New Zealand’s exports to China are growing, but not at Australia’s expense
ANALYSIS: This is the trailer that made many Kiwis wonder: is this true? Well, yeah, this 60 Minutes Australia music video is genuine. But the central point of the story – that New Zealand is enriching its relations with China while Australia’s relations with the country deteriorate – is a little less clear.
China’s problem in Australia
Relations between China and Australia have deteriorated over the past 18 months due to a series of issues.
Australia has been a relatively strong criticism of human rights violations against Uyghur Muslims in China. The country has also denounced China’s behavior towards Hong Kong and Taiwan and called for an official investigation into the origins of Covid-19.
* China “ accelerates ” its desire to divert key imports from hostile democracies
* Australia vs China: Australian coal blocked indefinitely by Beijing
* If New Zealand’s ‘dead bat’ approach to China doesn’t protect exporters, it’s life
China, for its part, has taken a number of measures to hamper Australian imports. It imposed significant import duties on barley and wine, suspended meat imports from a number of large Australian slaughterhouses, banned imports of wood and charcoal, and encouraged spinners not to import cotton Australian. It is also delaying other imports such as live lobsters.
Tobin Gorey, director of agricultural strategy at the Commonwealth Bank of Australia, says that for some Australian companies it hurts, but in a broader sense much of it has been able to be resold in other markets.
So, is there room for kiwi businesses?
Show us the money
For most New Zealand exporters, the situation does not offer significant opportunities.
Chinese customs data shows that New Zealand’s market share in a number of agricultural products increased only slightly or not at all during this period.
âThe market that Australia has lost in China due to various official actions is in areas where New Zealand is not really a competitor,â Gorey says.
New Zealand might be able to gain market share in the wine sector, but this would likely take time to materialize given the complexity of supply chains in this sector.
Our market share and the value of wine exports have changed little since 2019. In fact, they fell in 2020 due to the outbreak of Covid-19 and the closure of cities across China. Producers like France and Chile have managed to develop their position. Analysts believe this is likely due to the price and quality of the country’s wine.
Even if we could increase the wine trade in China, it might not be the best idea.
âFor a reorientation of trade, it must be beneficial,â says Doug Steel, senior economist at the Bank of New Zealand in Wellington. He says our wine market has strong markets and good supply chains in the UK, US and Australia, and it would be difficult to justify shifting the focus to China.
In the case of meat, demand from China has skyrocketed over the past two years due to its own domestic supply issues. After a strong increase in 2019, New Zealand exports have lagged behind the growth of other meat exporters. This is because Spain, Brazil, and the United States are major exporters of pork – China’s favorite meat – and at the same time have improved their market access.
Sirma Karapeeva, chief executive of the Meat Industry Association, says New Zealand meat volumes have actually fallen – even though their value has increased. This was likely due to the fact that other beef exporters, especially Brazil, also had better access to China in recent years.
The Australian grain sector, particularly barley, is one of the most affected by the new tariffs. New Zealand is not traditionally a grain exporter – most of what we produce locally is consumed here.
If Australia is looking for countries that profit at its expense, the United States and countries in South America would be a better place to start. U.S. exporters benefit from China’s commitment to purchase more U.S. agricultural products.
And in the dairy sector, dominated by New Zealand, Australia and New Zealand are losing market share to the United States. This is again because the United States has a bump after it returns to the market as a result of a trade deal.