Expect to see more Chinese tourists, students and even construction companies vying for large infrastructure projects in New Zealand, says the outgoing consul-general for the People’s Republic of China, Jin Zhijian.
China, now the world’s second-largest economy, vies with Australia on a monthly basis as New Zealand’s largest trading partner.
New Zealand and China have just concluded the first round of talks in Beijing on refreshing the eight-year-old free-trade agreement. However, while the juggernaut Chinese economy appears to sweep all before it, it has its own home-grown problems in which it needs to strike a balance — namely, escalating household and industrial debt.
Mr Jin, speaking to about 25 business and council representatives from across Otago in Dunedin last week, said all cross-border trade last year was more than $US20 billion and by 2020 was expected to hit $US30 billion.
"Once the [New Zealand] FTA is finished, expect to see the best, highest-standard FTA to be signed with any developed country," Mr Jin said of the negotiations, which should be completed within about a year.
The Chinese Government was implementing changes to integrate with the global "new economy" but it was also taking measures at home to tackle its escalating debt problem.
While proud of China having booked nine consecutive quarters of gross domestic product (GDP) growth of 6.7%, Mr Jin candidly admits to issues of rising indebtedness alongside the stellar growth curve.
In the bigger Chinese cities house prices had risen to "incredible and unaffordable" levels, he said, citing Beijing, Shanghai and Guangzhou.
The Government had put in place restrictions, where households could not buy a second home for investment, Mr Jin said.
"The Government has recognised there are risks in the housing sector ... they have put in place curbs to head off the market," he said in an interview.
Similarly, growth in construction had attracted a lot of debt.
"The debt ratio in construction companies is very high," Mr Jin said.
Again, the Government was "clear-minded of the risk" and had moved to cap those companies’ debt ratio, he said.
"We do not want to see a financial crisis happen in China."
In his earlier briefing, Mr Jin noted Chinese investment in recent years had taken controlling interests in Fisher & Paykel Appliances, Silver Fern Farms and Mataura Valley Milk, the latter 50% and 75.8% respectively.
Mr Jin said Otago and Southland could expect to experience increasing levels of tourism and students, who saw the southern South Island as "among the most attractive destinations", especially Queenstown and Milford Sound.
"In the southern South Island, expect this [upward tourism] trend to continue."
However, trade was "not a one-way street", Mr Jin said.
He cited the success of Otago cherry exports of 1000 tonnes last year, and more recently pastry exports to Shanghai and Beijing, saying milk powder and meat should not be the only exports.
"We stress the importance of the entire food chain, to broaden all areas to make it more sustainable and stable," Mr Jin said of Chinese investment in growing facets of the food chain.
Mr Jin repeatedly made reference to giant Chinese online trading platform Alibaba, which had recently secured a memorandum of understanding with Christchurch airport that would give small to medium companies access to a vast buying audience.
However, he also raised several cautions for individuals or small companies trying to establish trade links into China. There were cultural barriers, business models and social systems that had to be taken into account before there could be a "smooth-running business relationship".
Mr Jin said there was a place for New Zealand in China’s trillion-dollar Belt and Road Initiative, announced earlier this year, which included the global spread of trade across the Pacific into Australia and New Zealand.
"New Zealand is a natural extension of the Silk Road," he said.
He said 2017 was an important year for China in its current five-year plan. The Government was set on deepening structural reforms and advancing its manufacturing sector.
While that meant high energy use and pollution, among other issues, China was making the shift to new technologies, Mr Jin said.
"The Chinese economy is based more on consumption to be sustainable, as it can’t rely on government investment," he said.
He said the service, manufacturing and mining sectors would all be opened up to foreign investment and New Zealand companies could bid for projects on equal terms.
To underscore China’s overall economic plan, Mr Jin said the Chinese Government wanted to see per-capita GDP rise from $US8000 to $US12,000 over the coming eight years.
It transpired that Mr Jin’s Dunedin briefing was the last of 10 visits to the city before he ends his three-year term as consul-general in Christchurch. He expects to return to China in September and will probably take up another overseas posting. His replacement in New Zealand will arrive next year.
• Since joining the Ministry of Foreign Affairs in 1988 as an attache to the Chinese Embassy in Iceland, Mr Jin had held several senior postings, including at the Chinese embassy in the UK, as consulate-general in Chicago, as Chinese embassy counsellor in Denmark, as counsellor in the Department of Services for Foreign Ministry Home and Overseas Offices, at the Ministry of Foreign Affairs and as counsellor and deputy director-general Protocol Department Ministry of Foreign Affairs.
