Australia vs NZ with exports to China

February 3rd, 2014 at 7:00 am by David Farrar

I blogged a few days ago on the extraordinary growth in exports to in the years since we signed a with them, and said people should recall those who voted against it.

A reader asked if Australia had also experienced the same levels of growth in exports to China, and hence is it just that China is growing and importing now, or did the FTA make a difference.

It’s a good question, especially as Russel Norman often claims that the growth in exports to China has nothing to do with the FTA, and hence their opposition to it wouldn’t really have cost us tens of billions of dollars if their view had prevailed.

So I’ve looked at the value of exports to China for both Australia and NZ from 2008 to the year ending June 2013 (the last year Australia has reported on).

Australia exported A$37.1b in 2008 and $78.4b in 2012/13. That’s an increase of 111% or an average of 24.7% a year approx. Pretty good and there is no doubt China’s growth is leading to more exports generally.

But look at NZ in the same period, from when the FTA was signed and came into effect. In 2008 exports were NZ$2.5 billion and in 2012/13 were $7.7b. That’s growth of 205% or 45.4% a year – almost double Australia’s.

So if NZ export growth to China had followed Australia’s export growth for the last five years, what would be the difference? Around $6.6 billion.

Now it is overly simplistic to say the difference is solely the FTA. We have different export profiles. But I think there can be little doubt that the cost of Green and NZ First policies to our exporters would have been well into the billions of dollars.

The sad thing is not that they were wrong, but that they don’t admit they were wrong. Those who once opposed Nelson Mandela being released and opposed decriminalizing consensual same sex relations, generally admit today they were wrong, and on the wrong side of history. But the and NZ First refuse to accept that their opposition to the China Free Trade Agreement was wrong, despite the billions of dollars in extra exports NZ has gained since we signed it.

The sad reality is that the Greens just do not like trade full stop, and NZ First just doesn’t like Asians full stop. That is their motivation to their opposition to the free trade agreement, rather than any rational analysis of what is good for NZ.

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22 Responses to “Australia vs NZ with exports to China”

  1. tvb (4,493 comments) says:

    The spectacular success is due to the hard work and risk taking of our exporters. No due to deadbeats on welfare benefits wanting a baby bonus.

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  2. Euan (2 comments) says:

    While I’m sure you are right David, do you have the breakdown of any ‘new’ exports that were not possible before the Agreement was signed? As Australia and NZ have relatively different exports, and we know mineral p[rices have slumped for Australia, I wonder just how much is really attributable to the Free Trade Agreement?

    [DPF: No I don’t. I doubt any exports were banned previously but they would have had tariffs on them which would both reduce the price you export at, and the volume you export]

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  3. Simon (758 comments) says:

    So the State reduces its involvement in trade between NZ & China and the supply of goods and services soars which results in rising living standards in both countries.

    When do NZ businesses does get their Free Trade Agreement?

    That is the reduction in the involvement of the State in running of business through the removal of regulation and taxation?

    Remove regulation and taxation and watch trade & living standards within NZ soar.

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  4. big bruv (14,124 comments) says:

    Newsflash!

    The Greens have been caught telling lies once again.

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  5. Joanne (177 comments) says:

    Where do the Greens expect the money to come from to pay for their spoilt brat policies – I want I want – a printing press? Yes they do.

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  6. davidp (3,587 comments) says:

    >The sad reality is that the Greens just do not like trade full stop, and NZ First just doesn’t like Asians full stop.

    The Greens don’t like Asians either. Norman has been putting the boot in to Chinese for the last couple of years. It is pretty shameful stuff.

    [DPF: And another reader has pointed out to me that the Greens have never had an Asian candidate in a winnable position or seat]

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  7. All_on_Red (1,643 comments) says:

    The other difference is that Oz exports things they mine from the ground whereas we export things we grow in the ground (milk is a by product).
    People always need to eat but the market might not need iron ore etc if consumer demand slows. Therefore our exports are probably more sustainable over time and less fickle.

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  8. EAD (1,285 comments) says:

    Ironic isn’t it – A “Communist” China have thrown off the dead weight and yoke of socialism while the West and is busy hefting this weight and piling on more at every opportunity often under the guise of the green agenda. The Chinese always were hard working and industrious and now they have a head of steam, one again.

    I actually have some faith that China will not repeat the mistakes of the West. I do not imagine it will take a soft line with Islamist morons, and there is precious little welfare state in China for miscreats to bludge. I can’t see it’s government importing millions from the 3rd world, dilute it’s unique culture to create something called “vibrant diversity” whatever that means. It’s a noble country with huge history and much to be proud of.

    PS: That was a nasty cheap comment on NZ First in the final sentence even if you were being sarcastic.

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  9. redqueen (582 comments) says:

    Does NZ First actually ‘like’ anyone?

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  10. Maggy Wassilieff (442 comments) says:

    Although minerals have historically been the dominant export from Australia to China, Australia has also been expanding its trade in Frozen beef (up 370% in 2013), high tech manufacturing, education services to China.

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  11. itstricky (1,880 comments) says:

    Thanks DPF for some analysis this time instead of a look-at-this graph – the statistical equivalent of a wet blanket. It would be good to see the comparison with Australia in % *before* the FTA. During 2008 and after is not much use in terms of comparison.

    NZF opposition is clearly wrong given their xenowhining in the past. I don’t think the Greens are objecting on all trade in this case though. They’re probably waffling on about those “small” problems in China with personal and workers rights and pay. Not to mention Internet freedom which I would expect would resonate with some of your readers. So I don’t really think a told-you-so based purely on economic benefits really matches their argument if so.

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  12. Ross12 (1,453 comments) says:

    Further to Maggy’s comment — Australia has HUGE plans for developing food production in the North, specially aimed at the Asian market. I think they are mainly looking at crops, vegetables, fruit etc.

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  13. beautox (422 comments) says:

    The way they see it is this : Exports are bad. Good hard-working kiwis spend a lot of effort making stuff and then send it to China where they are consumed by undeserving Chinese. All we get in return in money, and there’s no point in that because governments can simply print money. Better keep the exports and print the money. Or even better, don’t bother making the exports in the first place. No need to get out of bed and actually work. Stay and home and get stoned and the govt will send you some freshly printed money.

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  14. Left Right and Centre (2,994 comments) says:

    Maybe that’s because an Asian Green candidate in a winnable seat is by definition a contradiction ?

    You’ll attract more dogs with chicken than bananas. Yes I used a dumb analogy that mixes food colours and skin colours. It’s the internet – people are weird.

    I thought the Greens were OTT PC extreme leftists. Why would they be anti-Asia ? When racial equality is trumped by being anti-trade ?

    Even I don’t like my own post much but you’ve got to admit – ethnicity of candidates must affect votes received.

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  15. Jack5 (5,145 comments) says:

    The baby milk bubble had something to do with the surge in NZ exports to China.

    However, careful folks, Australia and NZ might be competing soon to show which was LEAST reliant on China trade.

    http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/10611931/The-15-trillion-shadow-over-Chinese-banks.html

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  16. RRM (10,001 comments) says:

    There are legitimate moral concerns on which a person could disapprove of trade and diplomatic relations with a country like China, other than a general dislike of ‘asians’.

    But yes, those principles come at a pretty expensive price.

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  17. Jack5 (5,145 comments) says:

    EAD posted at 8.43:

    A “Communist” China have thrown off the dead weight and yoke of socialism …

    Rubbish!

    Economy: It is correct that China has moved to more market planning from central control, but, says the CIA World Factbook, in recent years, China has renewed its support for state-owned enterprises in sectors it considers important to “economic security,” explicitly looking to foster globally competitive national champions.

    China is within its twelfth five-year plan, this one adopted in 2011. There is no independent central bank, and not for the reason that libertarians would like, but because it’s run by the Communist Party.

    It is nonsense to say that China has thrown off socialism.

    Political parties: One party – the Chinese Communist Party – dominates, and ultimately controls eight nominally independent small parties.

    Law: civil law influenced by Soviet and continental European civil law systems; legislature retains power to interpret statutes. Chief justice appointed by the People’s National Congress; other justices and judges nominated by the chief justice and appointed by the Standing Committee of the People’s National Congress.

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  18. Jack5 (5,145 comments) says:

    I’m no Green supporter, but to be fair to the Greens, some of their opposition to China is related to the Greens’ support for Tibet.

    What they lose from any Green support from the Reds among the Chinese in Auckland may be compensated by support they pick up from Auckland’s growing Indian population. India has an uneasy relationship with China.

    Though surprisingly, wasn’t there been some Indian support for Winston Peters at the last election? Or were they mostly Labour?

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  19. wrightingright (145 comments) says:

    Australia and NZ have very different export profiles indeed, Australia exports a heck of a lot of minerals and such which China desperately needs. Thus I’d kinda have suspected Australia would’ve seen larger growth. The fact NZ is bigger is a tribute to how successful our FTA has been.

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  20. itstricky (1,880 comments) says:

    Or could it just be a sign that Aus it struggling at the moment as per post this afternoon. General growth a couple % apart to NZ. Not just in exports to China.

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  21. SPC (5,770 comments) says:

    The economic rise of China has enabled a recent capacity to appreciate the consumption of our dairy products, and thus our improved export performance would exceed most – as we are the world’s pre-eminent dairy exporter.

    The Oz export growth rise would have been over a longer time period, beginning during the economic rise.

    Where would China have got their dairy, if there was no FTA – still us (they got their minerals when there was no FTA with Oz).

    The advantage gained by the FTA is not in the improved dairy exports themselves, it is in the relationship and what that enables. That means the relationship is the advantage, but that still has to be maintained.

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  22. Ben Dover (526 comments) says:

    The Military Rise of China is set to become extreme in the 2030’s
    (this is when your neighbour Australia is set to be least defended)
    this is when their global GPS system will be complete
    and the increase in military aged people will he high

    Hence the changes to legislation last year on Labour Camps and 1 child Families

    Diplomacy in Asia is to use a metaphor is
    Holding a gun to someones temple and then asking them what they own

    That is what is going on as we speak in the South China Sea with Japan

    Do you? Won those Island or Do we?

    and over the years that approach will reach Australia and NZ

    wich are Islands Like Hong Kong that they will control eventually

    When you make Economic Analysis please also factor into the reason why Asias military spend
    has over taken Europe and is increasing year upon year

    http://www.globaltimes.cn/china/

    http://www.globaltimes.cn/CHINA/Military.aspx

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