According to StatsNZ: “In the June 2024 quarter New Zealand exported $5.38 billion of total goods and services to China, People's Republic of and imported $4.07 billion, representing a trade balance of $1.31 billion and a total trade value of $9.45 billion. This represented 20.5% of all exports of total goods and services in this time period and 15.9% of imports. For trade in total goods and services China, People's Republic of ranked 1 of 225 for highest export value, 2 of 232 for highest import value, and 1 of 241 for highest total trade value.”
The strong trade surplus with China was driven by agriculture, tourism and education (Chinese students studying in our universities). Dairy was our top export, think Fonterra. And Machinery was our top import.
China - Top exports (June 2024 quarter)
(StatsNZ) Top exports to China - June 2024 quarter
China - Top imports (June 2024 quarter)
(StatsNZ) Top imports from China - June 2024 quarter
So what scares us most? Geopolitical tensions in our backyard. If tensions kick off between the US and China, we find ourselves stuck between a rock (US) and a hard place (China). China is our top export destination, the US is our second. And any misstep could see China threatening our agricultural and tourism exports (and trade in general). This is not a new fear. We ranked Geopolitics as our number one fear a decade ago. And (trade) wars remain top on our list.
Our second largest trading partner is Australia. Our trade with Australia is dominated by tourist flows, both ways. And they too would face similar threats from China (they already have) if tensions kicked off in the pacific.
What is the solution? Diversification… we need to seek growth elsewhere.
India is a big part of the solution. India will be the fastest growing developing economy for many years… It’s great to hear we are pursuing better trade agreements with India. We have been for well over a decade.
The rest of Asia, and eventually Africa, will also be a source of growth.
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