Stephen Jacobi on the importance of NZ's trade relationship with China, the risks to it, and opportunities to diversify to other countries

Sooner or later China will choose to cut New Zealand off for some infraction.

We will then learn the folly of getting into bed with authoritarian nutjobs.

Do we have any choices to make or will it be a done deal as it is for South Korea?

If it could, it'll punish the UN for the audacity to report on Uighur suppression.

Sell meat and dairy to India or Indonesia, their consumers prefer cheaper alternatives. Did our Labour Government had to compromise on minimum wage. Low productivity vs others in the world restricts us to tourism and residential property sectors, as bedrocks of our economy.

It’s our logs I am most worried about.

We ship more logs than any other country, vast majority to China. These logs deteriorate while shipping and are largely used for cheapest applications (box wood, concrete support etc). We have tailored our forests to support Chinese exports with high volume at expense of quality (from seed to forest management).

China aims to be fibre self sufficient (and is planting huge forests), they have shown with Australia it will use trade to exert political will, and the government incentives that artificially distort log prices will unlikely last if Chinese economy tanks.

NZ is sleep walking into a crisis. Its internal wood/paper processing is dying and no other country can fill the gap as a customer for its low quality logs if the market shifts. It lacks any kind of resilience and is totally dependent on China.

The sector has been far too much short term transactional thinking, rather than long term strategic.

Haven't we been here before?

It doesn't matter what the political ideology of our major trading partner is, the risk is similar, and do we have any choice but to ignore it?

The UK joining the EEC, and the instant impediments to trade with the UK - our major trading partner by far at the time, comes easily to mind.

If we were paying attention then energy and food security should be at the top of our list. 

The arrogance and stupidity is on full display in Europe for all to see.. Go the ABs.

So far the govt is not biting the hand it feeds. Maybe a small less noticed nibble.  Let's hope it stays that way. I'm sure the likes of Fonterra and others would like more diversity but that is far easier said than done.

Its not a question of diversifying markets, New Zealand is a sellout to the highest bidder. The reason goods are going to China is because rich Chinese are paying top dollar. The public over here still think the Chinese are living on a bowl of rice a day, things have really moved on.

A most recent example of recent NZ stupidity is the complete shutdown of our only Refinery at Marsden Pt

Even in the greenest of worlds, and long, long  into the future,  the many, many products that are cracked out of crude oil are essential to our daily lives and every industrial need. 

Fertilisers are a product of the oil and gas industry!!  What does NZ need in bulk quantities to make milk and all the food?

Short sighted stupidity!



Oil demand is set to increase for anywhere between the next 7 to 20 years,  before transport fuels significantly taper in demand.  Petrochemical industries will increase in oil demand,  but at a slower rate.



Will will be left completely kneecapped if any of the regional refiners have a  "co-ordinated shutdown",  national security problem,  or shipping is disrupted by one of many reasons.



NZ passes with a AAA+,  in short sighted stupidity.  Like watching and a slow motion train crash.....and our "leaders??"  don''t even have a clue.......

Learn some Chinese history.

Read some Chinese classic literatures.

Travel to some Chinese cities, towns, and villige s.

Watch some Chinese TVs.

Get on Dou Yin.

Soon you will find how bad you have been brainwashed by the weastern mainstream medias.

Sad....

Yet again China is shutting down entire cities for a handful of covid cases. They have to know something about covid that we don’t, maybe they did engineer it. They are not normally known as being health and safety conscious 

The AU general population is ahead of NZ in realizing the risk regarding China, hopefully we can catch up. Unfortunately compromising our values and offering kind cuddles to China will finally end in tears, sooner we move on the better.

The CCP is more scared of its own people than anyone else. They know their hard handed approach doesn't appeal to everyone in China. Indeed, if China gave their people the vote there would probably be 15 or more nations emerge, that they would have to consolidate into a federation format to have the power they now have. I'm pretty sure they're not that civilised. Anyhow, the UN have let the cat out of the bag, & I for one say good on them for doing so. It's been their best decision for 30 years but that's another story. I suspect China will throw its toys out of the cot, as that what adolescents do, & is what Mr Xi will have to do to get re-elected for life, as is his goal. Everything he does is for internal consumption. Communists are basically cruel people, so the CCP will do what it has to do to stay in power. I wouldn't be surprised to see civil war erupt in China before the decade is out, but that will not help NZ Inc over the short term, sadly. The Chinese are also very close to being able to feed themselves. When that happens all bets are off.

Everyone who asks whether NZ is too dependent on China also needs to ask themselves: why does it matter?  There are some legitimate reasons, but anyone whose answer highlights the idea that 'China is a one-party state,' or more generally refers to some moral problem with China, needs to take a look at the world around them. There is no shortage of such governments around the world with which NZ happily does business, either directly or indirectly. Just keeping to the oil market, Saudi Arabia comes to mind. 

Nor does the idea that authoritarian states are less reliable as trade partners make much sense either. The Chinese have shown pretty clearly, for a few decades now, that they are primarily interested in making money and increasing trade. It is only when the West (hypocritically) criticizes their government or otherwise makes threats, that things start to get dicey.

The reality is that the United States is twisting every arm in this region to get countries onboard with US foreign policy, which is shifting to the South Pacific and -make no mistake- regards the maintenance of the post-1945 and especially post 1990 status quo as non-negotiable. The US intends to remain the world hegemon and is prepared to risk world war III to do it, unfortunately. For those who are familiar with recent history, that is the primary reason why we have a war in Ukraine right now, and the reason why 'tensions with China' have flared up so much in recent years (this had nothing to do with Trump).

None of this, of course, is to excuse China or Russia's government or actions. Putin is guilty of war crimes in Ukraine. But for better or worse, NZ's most powerful 'ally' is the United States. However little influence we have over the US, we have much less over China and Russia. In the first instance, we should be taking a look in the collective mirror and (as a sovereign state) asking how we can best steer an independent and beneficial course for NZ. There is no reason automatically to assume that this involves backing whatever the US asks us to do, including 'confronting' China.

Interesting points. Would be good to critique the dependence on China imports too. M10 and Bunnings are so littered with Chinese made products its practically impossible at times to find an alternative. That's not good for competition and not good for the consumer.

Aaahh.. yep!

The short answer is yes! and yes!