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Late last year, China overtook Australia as New Zealand's top individual trade partner. Business editor Dene Mackenzie investigates the implications of the growing ties to China and the relationship between New Zealand, Australia and China.
New Zealand's December trade statistics confirmed the importance of China to this country's traders with exports to China coming in two-thirds higher than a year ago.
The growth was driven by milk powder and pine logs.
BNZ economist Doug Steel says Chinese demand for New Zealand's primary produce remains an important driver of New Zealand's overall export and economic performance.
ASB chief economist Nick Tuffley agrees.
''While the economic ties between the New Zealand and Australian economies will remain significant, we expect China's economy will become more and more important to New Zealand's trade and broader economic outlook in the future.''
The importance of China was compounded by it also being Australia's top trade partner.
Accordingly, Chinese economic performance could touch the New Zealand economy through several different channels, he said.
Although the goods New Zealand and Australia sent to China were different, the export sectors on both sides of the Tasman had both become increasingly dependent on Chinese demand over recent years.
China had become New Zealand's most important dairy customer, Mr Tuffley said.
In the year ended December 2013, China accounted for 32% of all dairy exports and 46% of milk powder exports.
As with dairy, China was behind the surge in volume and value for New Zealand forestry exports.
New Zealand's forestry exports to China last year were up more than 50% on a year earlier.
Beyond dairy and forestry, China was also an important destination for many other commodity exports.
In the year to December, China was New Zealand's largest export destination, buying $10 billion of merchandise exports, or 20.7% of total merchandise exports.
Statistics New Zealand figures showed Australia still held second place on the export tables, buying $9.1 billion of merchandise exports - or 19% of total exports.
The three top export categories to Australia in 2013 were oil and fuel products (18% of exports), precious metals (9%) and beverages and spirits (7%). Dairy exports accounted for 5% of total exports to Australia.
On the other side of the trade ledger, New Zealand imported $8.3 billion from China in the year to December. China was New Zealand's top source of imports. About 17% of New Zealand's exports were sourced from China.
Again, Australia held second place on the import tables with 13%, or $6.4 billion, of New Zealand's exports sourced from across the Tasman.
New Zealand imported a diverse range of things from Australia. The top three imports from Australia by category were machinery and equipment (11% of total), vehicles (8%) and pulp and paper (5%). Other key sources of imports were the United States (9%) and Japan (6%).
Mr Tuffley said tourism was a key export earner for New Zealand, second only to dairy.
In the visitor stakes, Australia topped the table but China was becoming increasingly more important. About 45% of all tourists arriving in New Zealand came from Australia. Chinese tourists accounted for 8.4%.
But 10 years ago, Chinese tourists made up only 3% of the annual tourism numbers.
''And as China's level of personal income grows, the tourist potential for New Zealand should only get better.''
With China's increasingly important role, it was understandable why there was a lot of interest in Chinese growth prospects, Mr Tuffley said.
An unexpected drop in Chinese growth was a risk to global growth prospects, as well as the New Zealand, and the Australian, export sector outlook.
''We see the opportunities for trade between New Zealand and China outweighing the risks.''
China's gross domestic product (GDP) grew by 7.7% last year, slightly firmer than China's official 7.5% target for the year and the latest official 2011-15 five-year growth target of 7%.
Compared with developed economies which typically grew at rates more like 2%, China's growth seemed rapid, he said.
But, actually, China's growth was slowing and last year was a 14-year low for Chinese growth. China grew at an average pace of 11% a year between 2003-12.
''Slower growth in China is a mathematical certainty. As the economy develops, it becomes physically more difficult to sustain earlier rapid growth rates.
''But this slowing should not be seen as a threat to the New Zealand. Rather, we should welcome China's growth easing to a sustainable rate.''
GDP growth of only 6.9% in 2014 would generate a similar addition to global growth as those earlier 10% plus growth rates, and a similar increase in commodity demand, Mr Tuffley said.
New Zealand needed to continue to broaden the Chinese trade ties with the hope of replicating the phenomenal dairy story in other New Zealand export industries.
Key NZ product exports
Year to December 31. 2013
• Dairy $4.6 billion 46% (of total)
• Wood, wood articles $1.9 billion 19%
• Meat, animals, animal products $1.3 billion 13%
• Wool $400 million 5%
• Fish and other seafood $400 million 4%
• Cereals, flour, fruits and nuts $400 million 4%
Key Chinese product imports
• Boilers, machinery $1.5 billion 19%
• Electrical machinery and goods $1.4 billion 18%
• Footwear, clothing and apparel $1.4 billion 18%
• Furniture and other furnishings $400 million 6%
• Copper, iron and steel products $300 million 4%
• Plastic products $300 million 4%