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John Key: Opening address to China Symposium

Rt Hon John Key

Prime Minister

5 September 2012


Opening address to China Symposium Legislative Council Chamber
Parliament Buildings, Wellington

Ministers and Members of Parliament, Ambassador Xu, members of the Diplomatic Corps, ladies and gentlemen.

Thank you for inviting me here today.

Can I start by acknowledging the Contemporary China Research Centre at Victoria University and the New Zealand Institute of International Affairs who are hosting this event.

This seminar today marks the 40th anniversary of diplomatic relations between New Zealand and China.

I welcome the opportunity to reflect on those 40 years.

I also welcome the opportunity to look forward, and to consider the possibilities that lie ahead for our two countries.

Relations between New Zealand and China are very good.

We have extremely good trade links, which each year go from strength to strength.

Our people are regular visitors to each other’s countries.

New Zealand is home to many people who have come here from China.

In recent years, New Zealand has had three Chinese Members of Parliament – two of them from my own party, the National Party.

And our governments meet often and work together effectively.

In 2012, Vice Premier Li described the relations between our two governments as “at its best ever”.

It has certainly come a very long way since 1949.

That was in the early throes of the Cold War. And New Zealand and China soon found themselves on opposite sides in the conflict in Korea.

But in 1972, Richard Nixon made his ground-breaking visit to China.

That, on top of the outstanding diplomacy conducted by Henry Kissinger and Zhou Enlai, provided the opportunity for 28 countries, including New Zealand and Australia, to officially recognise the Beijing government.

New Zealand recognised China in December 1972, establishing the basis for New Zealand’s enduring “one China” policy.

Yet even during those early years, from 1949 to 1972, when the country was largely closed to foreigners, a handful of New Zealanders left their mark on China.

The most famous was, of course, Rewi Alley.

Alley was a Cantabrian who went to China in 1927 and spent the rest of his life there – a total of 60 years.

While working in Shanghai factories and travelling into the interior of the country, he became aware of the plight of ordinary Chinese peasants and workers.

During the war against Japan he helped establish thousands of small co-operative factories.

He founded schools.

And he was a prolific author and international publicist for the Communist government, while continuing to hold a New Zealand passport.

The photographer Brian Brake also visited China, in the late 1950s.

His photographs, taken during the period of the Great Leap Forward, form a unique record of a turbulent period.

The New Zealand Government is supporting Te Papa to tour a collection of Brake photographs from this era, in partnership with the National Museum of China.

They will be on display in Beijing at the time of the 40th anniversary.

This level of personal engagement by New Zealanders in China was possible in part because the New Zealand government relaxed travel bans against China before many other Western countries.

It also relaxed trade bans.

In 1956, New Zealand lifted trade embargos imposed on China during the Korean War.

Wool, tallow, hides and skins were New Zealand’s main exports in those days, but trade flows remained relatively small.

Exporters found it difficult linking buyers and sellers across very different economic systems, and connections were limited.

In 1972, bilateral trade between New Zealand and China totalled only $1.7 million, and there were no air links between our two countries.

To a New Zealander in 1972, China would have seemed an unknown, mysterious country of close to a billion people.

And it’s hard to believe New Zealand figured highly in the minds of most Chinese.

So much has changed, then, in 40 years.

Since the establishment of diplomatic relations, New Zealand and China have developed a broad and substantial relationship that is among New Zealand’s most important.

We have different cultures, different histories and different political traditions.

So we often have a different perspective on things.

However, we are able to express our views with openness, honesty and respect.

That is an important indicator of our positive intent over 40 years.

Our trade relationship, in particular, has been a huge success, and momentum has grown very quickly 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 2.3% of global GDP. By 2011 this had risen to 14.4%.

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 to recognise that China had established a market economy, in 2004.

We were the first country to agree bilaterally to China becoming a member of the World Trade Organisation.

And in 2008, our two countries signed an historic free trade agreement.

Since then, trade between us has grown exponentially.

New Zealand’s goods exports to China have trebled in only four years, and China is now our second-largest export market.

Dairy and wood products are the largest export commodities, followed by meat and wool.

New Zealand now exports more than ten times the value of product to China every day than we did in the whole of 1972.

Chinese demand has done much to support the New Zealand economy over the last few years.

China is also Australia’s largest export destination, chiefly in mineral resources, providing further indirect benefits for New Zealand, given that Australia is our top trading partner.

China is also New Zealand’s biggest source of imported goods.

Two-way trade in 2011 totalled $13.3 billion and is rising all the time.

Our countries are certainly on track to achieve the goal Premier Wen and I set in 2010, of doubling our trade to $20 billion per annum by 2015.

Our investment relationship with China is much smaller than our trade relationship, but that, too, is growing.

China is New Zealand’s 11th largest investor with $1.8 billion of investment in 2011.

In particular, Chinese firms have made investments in New Zealand forestry, manufacturing and agriculture.

China is also investing in New Zealand government bonds, contributing to the record low borrowing rates New Zealand currently enjoys.

New Zealand is seen as a relatively safe haven in these difficult times and Chinese authorities have wanted to diversify their international bond holdings.

Recently, there have been some encouraging examples of New Zealand firms investing in China.

Fonterra, for example, has significant plans to increase the number of farms it operates in China, with a roughly NZ$50 million investment per farm.

And high-tech firm Rakon opened a US$35 million factory in Chengdu last year.

People-to-people links between New Zealand and China are also strong.

Chinese tourism to New Zealand only commenced in earnest at the end of the 1990s but is increasingly significant.

Last year Chinese tourist numbers grew by 33 per cent.

That number will continue to grow under a new air services agreement that was agreed earlier this year.

A lot of young Chinese people also come to New Zealand to study.

Since the 1990s, China has been New Zealand’s largest education market.

New Zealand is today providing a quality educational experience and pastoral care to around 23,000 Chinese students, and we are aiming to grow that further.

And many Chinese want to stay permanently in New Zealand, rather than just visiting.

China is the second largest source of migrants to New Zealand, behind the United Kingdom.

The next census is likely to show a resident population of Chinese in New Zealand of close to 200,000 people.

But in relative terms, a greater proportion of New Zealanders actually live in China, rather than vice versa.

More than 3,000 New Zealanders are living in China which is not insignificant compared to our total population of only 4.4 million.

But the relationship between New Zealand and China is not just about people-to-people and trade relations.

From time to time, New Zealand hosts military ship visits from China.

We work together in regional organisations such as APEC, and on disaster relief.

China was one of several countries to send urban search and rescue teams to assist New Zealand in the immediate aftermath of the Christchurch earthquake, and to donate money for reconstruction.

We are very grateful for that assistance.

New Zealand has also aided China after natural disasters, including the Great Sichuan earthquake in 2008.

And just last week at the Pacific Islands Forum, we announced a new partnership between the Cook Islands, China and New Zealand that will deliver an improved water mains system in Rarotonga.

This new piece of infrastructure will ensure communities and businesses have access to clean drinking water.

It will mean a better quality of life for the people of the Cook Islands and it will help promote economic growth.

The project is the first time New Zealand has worked with China to deliver a major development initiative in the Pacific.

It is an example of how we can work together to get the most benefit from our aid programmes in the Pacific.

Ladies and gentlemen.

Looking forward, it is safe to assume that current trends will continue.

The centre of gravity of global economic activity will keep shifting from the Atlantic to the Asia-Pacific region.

Europe will remain a vital outlet for some of our highest value exports, but our biggest growing markets will be around the Pacific basin.

In that environment, New Zealand has a lot to offer.

We are a reliable, competitive and high-quality source of food.

We have technical knowledge and expertise that can help countries in this region develop, build infrastructure and add value to their natural resources.

We can deliver a world-class education to the next generation of leaders across Asia and the Pacific.

And we are a great place to visit, see wonderful scenery and play a few rounds of golf.

We have lots of things we can sell to other countries, but we also want to see New Zealand businesses forming productive partnerships with Asian and Pacific businesses across the region.

There are many new fields of opportunity for New Zealand businesses and people to explore.

To operate successfully in this region over coming decades they will need to have a good understanding of China, and of Asia in general.

In February I launched the NZ Inc. China Strategy.

The strategy is about getting greater efficiency and effectiveness across all government agencies that work in, and with, China.

And it’s about developing more targeted and cohesive services to help successful businesses develop and grow in China.

We want to be transparent about our bilateral interests, and get on with advancing them.

The China Strategy has a strong trade and economic focus.

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

The Strategy sets out ambitious, high-level goals, together with actions to achieve them. The five goals are:

· to retain and build a strong, resilient political relationship

· to double two-way trade to $20 billion by 2015, as I mentioned before

· to grow services trade including education services by 20 per cent, and grow the value of tourism exports by 60 per cent, all by 2015

· to increase investment to reflect our growing commercial relationship

· and to grow high-quality science and technology collaborations with China that generate commercial collaborations.

I’m pleased to say the Strategy has been positively received in New Zealand and in China.

It’s an important document. Our relationship with China is critical to achieving the Government’s aim of building a competitive and more productive economy.

One of the immediate outcomes of the Strategy was the formation of the New Zealand China Council.

The Council brings together New Zealanders who are engaged in China from across a whole range of fields, including people in the business, academic, science, cultural and education communities.

As the Council’s chair, Sir Don McKinnon, put it, the Council will operate as an umbrella organisation stretching across the breadth of New Zealand’s relationship with China, and not leaving anyone in the shade.

I think this is a significant further step in building on what is already a very strong relationship in many areas.

The China Strategy also reinforces the Government’s commitment to ministerial engagement, both as hosts and visitors to China, to build important relationships with China’s leadership.

As Prime Minister, I made my first official visit to China in 2009, where I met President Hu Jintao and Premier Wen Jiabao.

And I am hoping to visit China again later this year, to meet the new Chinese leadership.

I also hope to launch the New Zealand China Council’s inaugural Partnership Forum in Beijing.

I think that would be a fitting way to mark the 40th anniversary of a significant relationship which has a proud history and can look forward to an even better future.

I am confident that, with all of your support, we will continue to see New Zealand’s relationship with China go from strength to strength over the coming years.

Thank you.
ends

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