Mission Accomplished – Takeout from PM John Key’s China mission

Prime Minister John Key arrived back in New Zealand from Beijing with a strong message ringing in his ears that China Inc wants to step up the pace and take the bilateral economic partnership to the next stage. It was a good week for Key. Not only have senior Chinese accepted the essential value proposition of New Zealand to China (which he skillfully promoted during his week-long mission) for our country to be a long-term supplier of high-quality proteins. But a number of them, particularly Cofco chairman Frank Ning, want that relationship to be taken further by co-investing in developing international food supply chains through accessing arable land in third countries.

This plays well into proposals to accelerate the economic relationship.

At the Boao forum, President Xi Jinping reaffirmed to Key the joint goal for bilateral trade to reach $20 billion.  The Prime Minister later related that Xi believed the two countries could achieve this goal much faster than the 2015 deadline he set with former Chinese Premier Wen Jiabao. This was a recurring theme which was also played out in Key’s subsequent meeting with Premier Li Keqiang,

But the magnitude of China’s willingness to help the New Zealand side deliver on this goal was not apparent until the inaugural New Zealand China Partnership forum at the Historic Diaoyutai State Guesthouse in Beijing on Friday. From Vice-Premier Wang Yang  down, a suite of senior Chinese – including a bevy of Cabinet Ministers and top Chinese business leaders – not only reaffirmed the $20 billion goal but came up with pragmatic, concrete proposals on how to get there faster.

If Key had any doubts at all about the willingness of senior Chinese to engage with New Zealand it would have been dispelled by forum speakers.

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ice- Commerce Minister Wang Chao acknowledged the paradigm-setting role of the ground-breaking free trade deal that China and New Zealand inked five years ago. But importantly, Minister Wang also pointed to how both countries had “bucked the trend” of the global economic downturn. His suggestion that the two countries should think more “strategically” about the relationship was leveraged by New Zealand Trade Minister Tim Groser who said the countries “could not rest on their laurels” but must ensure the FTA is adapted to the changing needs of business within the shifting global economic context.

This is important given the New Zealand’s current first-mover advantage will be eroded when Australia finally gets to ink its own deal.

The Chinese side suggested the  $20 billion goal could be achieved in 2014; pushed for the bilateral investment relationship to grow to $5 billion by the end of this year and suggested joint working groups should be formed to eradicate barriers and work on new initiatives. If China and New Zealand do go down this track they will be following in the successful model established by the New Zealand and Australian business communities off the back of that particular leadership forum.

The forum was jointly hosted by the New Zealand China Council and the China Centre for International Economic Exchanges (CCIEE) which promoted the working party proposal. The council has wanted to use the forum to launch itself in China as the premier non-governmental vehicle through which the relationship can move forward and promote a level of ambition for the relationship which goes beyond the focus on the narrow traditional production base to the value New Zealand now offers.

There are inevitably risks to the strategy. Bilateral investment can secure more green fields operations in New Zealand. But New Zealand could arguably take a much more sophisticated approach to ensuring that investment delivers more domestic brand value. Some of the areas – such as renewable energy and green economy investments – have still to be fleshed out. There are also plenty of small steps. One interesting proposal Key relates is for New Zealand to market its clean air readings as part of the attraction for Chinese tourists.

Geoff Raby, a former Australia Ambassador to China and an acute observer, predicts the Chinese economy will quadruple in size within 20 years. The big issue for the Chinese Government is how it maintains the trust of the Chinese people in a country which has been suffering growing pangs through environmental pressures.

Key’s own confidence was buoyed by  Xi’s body language and friendly demeanor. China has embarked on a new era and New Zealand’s challenge is to leverage the growing opportunities on offer.