Preserving the China Dividend for New Zealand

New Zealand's economy has benefited significantly from China's emergence as a major economic power. The country's rapid growth coincided with New Zealand's efforts to reform its economy and improve access to international markets, providing an unusually favorable trading environment.

China's entry into the world trading system brought New Zealand many benefits, including increased exports, imports, and services trade. The 2008 NZ-China Free Trade Agreement helped New Zealand take advantage of China's growth by establishing market access, regulatory arrangements, and institutional relationships.

However, with China's economy maturing and its growth slowing, New Zealand must adapt to changing circumstances. The country should focus on preserving the gains from China while building new sources of growth.

New Zealand's consumers have benefited from cheaper imports and increased supply growth in third-country markets generated by China's integration into the global economy. Export drivers include China's rapidly growing demand for New Zealand products, particularly food and fibers, with China accounting for around 30% of New Zealand's goods exports in 2023.

The trade in services has also contributed to the relationship, with China's rising incomes creating demand for New Zealand services such as tourism and international education. Investment is a slow starter, but as commercial and institutional relationships continue to deepen, it may become more important in the future.