New Zealand Exporters Diversify Amid Chinese Demand Drop
New Zealand exporters are redirecting their products away from China due to a drop in demand. According to Karen Silk, speaking on CNBC's Squawk Box Asia, many exporters are actively diverting product meant for China into alternative markets.
This shift is significant because China remains New Zealand's biggest trading partner and top customer, accounting for about one quarter of all exports in the 12 months through July. In fact, looking ahead to 2025, New Zealand's goods bound for China were close to twice the value of shipments to the next two markets - the U.S. and Australia - combined.
The dairy industry is particularly affected by this shift, as New Zealand supplies over half of China's dairy imports. However, a pullback from Chinese buyers may not be entirely negative for New Zealand farmers, as higher global prices for staples like wheat have given them a relative cost edge even as volumes to China ease.
The macro backdrop is also influencing this shift, with China's growth slipping to its weakest pace in years in the second quarter due to tepid domestic demand and a protracted property downturn. Additionally, the Reserve Bank of New Zealand raised its cash rate to 2.75% on Wednesday, signaling another increase could arrive by year end.