Call for more balanced trade with N.Z.

Press, 10 December 1983, Page 20

Call for more balanced trade with N.Z.

Ken Coates has looked at changes in China since he was last there in 1977. He was one of two New Zealand journalists invited by the Chinese People’s Association for Friendship with Foreign Countries.

Officials who control China’s foreign trade have earned the reputation of being the toughest bargainers in Asia. They would like to drive a harder trade bargain with New Zealand.

The Chinese leaders wanted to overcome this imbalance, Mr Ye said.

“We have made efforts to raise quality and increase variety, as well as improve transport of our products.” He cited machinery, electrical goods and musical instruments as products needed by New Zealand, and said that he hoped restrictions on these and other Chinese imports would be relaxed.

China wants New Zealand to buy more of its exports, and holds out the promise of trade between the two countries growing more rapidly as a result. This message from trade promotion officials in Peking is based on Chinese dissatisfaction at a trade imbalance between the two countries, that runs at more than three to one in New Zealand’s favour.

New Zealand goods needed by China included wool, sheep for breeding, tallow, wood pulp and paper, and animal by-products. “In the last 10 years, the deficit figure has grown quite large, and exports to other countries have compensated for the deficit with your country. “This imbalance is an obstacle to further expansion of trade with New Zealand.”

In 10 years, China has grown from a market of scant importance to New Zealand’s seventh largest export market, worth $173.7 million. It is now the second largest buyer of New Zealand wool, the biggest purchaser of tallow, and the second most important market for leather products.

We made no headway with the argument that just as China buys where the price and quality is right, so does New Zealand. Reasons for lack of growth of Chinese exports include limited ranges of goods and limits imposed by import licensing. Design and presentation has not always been acceptable; minimum orders have been too large for the New Zealand market, and there has been a lack of marketing skills.

New Zealand imports from China are worth about $48.8 million annually. They are mainly textile articles and fabrics, tea and other foodstuffs, animal bristles and chemicals.

China’s guiding principle for trade is “equality and mutual benefit,” said Mr Ye Jixiu, advisor to the Council for the Promotion of International Trade which organised a Chinese trade mission to New Zealand last year. After noting that the value of trade between the two countries reached a record in 1980 at 18 times its 1972 value, he said China’s big deficit with New Zealand was causing concern.

“It will take time to overcome these problems; but they will be solved,” said Mr Ye. Asked about the long-term future for New Zealand’s wool exports, he said that an increase depended on the state plan, and on terms offered by New Zealand. He

made it clear that China’s purchase of wool depends on price and quality.

It seemed time to make the point that New Zealand importers are now more aware of the availability and competitiveness of Chinese products. This brought the response that not only does China want to import New Zealand timber, but also more livestock to improve native strains.

Mr Ye said that there was a problem with quarantine, as both countries had not reached agreement on health inspection standards.

centuries-old houses without adequate plumbing or drainage systems.

It is not a country one would expect to export heart pace-maker units, 10-speed cycles, and heavy mining machinery. Both the design and range of consumer goods and machinery for export has improved markedly in the last six years, as a visit to the Guangzhou Foreign Trade Centre indicated.

He suggested that the two countries should explore co-operation in processing agricultural products as China was interested in gaining managerial experience, and experienced in animal husbandry techniques. New Zealand has already notched up some success in this area through the pioneering work of China New Zealand Agricultural Consultants, Ltd, in which Professor Sir James Stewart, of Lincoln College, has been prominent. A model beef farm was set up in southern China, and a demonstration sheep farm is being run by two New Zealanders in a remote area at Qinshui, in Shanxi Province. A contract has been signed for a third model farm to specialise in pasture seed development.

Talks between the two countries are continuing on the co-produc-tion of plastic piping, a joint cheese producing venture, and on milking machinery. China is a paradox: it has launched satellites, it has synthesized insulin and developed nuclear weapons. Yet a few kilometres from a major city you can find rough tracks through villages surrounded by collapsing mud walls; pigs root in the slush and slime of courtyards enclosed by the squalor of

Among the solid graders and tractors were sporty yachts for export, and examples of two models of a new ultralight aircraft.

A British firm in Hong Kong has ordered 100 aircraft, and a United States company has contracted to sell at least 1000 in three years. Few New Zealanders realise that China has one and a half times as many sheep as this country although scientificallybased sheep-farming as it is practised here is virtually unknown.

China with 800 million peasants, is still largely rooted in a past which makes wooden ploughs pulled by water buffalo, commonplace. The peasants till the soil to feed themselves — agriculture still produces only limited surpluses. But agriculture is the foundation of the economy. Tt feeds 1000 million, supplies 68 per cent of raw material for light and textile industries, and provides a huge market.

The Chinese realise that if they

do not make herculean efforts to

develop and modernise their farms, then their plans of a quadrupled g.n.p. by the year 2000 will run into the mire.

It is for this reason that China looks to countries such as New Zealand, with a proven record in efficient farming. “We hope for more co-operation with New Zealand in developing animal husbandry,” said a deputy director in the Ministry of Agriculture, Mr Zhu Pei Rong, who in 34 years with the Ministry has travelled all over China.

Past emphasis has been on grain production. China now plans to develop grasslands to raise more meat, even in the dry northern areas with their short, sparse grass, and lack of water. “We have found good supplies of underground water, and hope to obtain overseas expertise to help use this,” Mr Zhu said.

Mr Zhu outlined plans to develop beef and mutton production (90 per cent of the meat now produced is pork) but he admits to problems with taste. Last year, publicity was given a campaign to change people’s diet so they would consume more meat, milk and other dairy produce. Such is the demand on Peking’s milk supply that a young couple told me they could only get on the waiting list — available milk only meets the demand of very young children and long-time customers. In the south, just over the border in China from the New Territories, 3500 Friesians from New Zealand are supplying milk at a joint-venture farm. The Guang Ming dairy farm, one of the largest in China, supplies 60 per cent of Hong Kong’s fresh milk. It is a joint venture with the Chinese, and a Hong Kong company has signed a contract for another five years. It will invest an extra $5.2 million, which will boost milk production by a third. China seeks expertise where it can find it, and likes to link it to projects aimed at home production.

It is, for example, adding 45 dairy cows from Denmark to the Guang Ming farm, and is also keen to develop dairy industry exchanges with Japan. What future agricultural trade and help from New Zealand will be sought? In Mr Zhu’s view, there is scope for importation by China of further breeding stock, and of grass seeds suitable for the southern part of China. “The textile industry has a big potential,” says Mr Zhu (with a worker’s average wage of $l5 to $2O a week it could make a world impact). “If the export demand is maintained, we will import more wool from abroad.”

China’s policy offers many forms of co-operation to foreign firms. In a joint venture with the French, for example, high quality wine is being produced and exported. Mr Zhu and his colleagues see New Zealand as a highly-advanced and successful agricultural country from which China can learn and purchase — to its advantage.