Max Bowden: Is NZ ready for the "Asian Century"?

30 September 2011

Max Bowden's BusinessSense: Is NZ ready for the "Asian Century?"

Australia is currently putting together a "white paper" on its role in the new "Asian Century." NZ is rapidly realising it is tied as much to China as the Australians are.

China is a key element in our primary produce based, export oriented "new" economy. What happens in China is doubly important because our biggest export market - Australia, is inextricably linked with China through its own resource exports.

But NZ must be mindful of the past. We have had some brutal trade shocks. Britain's entry to the EEC, as it was then known, is probably the most memorable.

As a commodity exporter and price taker, NZ can easily be seduced into concentrating on one major market to the detriment of all else. After the British "Common Market" slap in the face, many swore NZ would never get caught like this again.

But the emergence of China, with its population of billions, its go ahead economy and its relatively close proximity we seem to be being seduced again.

"The China Syndrome

China, as John Key notes, is crucial to NZ. 2011 figures show it is now NZ's second largest export destination, taking 11% of our exports, worth $4.8bn. It is also crucial to Aust's future. Aust is our biggest export destination, taking 23% or $10bn of our goods and services.

The interesting thing is how exports to China have moved since the FTA was signed. Between 2008 and 2010 NZ exports to Japan increased 90%, but 91% of those were primary products.

Over the same period NZ exports to Aust went up by just 2.3%. The Chinese are mainly taking milk powder. Its total value increased by 343% from 2008 to 2010.

Imports from China make up 16% of the NZ total, which places China as the second biggest importer into NZ. Computers and telephone equipment are the biggest import items from China.

Our biggest import market is Aust which provides 18%. Aust is more reliant on China than NZ, but NZ is very reliant on Aust, which makes China the key element in our trading world at the moment. NZ is less reliant on the old world trading partners of the past, the UK and US.

The big question is whether NZ is doing enough to boost trade in other markets. Brazil is the world's 7th largest economy. It is just 50th on NZ's bilateral trade list."

Australia is complaining not enough focus is being placed on Asia in educational terms. It wants Chinese taught in schools, and a wider examination of the significance of Asia.

A culture shift needs to take place here as well. The NZ education system must realign its courses away from the old world of the UK, and the US, and to look at the new world of China, India and maybe Russia and Brazil as well.

When these nations are the major drivers of the world economy, we need to be able to engage with them and understand them. Learning their languages, something of their culture and their history would be a good start to understanding how we can trade with them.

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