Closer relations with China

New Zealand Prime Minister John Key has maintained his warm relations with China through his latest visit, despite being warned not to raise the South China Sea issue if he wanted progress on trade.

Chinese media ran articles saying New Zealand had implicitly criticised China by stepping up its calls against militarisation and reclamation in the South China Sea, a message Mr Key said he took with a grain of salt.

New Zealand was the first country to establish a free-trade Agreement (FTA) with China which used this country as a test case for FTAs with other countries.

So far, New Zealand has received much benefit from the trade deal and prospects for further gains look likely.

Mr Key says the NZ-China FTA has been a success for both countries.

China is now New Zealand's second-largest trading partner with two-way trade more than doubling since the agreement came into force.

This week, Mr Key met China Premier Li Keqiang to discuss intentions to upgrade the FTA to reflect the growth in trade between the two countries and to ensure it continues to drive forward.

Other issues were on the official agenda, particularly co-operating in science and innovation, the United Nations Security Council issues and tourism.

It is unlikely the public agenda was the only one being discussed at some level between Chinese and New Zealand officials.

The Government's decision to refuse the sale of Lochinver Station to Chinese buyers will have sent warnings to China about how open the country is to foreign investment.

Chinese buyers have been blamed by the Labour Party for pushing up the price of houses in Auckland, something disproved later.

Opposition political parties are not immune from pushing a racist button when polls are lagging and the Chinese are easy targets because of the enormous wealth being generated by the growing middle class.

New Zealand gains most from Chinese wealth through increasing tourist numbers.

With more planned direct flights between the two countries, this is likely to significantly increase numbers in the coming years.

Trade remains the key to New Zealand's productive economy continuing to grow, although tourism is a major earner for the country.

Mr Key and Premier Li witnessed the signing of new arrangements, reflecting the engagement between New Zealand and China.

These included developing an agricultural growth partnership, promoting trade and investment between the New Zealand Export Credit Office and the Export-Import Bank of China and Chinese recognition of New Zealand halal standards for New Zealand exports.

This is seen as a major step forward for New Zealand's halal meat producers, and it marks the first time China has recognised another country's halal regulatory and certification systems.

China is New Zealand's No 1 market for halal-certified meat.

In the 12 months to September 2015, about 77,672 tonnes of halal-certified meat were exported to China, representing 33% of New Zealand's total halal-certified exports.

Mr Key may not, however, be able to ignore a major part of the prospective expanded trade deal with China calling for an extradition treaty with New Zealand.

Some of China's "most wanted'' live in New Zealand and an extradition treaty would ensure their return to face justice, perhaps death, in China.

Mr Key has assured New Zealand China will have to agree to not impose the death penalty on those returned through any treaty.

But, in the end, New Zealand will have no say.

Mr Key has a balancing act of Solomon proportions.

Trading with China is not easy.

But given what is at stake for New Zealand exporters, it is worth making the effort.

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