China remains key to NZ's outlook

When it comes to the outlook for New Zealand's primary industries, China is very firmly in the spotlight.

Seemingly insatiable demand growth in China for food has fuelled a sharp rise in New Zealand's export returns over the past year.

Whether for dairy products, meat and wool, aquaculture or logs, there is no denying China is a crucial market.

Dairy export to China has grown from $0.2 billion revenue in 2001 to $6.1 billion for the year ended March 2014, and market share has soared from 2.6% to a whopping 35%.

It is now New Zealand's largest market for sheep meat, and second largest market for beef by both value and volume.

Exports of lamb and mutton to China increased 76% in the year ended June 2013 and it is set to remain the most important market for wool exports, accounting for 56% of exports in the year to June 2013.

Demand from China for logs is driving the growth of the forestry sector.

Global log prices are at historically high levels, reflecting China's consumption of wood products.

An easing in growth is expected in China this year and next year, with a rebalancing of consumption from low to higher-value commodities and an easing in infrastructure investment.

New Zealand is seen as well placed to take advantage of that structural shift in consumption, which is reflected in significant growth in exports to China.

Ministry for Primary Industries director-general Martyn Dunne is right when he says ensuring the long-term strength of New Zealand's relationship with China - and all of Asia - is critical to our economic success.

For relationships in China are key.

Doing business there is tough and anyone thinking they can make a quick buck is sadly mistaken.

There is a very big danger of relying too much on one market. Diversity is needed - both with markets and also exports.

We cannot rely solely on the dairy industry for our economic prosperity; all primary industries need to be strong, robust and sustainable both economically and environmentally.

Nor can we rely solely on China to be our dragon in shining armour.

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