Chinese yuan notes (Photo: Getty Images)
Chinese yuan notes (Photo: Getty Images)

OPINIONPoliticsMay 28, 2020

We may not like it, but we need China’s money now more than ever

Chinese yuan notes (Photo: Getty Images)
Chinese yuan notes (Photo: Getty Images)

Diversifying the export economy is a worthy goal – but let’s be realistic about what throwing away a critical relationship with China would mean for New Zealand, writes Stephen Jacobi of the NZ International Business Forum.

In a 2018 study of 183 economies’ dependence on China, undertaken by the Australian Department of Foreign Affairs and Trade, New Zealand ranked 93rd. So, do we have a problem or not?

A similar debate about whether there are too many eggs in one trade basket is alive across the ditch. The study is quoted in a new report published by the Australia China Relations Institute (ACRI) at the University of Technology in Sydney under the intriguing title “Covid-19 and the Australia-China relationship’s zombie economic idea”.  You’ve got to hand it to our Aussie mates for their plain speaking.

Australia’s ranking in the DFAT study was 46th, with our other great trade competitor, Chile, not far behind at 49th. Australia and Chile both send around 35% of their goods exports to China, whereas New Zealand’s concentration is at just under 25% (adding receipts from tourism and international education will push that figure higher).

For some sectors the concentration is even higher: for dairy it’s 35%, for meat around 50%, and for our $320 million crayfish trade it’s a whopping 90%.

In New Zealand the charge is that this makes us too dependent on one partner, one which has quite different political values from us.

How has it come to this?

First, because the growing affluence of China’s middle class has made them eager to buy the goods we have to sell, especially our safe, sustainable and nutritious food products and a range of other high quality goods and services. And second, because since 2008 New Zealand and China have enjoyed a free trade agreement (FTA) that has enhanced the trading environment between us.

The fact of the matter is that diversifying our business away from China, whether for crayfish, dairy or other products, is not a straightforward matter.

Other markets may not be readily available, they may be highly protected by tariffs and non-tariff barriers, or – as in the case of those crayfish – they may not be prepared to pay the premium China pays.

Decisions about choice of markets are made quite rightly by exporters themselves. To make the case for diversification is to ask exporters to accept lower prices in other markets while good opportunities are passed to our competitors. This is a difficult proposition at the best of times but all the more so right now, when the Chinese market is saving our economy’s bacon.

Nor it is fair to argue that New Zealand has pursued links with China at the expense of other partners. In some respects, seeking diversification has always been New Zealand’s strategy, ever since 1972 when the UK joined the European Community.

While the ground-breaking FTA with China has certainly led the way in terms of export growth, we have negotiated FTAs with a range of partners – including Singapore in 2001, ASEAN in 2008 and the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) in 2018, to mention just a few.

Our long-standing quests for FTAs with the United States or India have not been realised – not for want of trying but because, unlike China, those particular economies, for their own protectionist reasons, do not want to do the deal with us, at least not on terms we would be willing to accept.

New Zealand is currently negotiating a new FTA with the European Union and hopes to start one shortly with the UK. With luck, both these FTAs will yield new commercial possibilities, but they will not any time soon reduce the attractiveness of the Chinese market. That’s because neither the EU nor UK FTAs are likely – short of a miracle – to deliver new access for anything like the volume or value of products currently traded with China.

Perhaps the issue has more to do with the products we sell. It’s hard to deny that we could do with a few more strings to our economic bow. Successive governments have been trying to facilitate this for generations – remember Helen Clark’s Knowledge Wave, which was followed by a significant growth in sectors like IT, creative and film?

This is a continuing story. These are all sectors, along with high tech or specialised manufacturing, on which we should be focusing our attention to identify barriers to their further development, whether in relation to infrastructure, research or investment. That work was important before the crisis; now it is vital.

It’s true that China and New Zealand are quite different societies with different political cultures. As the prime minister has said, we are never going to agree on everything all the time.

In an increasingly complex geopolitical world, the relationship requires careful management, so that New Zealand can continue to trade and make its voice heard on global issues New Zealanders care deeply about, like human rights.

There are very good reasons why New Zealand  has been able to expand its exports to China so strongly and equally why further diversification remains as challenging as ever. What we really need is both continuing strength in the trade relationship with our biggest partner and continuing efforts to open up new markets where these exist; both continuing growth in traditional exports, and more urgent work to develop promising new sectors.

Zombie ideas aside, the more realistic we are about the task before us, the more likely we are to succeed.

Keep going!
tobs

PoliticsMay 27, 2020

A frame-by-frame analysis of Tova O’Brien’s hall-of-fame National shambles story

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Last night New Zealand witnessed one of the most exhilarating, confronting political stories to air on national television. Hayden Donnell has watched it several hundred times. 

Newshub at 6 opened last night with a back-and-forth between presenters Samantha Hayes and Mike McRoberts. After an intro from Hayes, McRoberts set the scene for a drama inside the National Party. “Responding to complaints about a lack of diversity, they identified Paul Goldsmith as a Māori MP on their front bench,” he said. “But, taihoa, Goldsmith isn’t Māori.” 

SAMANTHA HAYES AND MIKE MCROBERTS INTRODUCE TOVA O’BRIEN’S REPORT

It was a tantalising intro, but could not possibly prepare the audience for what was to come. The report from O’Brien is an exhilarating, absurdist, dark comedy. A chaotic human drama unfurling over the course of a few hours, with almost all the action centred in a single red-carpeted corridor. Though the story is just a couple of minutes long, it runs the full gamut of political emotion.

The report begins with a short summary of Muller’s comparatively happy start to the day, offering little hint of the darkness to come. Muller is sitting in Simon Bridges’ old seat in the Beehive. He’s ditched his MAGA hat. Around 30 seconds in, the action ratchets up. O’Brien asks him: “How many Māori MPs are there in your shadow cabinet?”

Newshub’s camera operator captures the distant gaze on Muller’s face as the inquiry is made. The shot reveals a painful cross-stitch of emotions. Fear. Regret. Resignation.

TODD MULLER THINKS ABOUT THE COMPOSITION OF HIS FRONT BENCH

Muller starts talking about Shane Reti (ranked 17) and Paula Bennett (ranked 13), before his deputy Nikki Kaye jumps in with what she believes is a helpful suggestion. “And Paul Goldsmith, obviously, is of Ngāti Porou,” she says.

O’Brien immediately senses something is amiss. She asks Muller to clarify. “Paul Goldsmith is your only Māori MP in your top 12, is that right?” she asks.

At this point, Kaye and Muller both appear to receive a vision of what’s about to unfold.

NIKKI KAYE AND TODD MULLER RECEIVE THE VISION

Having established the point of conflict, the action speeds up. The next shot is rushed and messy, conveying the urgency of what’s taking place. O’Brien, having spoken with Goldsmith off-screen, hurries to stop Kaye and Muller at a doorway.

“Is Paul Goldsmith Māori?” she asks. And then the devastating news: Goldsmith, she says, does not believe he is Māori. 

TODD MULLER AND NIKKI KAYE RECEIVE THE NEWS THAT PAUL GOLDSMITH DOES NOT THINK HE IS MĀORI

Kaye responds with this look, while saying she will “go and talk to Paul”.

NIKKI KAYE SAYING SHE WILL GO TALK TO PAUL, TOP RIGHT, AND THE CRYING SMILE  MEME MAN, BOTTOM RIGHT

O’Brien then chairs an impromptu group discussion on Goldsmith’s ethnicity. The conversation is clearly hastily organised, because O’Brien appears to be recording it on a still-tangled lapel mic in her hand. 

Kaye makes a bold opening gambit. “Paul does have Ngāti Porou descent.” Paul lacks the same confidence on this point. “No, no, not [garbled], I’m not, not Māori myself,” he splutters, as Anne Tolley desperately dodges out of shot.

PAUL GOLDSMITH HEARING THE NEWS THAT HE IS MĀORI

After pausing for Goldsmith to clarify that his great-grandfather had several “Māori wives”, the report diverts to a B-plot involving former National deputy leader Paula Bennett and Judith Collins, who was recently promoted to number four on National’s list. “She’ll be needed in caucus more than I will,” Bennett says with palpable delight as Collins heads to the mics to be interviewed first.

In the space of seven chilling seconds, O’Brien then shows Collins witheringly replying “oh Paula”, before asking media, “is there something wrong with me being white?”

JUDITH COLLINS DECIDING IT’S A GOOD IDEA TO ASK WHETHER THERE IS SOMETHING WRONG WITH HER BEING WHITE

Bennett is then asked about Goldsmith’s alleged Māori heritage. She makes this face.

PAULA BENNETT RESPONDS TO THE IDEA THAT PAUL GOLDSMITH IS MĀORI

There’s no time to dwell on Bennett’s emotions though, because Winston Peters has to talk about how he’d not heard of  “Paora Heke Goldsmith”, before cracking up at his own joke.

WINSTON PETERS RESPONDS TO ONE OF HIS OWN JOKES

O’Brien’s report is one of several humiliations for Muller over the last three days. He’s struggled in interviews with Jack Tame on Q&A and John Campbell on TVNZ Breakfast, often flapping his hands in response to tough questions as if hoping to levitate out of the situation.

But Newshub’s story is more memorable than just a hard-hitting Q&A, because of both its dramatic arc, and its sheer number of memorable vignettes. It ends with one final humiliation for Kaye and Muller. One of their key allies, MP Nicola Willis, appears to forget about the leadership coup she helped orchestrate, insisting that Simon Bridges will perform well against prime minister Jacinda Ardern during question time.

When informed of her mistake, Willis wears a mixture of amusement and deep pain. Viewers will recognise her expression. It’s the same one they’ve been making for the entire duration of the report, which will go down as one of the most confronting and visceral political TV stories of our time.

VIEWER REACTION TO TOVA O’BRIEN’S REPORT

Editor’s note: This story has been updated to reflect the fact that Judith Collins asked media whether there is something wrong with her being white.