Rt Hon John Key
Prime Minister
12 April 2013 Speech

Speech to the
New Zealand China Partnership Forum
Beijing, China

It’s a great pleasure to be here at the opening of the first-ever New Zealand China Partnership Forum.

The Forum is the first of this nature and scale to take place between China and New Zealand.

So this is a notable occasion.

I want to start by acknowledging the two partner organisations – the China Centre for International Economic Exchanges, and the New Zealand China Council.

Thank you for organising this event and ensuring an impressive line-up of presenters and guests.

I know that, on the Chinese side, an extremely distinguished delegation is present here today to take part in the Forum.

With me from New Zealand are three of my ministerial colleagues, a number of top-ranking government officials, and leaders in New Zealand business, education, scientific and cultural fields.

We are all engaged with China, and we are keen to strengthen what is one of New Zealand’s most important relationships.

The Partnership Forum caps off a very successful visit to China – my third visit as Prime Minister in four years.

In my speech at Peking University yesterday I talked about the New Zealand-China relationship across a whole range of fields.

Today, I want to focus on our economic relationship.

Trade between New Zealand and China, as you know, has grown rapidly in recent years.

In part, that is because of China’s ever-increasing importance in the global economy.

In 1981, when several pioneering New Zealand businesses formed the New Zealand China Trade Association, China accounted for around two per cent of global GDP. That figure is now around 15 per cent.

Rapidly rising living standards, increasing urbanisation and a shift to higher-protein diets have supported demand for New Zealand products.

But our booming commerce is also due to the fact that New Zealand and China have worked hard to develop our trade relationship over a number of years.

New Zealand was the first country, for example, to conclude negotiations agreeing to China’s accession to the World Trade Organisation.

And in 2008 – almost five years ago to the day – our two countries signed an historic free trade agreement.

On the back of that agreement, New Zealand’s goods exports to China have more than trebled in five years, and China is now our second-largest export market.

Our major exports to China are dairy, timber, meat and wool. But products such as wine are also doing well and more than 90 per cent of goods are entering China duty-free.

At the same time, Chinese exports to New Zealand have also increased significantly.

China has passed Australia to become our biggest source of imported goods.

So our trade relationship is in very good shape.

In fact, since the FTA was signed, New Zealand has traded more with China in five years than the combined value of all previous trade between our two countries.

And we are on track to achieve the goal – which I reconfirmed with President Xi at Boao – of doubling two-way trade by 2015.

Our two-way investment relationship has also been growing, and I can give you some good examples of that.

Haier, which owns Fisher and Paykel Appliances, wants to make New Zealand a design and innovation centre and will be taking on 100 new R&D staff in Auckland and Dunedin over the next two years.

Bright Dairy is the majority shareholder in Canterbury milk processor Synlait, which produces high-quality dairy products, including infant formula, for export.

And two Chinese dairy companies, Yili and Yashili have recently received approval from the Overseas Investment Office to establish milk processing plants in New Zealand, both of which involve over NZ$200 million of investment.

A growing number of New Zealand companies are also investing in China.

Fonterra, for example, has three large dairy farms in Hebei Province and is currently developing two more to complete a hub. Its longer-term goal is to produce more farm hubs and produce one billion litres of high-quality milk in China by 2018.

And high-tech firm Rakon has a joint venture facility in Chengdu producing crystals and crystal oscillators for satellites, navigation devices and smart phones.

My Government sees investment as crucial for growth and prosperity.

That includes overseas investment in New Zealand, because it adds to what New Zealanders can invest on their own.

Overseas capital can grow businesses that wouldn't otherwise have the means to grow, create jobs that otherwise wouldn't exist, and pay wages that are higher than they would otherwise be.

So we welcome that investment.

When it comes to purchasing sensitive land in New Zealand, we have rules to ensure that New Zealand benefits, for example, from new job opportunities, new technology, or better access to export markets.

My Government supports those rules, and we apply them fairly and consistently across all potential investors, in a transparent way.

Our transparency and stable business climate are part of the reason we are considered a good country to do business with.

Forbes ranks us number one on their list of “best countries for business”, while the World Bank puts us third, after Singapore and Hong Kong.

Last year, New Zealand was once again ranked at the top of Transparency International’s list of the least corrupt countries in the world.

We have excellent legal and economic institutions, and a banking system that came through the Global Financial Crisis in good shape.
So New Zealand is well-placed to help China, and other countries in this region, address their development challenges.

Populations in this region are growing strongly, and they are getting more prosperous and more aspirational.

They will want to know they can feed their families with safe, nutritious food – particularly protein – from reliable and trusted sources.

I believe the challenge over the next 20 years will not be about countries competing to meet a limited demand for high-quality food – it will be about countries striving to ensure there is enough supply.

That is where I see New Zealand playing an important role in this region.

We are world-class, highly-efficient food producers.

And we have very high food safety standards, backed up with world-leading technology, so consumers can have the utmost confidence in our products.

We are not a threat to domestic producers in any country. Far from it.

We are the world’s biggest dairy exporter, but that is because we have a small domestic market.

We produce two to three per cent of the world’s dairy supply, and global demand is also growing at two to three per cent a year. So effectively, the world needs to add New Zealand’s total production each and every year.

The future for New Zealand – across all foods, not just dairy – is in partnering with other people and other countries in our region.

We are already doing that and will continue to do so in the future.

We can offer the knowledge gained over years of experience in agriculture, horticulture, food science and technology.

We may be small, but where we have areas of expertise, we have very deep expertise.

We are teaming up to produce food in China and in other countries. I have already mentioned Fonterra’s operations in China and Bright Dairy’s in New Zealand.

We are working with other countries to improve the productivity of their domestic sectors.

We are helping build brands that stand for high quality and proven safety.

As a partner for prosperity, New Zealand has a lot to offer the region.

Alongside our expertise in food production, we also have technical, scientific and engineering expertise that can help other countries develop and add value to their natural resources.

We have growing high-tech industries, we are creative people, and we have a beautiful natural environment.

You can see these things come together in films like The Hobbit, which is showing now in Chinese cinemas.

This was filmed in New Zealand, with a New Zealand director, and world-leading production and effects from New Zealand artists and technicians.

We have a highly educated population and we can deliver a world-class education to the next generation of leaders across Asia and the Pacific.

China is the largest source of international students in New Zealand, numbering over 24,000, and we are keen to see even more young Chinese come to our country to study.

We offer high-quality, cost-competitive schools and institutions in an English-language environment.

And we have a code of practice to ensure a high standard of care for overseas students.

As so many Chinese people know, New Zealand is a great place to visit, see wonderful scenery and experience our unique culture.

As well as being Prime Minister, I am also the Minister of Tourism. So I welcome the big increase in Chinese visitor numbers over recent years.

Almost 200,000 visits were made in 2012, making China our fastest-growing, and also second-largest, source of visitors.

Premier Li and I agreed two days ago to make business travel between our countries even easier through three-year, multiple-entry business visas.

So my message to you today is that New Zealand is open for business, and we want to do business with China.

By the standards of other developed countries, our economy has come through the Global Financial Crisis in good shape.

Last year, the New Zealand economy grew three per cent, which was one of the highest growth rates in the OECD – higher, for example, than growth in the United States, Canada, Japan, the United Kingdom and the Euro area.

Interest rates are at 50-year lows and our terms of trade remain high.

The biggest economic project in New Zealand’s history – the rebuilding of Christchurch after a series of destructive earthquakes – is about to get into top gear.

Spending on reconstruction in Christchurch over the next few years is expected to total $30 billion, or around 15 per cent of New Zealand’s GDP.

My Government has been very carefully managing the country’s finances to get back to surplus, keep net public debt under 30 per cent of GDP, and start reducing that debt over time.

And we’re pressing ahead with a range of measures to build a more productive and competitive economy.

New Zealand has changed a lot in the last 40 years and we see ourselves, not as a far-flung part of Europe, but as an Asia-Pacific country, with our focus very much on this region.

We now export more than four times as much to China each year than we do to the United Kingdom, which was historically our most important market.

And New Zealand businesses are very keen to learn more about China. Courses run by New Zealand Trade and Enterprise on doing business with China have been very popular and well-attended.

A recent survey showed that more than three-quarters of New Zealanders see the Asian region as important to New Zealand’s future.

Asia is rated as more important than Europe, North America and every other region in the world apart from Australia, our nearest neighbour.

So New Zealand is firmly locked into Asia.

But there is more we can do.

That is why my Government last year launched the New Zealand China Strategy.

The China Strategy has a strong trade and economic focus.

It has been developed with industry groups, businesses and organisations which are involved in building New Zealand’s relationship with China.

The goals of the Strategy are:
• to retain and build a strong and resilient political relationship;
• to double two-way goods trade by 2015, as I mentioned before;
• to grow services trade – including education and tourism – by 2015;
• to increase investment;
• and to grow high-quality science and technology collaborations.
I’m pleased to say the Strategy has been positively received in New Zealand and in China. It’s an important document for us.

One of the immediate outcomes was the establishment of the New Zealand China Council, and the Partnership Forum.

Which is where we are today.

Ladies and Gentlemen.

Together, New Zealand and China have made enormous strides in our relationship over the past 40 years.

We should be proud of what we have achieved.

Today is another significant milestone.

And in the years ahead, New Zealand’s relationship with China will continue to grow stronger as we build mutual prosperity and well-being together.

Xie xie. Thank you.

ENDS

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