Qu Yun

Home Institution: Chinese Academy of Social Sciences, Institute of Economics

Visiting Period: 20 September 2012- 5 November 2012

Research Project: The Economic and Trade Relations between China and New Zealand: Retrospect and Prospect

The Economic and Trade Relations between China and New Zealand

New Zealand was once one the first western countries to have established diplomatic relations with PR China, the first developed country to sign bilateral agreements on China's entry into the World Trade Organisation, the first developed country to recognise China's full market economy status and the first developed country to start and complete the bilateral FTA negotioations. Whilst benefiting from the favourable political and economic relationship, Sino-New Zealand's bilateral trade has developed rapidly in the past three decades. China has become New Zealand's second largest trade partner, seconds largest export market and second largest source of importers. The current strong trade performance between China and New Zealand is in great contrast to the situation in the early stage of the PRC's foundation. What are the variable factors underneath this dramatic stange? Is the current strong momentum sustainable? Retrospective studies on the Sino-New Zealand trade relations intend to identify causal factors contributed to this change with prospective analysis focus on the potential benefits and risks in the future development of bilateral economic relations.

The China-New Zealand trade relations experienced several development stages. Prior to 1958, the bilateral trade volume was a one digit number and negligible. From 1959 to 1972, import from New Zealand quickly picked up the speed while China's export lagged behind. This resulted in China's long lasting trade deficit with New Zealand. After 1973, especially after China's Opening Up, normalisation of the bilateral diplomatic relations and China's open door policy facilitated the steady development of the bilateral trade. In this process, many factors may have played a role. Aside from already known factors such as the evolution of the Cold War and the switch on China's trade strategy from import substitution to export promotion, are there any other latent variables? What are the causes of China's lasting trade deficit with New Zealand in the 1960s? What was the role New Zealand played during China's import substitution period? These topics are all included in this research project.

While China experienced great success on its foreign trade expansion in the last three decades, it also witnessed many side effects such as deteriorating trade conditions, environmental pressure, natural resources constraint, increasing labour tension, etc. Facing global turbulence and domestic demand for economic restructuring, China recently lowered its 2012 GDP growth target to 7.5 percent, to achieve "higher level, higher quality development over a longer period of time". The potential effects that shall be brought by this adjustment on China-New Zealand bilateral trade are worthy research. More specifically, in addition to the FTA, China and New Zealand have concluded legally binding agreements on labour and environment. How China can take more advantage from these corporations in its economic restructuring, is a theme for study and debate.