China Looms Large for New Zealand, Asia-Pacific and the World

CHINA is our third largest trading partner after Australia and the United States. Two-way trade exceeded NZ$10 billion in August 2009-a robust 12% annual increase. China has also edged out Japan to become our third largest export market. The value of exports to China for the 12 months ending November 2009 totalled NZ$3.56 billion-a remarkable 47% increase from the previous year. The increase in New Zealand exports to China over the past year- some NZ$1.1 billion-is not far behind New Zealand's total exports to Korea, and everyone understands the importance of Korea to New Zealand. In other words, in some 12 months, and with only a little exaggeration, we have added another Korea to New Zealand's export drive. This is not just a story about dairy exports, significant as they are. Dairy accounts for more than 25% of New Zealand's exports to China. Exports across a wide range of products have grown strongly-meat, wood products, wool, kiwifruit and wine. Whilst commodities still dominate our export basket to China, processed foods and beverages and some niche-manufactured goods have also performed well. With tumultuous economic times in 2009 impacting severely on global trade, China has played a major role in sheltering New Zealand from the impact of a global recession. Many New Zealanders owe their jobs and livelihood to the resilience and dynamism of the Chinese economy. Through living and working here, you are first hand witnesses to the process by which China is asserting its global importance. In some ways, it may be more accurate to say China is "reasserting" its global role. If you go back to 1750, it is estimated that China represented some 30% of global GDP. From a low point of around 5% of global GDP in the mid 1970s, China is probably around 18-20% of global GDP and we know that relative importance will increase. This is not some minor academic point. China is clearly providing one of the engines for economic recovery in 2010. The latest IMF projections have China's economic growth averaging 9.6% (almost back to pre-crisis growth rates) over the next five years, with China set to account for 60% of Asia's economic growth over that period. We welcome the important and constructive role that China's US$4.9 trillion economy is playing regionally and globally. FTA Makes an Encouraging Start The strong performance of New Zealand exports to China has paralleled the entry into force of the New Zealand-China Free Trade Agreement. Wider market forces, including robust demand for some of our key exports, has been a dominant factor in the trade equation. Nonetheless, the reduction in tariffs on New Zealand's exports to China has contributed to export growth. Its impact will continue as tariffs further reduce and are eliminated. China's tariff on New Zealand wine, for example, has reduced to 5.6 % this year and will be zero in 2012 (compared to a base rate of 14%). The duty on our kiwifruit is now 13.3% (compared to a base rate of 20%) and will be zero in 2016. New Zealand is proud to be the first developed country to conclude a comprehensive and high quality FTA with China. The FTA encompasses 96% of our exports to China [and] provides an invaluable platform for our exporters to expand their presence in the Chinese market. It gives us a decisive head start in a competitive and tough market. At a time of global economic crisis, the New Zealand-China FTA also provides a strong message of the importance of expanding trade rather than resorting to protectionism. Despite our vast differences in scale, the lifeblood of both our countries is trade. Food Safety Food safety is an important new area of cooperation between New Zealand and China. A comprehensive government-to-government food safety cooperation programme is evolving. This brings together New Zealand's expertise as a food exporter anNike Zoom Vomero 11