This year marks the 50th anniversary of the establishment of diplomatic relations between China and New Zealand, a major milestone for the evolving relationship and an important opportunity to reflect on the progress made and chart the course for its future development, taking the Comprehensive Strategic Partnership between the two countries to a higher level. A key building block for this Partnership is the Free Trade Agreement (FTA) between China and New Zealand and the Protocol on its upgrade, which goes into force on April 7th 2022.
Over the last five decades, New Zealand and China have stayed committed to advancing practical cooperation in the spirit of mutual respect, mutual understanding and mutual benefit. As bilateral economic and trade cooperation deepens, the two countries have created many “firsts”: New Zealand was the first Western country to support China’s accession to the WTO; the first Western country to recognize China as a market economy; and the first developed country to start negotiating, and to sign an FTA with China. Joint efforts on both sides culminated in the establishment of Comprehensive Strategic Partnership in 2014, delivering tangible and increasing benefits to both peoples and setting a prime example of win-win cooperation between countries of different sizes, national conditions and social systems.
In that process, mutually complementary industry structures and shared development philosophies putting people at the centre have underpinned practical economic cooperation that generate mutual benefits for the two countries. As a result, bilateral trade in goods increased exponentially from NZ$7 million when the two countries forged diplomatic ties to NZ$35.5 billion in 2021. China is now New Zealand’s largest trading partner, accounting for nearly 30 percent of New Zealand’s total exports of goods and services to the rest of the world, and the largest single buyer of Kiwi dairy, meat, wood and fruits. MFAT Working Paper (2018) estimates that the tradable sector produces 60 percent of New Zealand GDP, and employs 50 percent of the country’s workforce. As New Zealand products make their way into millions of Chinese households, China’s strong consumer demand has become a key driver of New Zealand’s export earnings and a major contributor to trade-related jobs for the local communities.
None of this has happened as a matter of course, but as a result of hard work on both sides. While economic cooperation has served as an anchor of the China-New Zealand relations, a thriving overall bilateral relationship has, in turn, provided the enabling environment for trade and investment to grow. A case in point is the China-New Zealand FTA and its recent upgrade, which would not have been possible without the commitment from the highest level and broad-based public support in both countries rooted in positive national branding and people-to-people linkages.
Under the FTA, New Zealand liberalized 100% of tariff lines and China liberalized 97% of tariff lines, offering high-level mutual market access, which helped to drive the two-way trade in goods to a record level in 2021, growing at an average annual rate of 11 percent since the implementation of bilateral FTA in 2008.
Notably, New Zealand exports of goods to China valued over NZ$20 billion in 2021, increasing by 17 percent year-on-year since 2008, much faster than the average annual growth rate of 3 percent for New Zealand exports of goods to the rest of the world.
As one in four New Zealanders’ jobs is dependent on exports and these jobs tend to pay higher wages, our bilateral FTA has played a significant role in growing the economy and create resilient jobs in New Zealand.
The Upgrade Protocol further improves access to the Chinese market for New Zealand exporters and reflects the new trends of trade and business models between our two countries. Upon its entry into force, China opens its market for New Zealand wood and paper products, which will result in duty savings for New Zealand, and 99% of New Zealand’s wood and paper trade to China (of nearly NZ$3 billion) will receive tariff-free access at the end of the transition period. The expanded services market access and MFN commitments made by China level the playing field for New Zealand services suppliers and enhance their future competitiveness. More importantly, the introduction of 21st century trade issues such as e-Commerce and Environment and Trade builds new avenues for holding dialogue and deepening cooperation.
Growing risk and uncertainties in the global landscape has made China-New Zealand Comprehensive Strategic Partnership even more important, as it helps to provide for greater political and economic stability and certainty. The implementation of Upgrade Protocol not only further demonstrates the vitality, resilience and potential of China-New Zealand economic and trade cooperation in bringing out a robust post-pandemic recovery and promoting longer-term sustainable development, but also showcases our common commitment to working together in support of multilateralism and free trade.
As part of China’s efforts to pursue high-quality development through deepening reform and further opening up, Chinese President Xi Jinping has declared that China will proactively seek to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the Digital Economy Partnership Agreement, with a view to further integrating into the regional and global economy for mutual benefit and common prosperity.
China is a firm believer in honoring its words with actions. We are going to deepen reform and further opening up to align with high-standard international economic and trade rules, just as we are willing to further advance the China-New Zealand economic cooperation to a higher level that benefits both countries and peoples.
Looking ahead to the the next 50 years, China will join hands with New Zealand to further enhance mutual understanding and trust, and expand and deepen practical cooperation, giving increasing substance to our Comprehensive Strategic Partnership. With concerted efforts, I believe, we will create a brighter shared future for China and New Zealand.