China links to fore as two-way trade tops $20b

John Key
John Key
Prime Minister John Key was yesterday playing up his relationship with China's leaders after trade data showed this country's two-way trade with China had exceeded $20 billion for the first time.

Mr Key is already planning for two-way trade to exceed $30 billion.

Statistics New Zealand figures show May trade data in surplus for the seventh consecutive month, although the balance of $285 million was below the expectations of some commentators.

Imports in May were $4.3 billion and exports were $4.6 billion.

The annual balance was $1.37 billion.

However, it was the annual China trade figures which allowed Mr Key to take some of the credit.

In 2010, two-way trade between New Zealand and China was worth $10 billion with New Zealand's exports to China worth $4 billion.

''At that time, the then-Chinese premier, Wen Jiabao, and I agreed on the ambitious target of doubling two-way trade to $20 billion by 2015.''

Figures out yesterday showed New Zealand was exporting more than $11 billion worth of produce to China and two-way trade had already exceeded the goal of $20 billion, Mr Key said.

''The growth is showing no signs of slowing and that is why in my visit to Beijing in March, President Xi Jinping and I set an ambitious new goal for trade. We are now aiming to reach two-way trade of $30 billion by 2020.''

New Zealand's economic relationship with China had deepened markedly in recent years, he said.

Rapidly escalating demand from China had come as its citizens became wealthier and turned to higher-quality products. As a high-quality food producer, New Zealand was well placed to meet that demand, Mr Key said.

ASB chief economist Nick Tuffley warned New Zealand's overall trade was likely to moderate over the rest of the year.

In May, dairy export price falls of about 7% were balanced by strong dairy export volumes, which were up by the same amount. The strong end to the dairy production season should cushion to a degree the fall in dairy export values over the next two to three months.

Beyond that, the dairy price falls would be the sole influence on dairy export values.

In other export sectors, meat and forestry values recorded strong falls of 7% and 9% respectively, mainly because of falling export volumes, he said.

Import values were 6.2% higher in May compared with May last year. Capital imports continued to lead the way, driven by the purchase of equipment for the Canterbury rebuild, as well as the commodity export boom.

Households continued to show constraint and spending on imports was lagging the rest of the economy.

Mr Tuffley still expected the Reserve Bank to lift interest rates next month before pausing until December.

''Continued restraint on behalf of households will be a key factor shaping the extent of interest rate rises over the next couple of years. Our view is interest rates will rein in households faster than both the Reserve Bank and markets expect at this stage,'' he said.

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