods imports from China accounted for only 0.3 percent of the value of China’s total goods exports (UN Comtrade Database).

Milk powder top export to China – but gap closing

New Zealand’s top goods exports to China in the June 2016 year were milk powder; untreated logs; and meat (beef and lamb). Top services exports were other personal travel (travel other than for business, education, or health); education travel; and transportation services. Transportation services include the transport of people and objects, as well as related services, by sea and air (including postal and courier services).

Graph, Top exports as proportion of total export value, rolling annual, 2007-16

Milk powder has been New Zealand’s largest export commodity to China since the year ended December 2008. Exports of milk powder to China began to rise around the end 2008, coinciding with the entry of the China-New Zealand free trade agreement. At its peak, in the year ended June 2014, milk powder accounted for over 40 percent of New Zealand’s total annual export value of goods and services to China. The level fell throughout late 2014 and early 2015, mostly due to lower prices and weaker demand (see Dairy prices down, from farm gate to grocery store).

Exports of untreated logs as a proportion of the total export value have remained stable post-FTA, but were overtaken by other personal travel in the year ended September 2015, to become our third-largest export. The value of untreated log exports has fallen 27 percent since the peak in the March 2014 year, caused by a slowdown of building construction in China and less consumer spending on furniture and home-remodelling (news.cision.com).

Clothing falling, but still our top import from China

Our top goods imports from China are clothing; telecommunications devices (such as cellphones); and data processing machines (such as computers). Top services imports from China are other business services; other personal travel; and transportation services.

Graph, Top imports as proportion of total import value, rolling annual, 2007-16 

Clothing is the largest import over the past decade, but has dropped from around 16 percent to 11 percent of the total import value from China. Clothing is the largest contributor to consumption good imports from China, and consumption goods are the largest economic category of imports from China.

Year-ended values of consumption goods from China have been increasing since November 2010, when compared with the same period of the previous year. Of New Zealand’s consumption goods imports in the June 2016 year, 29 percent came from China.

In the December 2015 year, telecommunications device imports overtook data processing machine imports for the first time in the past 10 years. The overall electrical machinery commodity grouping, which includes telecommunications devices, accounted for 19 percent of the total value of imports from China in the year ended June 2016.

Published 7 September 2016

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