China trade growth cushions impact of COVID-19: NZ China Council Report
China is now taking 32.6% of New Zealand’s total exports, up from 25% in 2018 according to a new report released by the New Zealand China Council (NZCC).
“In Perspective: The New Zealand – China Trade and Business Relationship 2022 Update” shows trade with China has played a significant role in pulling the New Zealand economy through the COVID-19 pandemic.
After a small decline in 2020, the report shows goods exports to China rebounded strongly by $3.3 billion (19.8%) in 2021, while imports from China increased by $3.1 billion (26%). Total two-way trade of $37.7 billion in 2021 reconfirms China as New Zealand’s largest trade partner.
NZCC Chair John McKinnon says China’s market performance was welcome at a time when exports to other key markets Australia, UK and Japan dipped due to the pandemic but notes supply chains and shipping costs still pose major challenges for both exporters and importers.
“The report shows that New Zealand’s trading relationship with China is a resilient cornerstone for our economy. This reflects the robust relationships our companies have built up with their Chinese counterparts.”
“But it hasn’t all been plain sailing, and our hard-hit international education and tourism sectors will need more time to recover. We also anticipate further impacts in 2022 as China continues to manage COVID domestically.”
Report author John Ballingall from Sense Partners says exporters must continue to assess risks as well as opportunities when considering heavy market exposure.
“The potential for trade disruption in a variety of forms is ever-present, including currently. Overseas experience demonstrates that while trade disruption can hamper bilateral trade flows in specific products, the aggregate impact on exports has been more muted.
Much depends on the ability of firms to switch between markets. An informed understanding of specific export sectors and products in the Chinese market will help our companies to assess and plan”, Ballingall says.
McKinnon says New Zealand’s trade with China continues to show strong potential given China’s positive economic prospects.
“The outlook for our China trade is positive. There are few markets globally which can match China’s demand for such a wide range of New Zealand products, are prepared to pay a premium for our highest quality, most sustainable products and have the potential to continue growing at pace.”
“Trade diversification remains as important as ever, but it’s not a zero-sum question for exporters. New Zealand’s future will be about taking a ‘China and’ rather than a ‘China or’ approach to exports.”
The full report can be accessed here.
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