China is using Zespri to signal to the world it's becoming bigger on quality rather than quantity, says an Asia NZ professor

By Jenée Tibshraeny

An expert in Asia-New Zealand relations says China is using Zespri to signal to the world that it’s more interested in quality than quantity.

Zespri has temporarily halted its exports to China, following Chinese authorities raising concerns over a fungus on its kiwifruit. The fungus has been present in Zespri’s kiwifruit for years, doesn’t pose a health risk, and has never affected trade.

The fact this is being flagged as an issue now has raised a few eyebrows, as a Chinese trade association is believed to have previously warned Zespri there would be consequences if New Zealand investigated allegations China has been dumping excess steel here.

China shifts paradigm from quantity to quality

The BNZ Chair in Business in Asia at Victoria University, Siah Hwee Ang, supports the Government in saying the two events are unrelated and China isn’t waging a trade war.

Rather, he says in a Double Shot interview that China is using Zespri to signal to the world: “First, quality is important. Second, we are no longer trying to take just the quantity, we want the quality as well.”

He says the issue is not about New Zealand, but about China asserting its position globally.

“When you have a system in place, you need to apply it to all countries.”

As for the timing of export halt, Ang says it’s purely coincidental that it occurred in such close succession to the steel dumping warning.

“We’re talking about ‘China pace’ here,” he says.

What appears to be a short period of time for us, is a longer period of time for China.

He says ensuring China receives quality imports has been a key part of the superpower’s structural reforms.

In fact, when the Scandinavian furniture maker IKEA recalled faulty dressers from the US but not from China, Chinese consumers kicked up such a stink, IKEA recalled their stock from China too.

While the furniture technically met China’s standards and not US standards, Ang says Chinese consumers still protested, saying: “We also deserve what the rest of the world deserves. Regardless of the authorities… we should still have safe dressers like Americans.”

Steel dumping issue beyond NZ and about global protectionism threatening China

Ang admits China is feeling the pressure as its economic growth slows.

“It needs to grow quickly. Debts are rising, consumption is going up, but still not fast enough. Money seems to be coming out of China much faster than it used to,” he says.

“It’s hoping that the rest of the world will work with it… They want to push forward a lot of things and they need a lot of support. New Zealand is not standing in their way.”

Ang says the wave of protection sweeping the world is putting China under further pressure.

In fact he believes it sees protectionist moves from the US and European Union as a larger threat than those trying to prevent it from securing more territory in the South China Sea.

“If countries - particularly in the European Union - are not allowing Chinese to actually send in cheaper products, then [China is saying], ‘we are not allowing other products to come into China as well’. So it’s a tit for tat.”

For example, China is currently challenging Australia and Brazil for exporting iron ore too cheaply; a move that will undoubtedly put more pressure on Australia, which is already taking a huge hit from weak iron ore prices. See this column Ang has written for Interest.co.nz for more on protectionism.  

In this vein, Ang says there’s more to the issue that New Zealand’s caught up in, of China being accused of illegally dumping steel around the world.

NZ’s bargaining power dropping by the day, but we remain well positioned

Asked what New Zealand can do in this environment of rising protectionism, Ang admits our “bargaining power is definitely dropping by the day, because China is becoming a stronger and stronger economy”.

Yet he says we are still well placed on the world stage as we have a lot to offer and are seen as a fairly “neutral” nation geopolitically.  

The main thing is that we keep exporting good quality goods at a fair price. If China can produce the same products, to a higher quality itself, then it will.

Ang accepts China has received some bad press locally in recent times.

Further to the steel dumping issue, it has ignored an international tribunal ruling from The Hague that has backed the Philippines in a territorial battle in the South China Sea. There are also claims of widespread mortgage and immigration fraud being committed in New Zealand.  

Asked how we can maintain a strong relationship with China, when it doesn’t always play by the rules, Ang says: “Some of the things we are observing in terms of say steel, property and other things, are actually happening in other countries as well.”

If China wasn’t interested in what we were doing, we’d be in trouble.