Will Labour oppose the China FTA upgrade?

April 22nd, 2016 at 7:00 am by David Farrar

Stuff reports:

China will allow dairy to remain on the table as it progresses talks with New Zealand over an upgrade to an existing free-trade agreement.

But it’s not yet promising that formal re-negotiations will begin over an eight-year-old pact that the government would argue has fallen victim to its own success. 

Prime Minister John Key met with Chinese President Xi Jinping in Beijing overnight (NZ time), and said he left the meeting more optimistic than when he went into it, about China’s willingness to progress free-trade talks. 

If an upgrade to the China FTA is negotiated, will Labour oppose it?

Once upon a time this would have been a ridiculous question to ask, especially as they negotiated the China FTA.

But consider these two points:

  1. Labour now regularly rails against the Chinese – everything from investing in a farm to buying a house to being an Chinese chef
  2. The initiated the TPP agreement in Government yet denounced it in opposition

Greens and NZ First both opposed the FTA with China. Labour’s policy has been getting closer and closer to the Greens, so it is not impossible they’ll oppose any upgrade to the China FTA purely because it may happen under National.

China’s correction nine times greater than NZ’s total emissions

November 9th, 2015 at 10:00 am by David Farrar

The NY Times reports:

China, the world’s leading emitter of greenhouse gases from coal, has been burning up to 17 percent more coal a year than the government previously disclosed, according to newly released data. The finding could complicate the already difficult efforts to limitglobal warming.

Even for a country of China’s size, the scale of the correction is immense. The sharp upward revision in official figures means that China has released much more carbon dioxide — almost a billion more tons a year according to initial calculations — than previously estimated.

The new data, which appeared recently in an energy statistics yearbook published without fanfare by China’s statistical agency, show that coal consumption has been underestimated since 2000, and particularly in recent years. The revisions were based on a census of the economy in 2013 that exposed gaps in data collection, especially from small companies and factories.

Illustrating the scale of the revision, the new figures add about 600 million tons to China’s coal consumption in 2012 — an amount equivalent to more than 70 percent of the total coal used annually by the United States.

That extra 600 million tons is nine times greater than the total emissions of New Zealand.

Labour’s policy would breach the FTA Labour signed

July 15th, 2015 at 10:00 am by David Farrar

Richard Harman at Politik reports:

Labour would exempt Australians from any restrictions it might put on foreign buyers of New Zealand real estate.

In a move that raises questions about the reasons for appearing to single out Chinese residents, Housing spokesman, Phil Twyford says the Australian exemption is because of the Closer Economic Relationship with Australia. …

But back in the Labour Party Mr Twyford has been continuing to assert that Labour would ban all foreign buyers.

He repeated this claim in a piece he wrote for the Herald. 

But he told POLITIK that “sometimes simplicity is the enemy of nuance.”

“Our policy is to ban all foreign buyers with the following exceptions —“If you intend to come here and settle.”

“If you build new.

“Australians – in the spirit of CER, given that they exempt Kiwis from their restrictions on offshore speculators.”

This tells us two things. The first is you can’t trust an article written by Phil Twyford. Sure in a live interview you may need to go for simplicity, but in a written op-ed for a newspaper, it is disgraceful to lie about your own policy.

But assuming he has told the truth to Harman, he has killedhis own policy. Stephen Franks explained why in 2013:

But wait – another Article (the most favoured nation clause) commits New Zealand not to pass law that discriminates against Chinese investors in comparison with other overseas investors (such as Australians).

Article 139 requires that investors of [China] be treated no less favourably than investors of any third country [Australia] “with respect to admission, expansion, management, conduct, operation, maintenance, use, enjoyment and disposal” of investments.

So Chinese would-be  investors do not get direct rights to insist on investor equality but they can’t be treated worse than Australians.

Labour has said Australians would still be allowed to buy residential property under their policy. This would breach Article 139.

So Labour’s policy is a soundbite, not an actual policy that could be implemented.

Winston back to Chinese bashing again

November 24th, 2014 at 11:00 am by David Farrar

Stuff reports:

Streamlining rich Chinese into the country because they hold a Chinese-issued credit card has been slammed by New Zealand First leader Winston Peters who said it will lead to corruption here.

But the tourism industry welcomes the new move as knocking down a barrier to growth in getting wealthy Chinese to come to New Zealand.

Immigration New Zealand’s agreement with China UnionPay allows holders of Platinum and Diamond UnionPay credit cards to provide evidence of their “premium card” status instead of information on their employment and source of funds, as part of the visa application process.

UnionPay is the only domestic bankcard organisation in China.

In the joint statement by New Zealand and China last week, the Chinese side welcomed “New Zealand’s recent visa facilitation package for Chinese citizens visiting New Zealand for tourism and business, and is willing to work with the New Zealand side to create more favourable conditions for bilateral personnel exchange.” Chinese visa applicants are also required to meet other requirements such as being of good character and having an acceptable standard of health.

This is about making it easier for Chinese nationals to visit NZ, not making it easier for them to gain residency here. This is a crucial difference.

Nationals from many countries can visit here without needing a visa at all. Is Winston complaining that British people can visit NZ and not need to prove they have a job and a source of funds? Of course not, as they’re not Asian.

Tourism Industry Association (TIA) New Zealand chief executive Chris Roberts welcomed the new credit card immigration policy.

He said the TIA had been advocating strongly to the government for more streamlined visa processing for high-value Chinese visitors.

It is one of the key growth opportunities identified in the industry’s Tourism 2025 framework.

“The Tourism 2025 goal of almost doubling total tourism revenue to $41 billion a year can only be achieved by the public and private sectors co-operating to remove barriers to growth and seizing opportunities.

“Smart schemes to target high-value Chinese travellers to get the visas they need as quickly and easily as possible will make New Zealand more internationally competitive for this crucial market, which has grown quickly to become our second-biggest source of visitors after Australia.”

So again this is about tourism, not migration.

However, Peters said Prime Minister John Key had not learnt lessons from the Kim Dotcom affair which had cost the country “a packet in the courts” and tarnished both the government’s and our international reputation”.

“Instead of saying we have a rigorous immigration programme and policies capable of doing the job . . . he’s now transferred that right onto another country and another country’s system.

“If holding some sort of platinum card is going to be the criteria then you hugely expose yourself and leave yourself open to corruption.

Winston has tried this before. I blogged on almost the same issue in 2012. Nationals from 57 countries can visit NZ without even needing a visa. Chinese nationals do still need a visa, and have to provide

  • Proof of good health
  • Proof of good character
  • A proper purpose for visiting
  • Proof they plan to leave
  • Proof of funds to cover stay in NZ ($1,000/mth), and departure
  • Not have a serious criminal record

They still have to fill in a 16 page form. All this change is that having a platinum credit card is an acceptable substitute for a statement from an employer about what their earnings are.

Winston knows this of course, but can never resist an opportunity to scaremonger.

Mallard on Chinese students

September 1st, 2014 at 10:00 am by David Farrar

Stuff reports:

Most political parties turned out last week to the Great Immigration Debate at Eden Park in Auckland, where Labour MP Trevor Mallard said New Zealand was getting a reputation for letting in “fat, rich lazy, unintelligent Chinese students”.

If you know any Chinese students, make sure they know what Labour thinks of them.

UPDATE: Trevor Mallard has commented:

David the reason the media who were there didn’t pick up on it was that I was quoting Chinese Minister of Education in circa 2003 who felt we needed to lift our game because we were getting some of the wealthy but less talented students. His words not mine.

Useful clarification. I’d still make the point that repeating someone else’s words can sometimes be seen as agreement, depending on context.

Export growth not just China

June 12th, 2014 at 1:08 pm by David Farrar

Trans-Tasman reports:

Is NZ becoming too dependent on the Chinese market? It’s a question worrying many authorities as they see China absorbing the bulk of NZ’s exports of milk powder, but also 50% of NZ wool and forestry exports, as well as big volumes of seafood, fruit and sheep meat. ANZ Bank economists Cameron Bagrie and Con Williams, taking what they call “a big picture view” have done an exercise studying alternate Asian markets. They say while the speed of the increase in NZ’s trade connectivity with China has been staggering (China now takes 22.6% of total exports), NZ has hardly been standing still in other markets.

Over the last 5 years, double-digit growth in exports has been achieved in 46 of the countries NZ trades with (22% of total).

We are of course vulnerable to China, but the fact we are growing other markets also mitigates the risk.

The Chinese general who said no at Tiananmen Square

June 6th, 2014 at 2:00 pm by David Farrar

The NY Times reports:

On a spring evening in 1989, with the student occupation of Tiananmen Square entering its second month and the Chinese leadership unnerved and divided, top army commanders were summoned to headquarters to pledge their support for the use of military force to quash the protests.

One refused.

In a stunning rebuke to his superiors, Maj. Gen. Xu Qinxian, leader of the mighty 38th Group Army, said the protests were a political problem, and should be settled through negotiations, not force, according to new accounts of his actions from researchers who interviewed him.

“I’d rather be beheaded than be a criminal in the eyes of history,” he told Yang Jisheng, a historian.

Although General Xu was soon arrested, his defiance sent shudders through the party establishment, fueling speculation of a military revolt and heightening the leadership’s belief that the student-led protests were nothing less than an existential threat to the Communist Party.

If only there had been a few more brave men like him who refused to say yes to killing peaceful protesters.

Dann on China

March 25th, 2014 at 1:00 pm by David Farrar

Liam Dann writes in the NZ Herald:

We are fortunate to have a favoured status with the Chinese Government but we will need to be actively engaged as a nation to ensure we achieve the best results for New Zealand.

The currency convertibility deal was an important symbolic move. More significant for us was the agreement to target $30 billion worth of bilateral trade by 2020.

That target announced by John Key and President Xi Jinping in Beijing updates our previous objective of $20 billion by 2015. There is no reason to assume we won’t get there.

The Chinese don’t like to miss targets.


You could also argue that all they have done is get a pencil out and extend the growth curve along its existing path.

But growth has been spectacular since the free trade deal was signed in 2008. Another six years of equivalent growth will have an even bigger impact on New Zealand life.

In 2007 two-way trade with China was worth $7.5 billion. Last year it was worth $18.2 billion.

So exports in 2020 may be $22 billion higher. Per household that is around $10,000 per household. And recall Greens and NZ First fought so hard to oppose the free trade deal with China.

We have both had huge growth in the past decade at the low end of the value chain. Where we’ve been relying on agricultural commodities, China has relied on cheap labour to export mass-produced consumer goods.

Now we want to sell more infant formula, wine and gourmet food. China wants to sell more of its own premium consumer products instead of just making them for the likes of Apple and Nike.

New Zealand won’t be a big market for China but will likely be a good test market.

The Japanese made the shift in the 1980s. Its products went rapidly from a running joke in the West to become the benchmark for high quality cars and electronics. The Koreans – led by Hyundai and Samsung – have achieved the same kind of shift in the past decade.

China is planning on making such a transition. New Zealanders should expect to see Chinese companies like telco Huawei and car maker Great Wall pour enormous sums into marketing and branding in the next decade.

Locally we can see the benefits of this shift at F&P Appliances, now owned by Chinese whiteware giant Haier.

Haier is using New Zealand skills to push up the value chain.

The Chinese firm is investing $2.5 million expanding its Dunedin R&D plant and has hired 80 new engineers. It is going to spend a further $5.5 million building a new R&D hub in Auckland and hopes to have F&P Appliances generating $4 billion of revenue in the next decade – up from $1 billion.

But I thought foreign investment was bad, according to Labour?

This is really good news for New Zealand but the cynics will have noticed the downside in the story.

We’ll almost certainly see Haier reducing its commitment to basic manufacturing over the next decade.

That’s an inevitable part of this economic story for New Zealand. It was already happening when F&P Appliances was locally owned. NZX-listed F&P Healthcare is following the same path.

We need to get ready for an acceleration of this shift. We can’t compete with low-wage economies such as Vietnam and the Philippines and we shouldn’t try.

The Green Party might call it a crisis but if we want to maintain a high standard of living and lift the median wage then we need to start viewing this as an opportunity.

It’s what the wine industry went through in the 1980s. They used to compete by being the cheapest wines you could buy as tariffs meant no foreign wines could be sold cheaply. Then the protection went and the result was the NZ wine industry focused on quality and exports boomed as many NZ wines become valued around the world.

Wine exports are over $1 billion a year and in the 1990s were under $100 million.

Fran on China

March 23rd, 2014 at 9:00 am by David Farrar

Fran O’Sullivan writes:

John Key has firmly put his personal stamp on the New Zealand-China relationship by forging a “trusted partner” status with Chinese President Xi Jinping.

Xi heralded the co-operation between China and New Zealand as “pioneering and exemplary”, saying he believed Key’s tour would instil new vitality into the bilateral relationship.

The Chinese President not only made sure New Zealand media were present for all of his reassuring opening remarks at the onset of the two leaders’ bilateral meeting at the Great Hall of the People, but he also welcomed Key and his officials “as family” to a rare private dinner.

Pretty good to be on such good terms with the President of our largest trading partner.

Key relates that Xi placed great store on his decision to go to China and offer explanations for the fiasco and the steps that our Government has taken to ensure there is no repeat. “You did the right thing by coming up,” Xi told Key. This move had “built trust” into the relationship.

The upshot was Xi’s decision to elevate the so-called apology tour into a full-scale official visit complete with a series of deliverables like announcing direct convertibility of the New Zealand dollar with the renminbi.

But Key’s biggest takeaway was securing a commitment from Xi to set a new joint goal of $30 billion for bilateral trade by 2020.

The significance of the commitment has possibly been under-sold.

From the NZ side, it is a statement of good intention. However the NZ Government has little influence on decisions made by individual NZ importers and exporters. They will go where the money is or goods are.

However in China, the Government has far more influence. When the Chinese President says he wants an extra $15 billion of trade with NZ in the next six years, then many Chinese companies will pay heed to that and NZ companies become preferred suppliers.

That statement by President Xi probably means more to NZ exporters than any domestic policy in NZ.

Here’s the thing: New Zealand exporters are scathing of the Opposition’s timing of the Oravida revelations. Beijing expats retain deep suspicions that in the first place, some “low-level” Foreign Affairs official leaked details of Cabinet minister Judith Collins’ off-schedule meetings with Stone Shi’s Oravida in October, and that the Opposition sat on the issue until the eve of the Prime Minister’s China trip to inflict maximum political damage while he was overseas.

Politics ahead of country. The issue is quite legitimate, but the timing was done to try and sabotage the visit. Fortunately for NZ exporters, they did not succeed.

Improving the relationship with our largest trading partner

March 19th, 2014 at 2:00 pm by David Farrar

Stuff reports:

While Key’s visit to China this week – built around giving assurances over food safety standards – is unusual, it is hard to argue with the evidence that relations with China continue to deepen and broaden.

Trade with China, an economy strongly controlled by officials in Beijing, continues to grow at remarkable speed.

Yesterday, there was formal announcement that New Zealand would be allowed direct currency trade with China, becoming one of only a handful of currencies in the world to do so.

That’s significant and useful, as we no longer have to do a double exchange by converting to say US first.

All of this came ahead of tonight’s dinner, intimate in terms of state dinners at eight or nine guests a side, believed to be the first with a New Zealand prime minister since David Lange in the 1980s.

In the lead-up to this trip, the schedule appeared lacking in any event which could match the pageantry of last year’s 19-gun salute on the courtyard in front of Beijing’s Great Hall of the People.

But the night’s dinner suggests both that China has no interest in embarrassing New Zealand over the botulism scare, and that the relationship between the leaders is warm and personal. 

This is Key’s third meeting with President Xi Jinping in a year, possibly the most the Chinese leader has had with any foreign leader.

As Stuff says, this does not win votes but …

Such details win few votes at home, especially with no media attending the dinner.

But in terms of giving confidence that all is well with one of the main drivers of New Zealand’s economy, it is hard to beat.

China has a growing middle class. They is a great opportunity for countries that can produce goods and services middle class Chinese families want.

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 China in the years since we signed a free trade agreement 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 Greens 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.

Recall those who voted against the China FTA

February 1st, 2014 at 2:00 pm by David Farrar



This is a graph of our annual exports to China. The growth in exports since we signed a free trade agreement with them has been almost beyond belief.

In the last six years we have exported $33.7 billion of goods to China. In the six years before that, it was $9.9 billion.

Remember those facts as you also recall that NZ First and the Greens railed against the China FTA, and voted against it.

I hope Labour are proud of the China FTA. They should be. May the protectionists in their party and the affiliated unions not gain dominance.

Chinese leaders have trillions offshore?

January 24th, 2014 at 12:00 pm by David Farrar

The International Consortium of Investigative Journalists writes:

Close relatives of China’s top leaders have held secretive offshore companies in tax havens that helped shroud the Communist elite’s wealth, a leaked cache of documents reveals. …

Chinese officials aren’t required to disclose their assets publicly and until now citizens have remained largely in the dark about the parallel economy that can allow the powerful and well-connected to avoid taxes and keep their dealings secret. By some estimates, between $1 trillion and $4 trillion in untraced assets have left the country since 2000.

The growing onshore and offshore wealth of China’s elites “may not be strictly illegal,” but it is often tied to “conflict of interest and covert use of government power,” said Minxin Pei, a political scientist at Claremont McKenna College in California. “If there is real transparency, then the Chinese people will have a much better idea of how corrupt the system is [and] how much wealth has been amassed by government officials through illegal means.”

China seems no different from other countries where leaders effectively do not face elections and do not have a free press.

Hat Tip: No Right Turn

China Communist Party votes for more markets

November 13th, 2013 at 11:00 am by David Farrar

Stuff reports:

China’s leaders pledged to let markets play a “decisive” role in the economy as they unveiled a reform agenda for the next decade today, looking to secure new drivers of future growth.

Ironically this comes two weeks after the Labour Party Annual Conference voted “Co-operation, rather than competition, should be the main governing factor in economic relations

So the NZ Labour Party is more hostile to markets than the Chinese Communist Party!

The benefits of free trade agreements

November 6th, 2013 at 9:00 am by David Farrar



Sam Morgan tweeted this graph.It shows the huge change in out trade balance with China since the FTA was signed.

Ironic that NZ First and Greens opposed it, considering NZ First claims they are pro exporters and Greens always harp on about the current account and trade deficits. They should apologise for their opposition to it.

I just hope that Labour don’t go down the anti trade path, as the unions want them to with TPP.

Best deal ever

October 4th, 2013 at 1:00 pm by David Farrar

The Herald reports:

New Zealand’s exports to China have more than trebled since the free trade pact between the two countries came into force.

New Zealand exports to China were worth $7.9 billion in the year to August (the most recent trade statistics available). That’s up from $2.2 billion five years earlier, an increase of 260 per cent. China is now our largest export market.

The China FTA is our best deal ever and Phil Goff’s greatest legacy.

People should remember though that both Greens and NZ First voted against it. They voted against a deal that has seen an extra $5.7 billion a year of exports. Imagine the state of the NZ economy if their views had prevailed.

“It has exceeded all expectations, I think,” says Charles Finny.

Now with consultancy Saunders Unsworth, Finny was the Ministry of Foreign Affairs and Trade official who in 2004 was tasked with building the case with the Chinese for beginning negotiations, the first with a developed country, and then launched the negotiations in 2005.

They were to take three years.

And five years after the agreement took effect, the transition to free trade still has some way to go. Tariffs on beef, sheepmeat and kiwifruit will not go until the start of 2016, and not until the start of 2019 on whole and skim milk powder and wool. But by then 96 per cent of New Zealand’s exports to China will be duty-free.

This is key information. The full benefits of the FTA are yet to be realised.

New Zealand now has a network of free trade agreements which covers all of Asean and all three Chinas – Taiwan and Hong Kong as well as the People’s Republic – and that provides options to diversify, he says.

“If you look at markets like Taiwan, Singapore and Hong King where you have a proxy for a Chinese population at certain income levels, you see a disproportionately large spend on food and on things like high quality fruit. Look at Hong Kong and wine; it is just absolute upside.”

Rabobank, in a report last week, is bullish about the prospects for lifting beef exports to China as rising incomes drive demand for what is considered one of the foods of affluence.

Yet some parties remain hostile to international trade.

In China

September 8th, 2013 at 4:00 pm by David Farrar

Later today I fly to Hong Kong, and then drive into China where I’ll be a guest of Huawei for five days. Their NZ arm invited me over to have a look at their operations, see some of their 4G networks in operation etc.

Huawei is now the largest manufacturer of telecommunications gear in the world. They have around 140,000 staff and annual sales of US$22 US$35 billion. Their customers include BT, Vodafone, Motorola, France Telecom and closer to home I think they are suppliers to almost every telco – Telecom, Vodafone, 2 degrees and Chorus.

Now some readers may be aware that parts of the US Government have alleged Huawei is a security risk, and their equipment allows the Chinese Government and the Chinese People’s Liberation Army access to any data on their networks.

There has never been any evidence of this, and personally my feeling is that this is more de facto trade protectionism from some US companies, trying to get rid of a competitor. Why do I think this? Well, take it in four parts – willingness, ability, secrecy and impact.

In terms of willingness, do I think the Chinese Government would have any ethical concerns about using a company to grab some unauthorised data. Absolutely not.

But the next question, is can you actually design equipment with a secret back door, that none of your customers can detect, and they don’t notice unauthorised data flowing through their networks.  I’m not an expert, but I don’t think it is that easy to do.

The big issue for me, where the theory falls down is how many people would have to be involved in the conspiracy for a major billion dollar company to be a front for the PLA. It would be at least 500 to 1,000 people. This couldn’t be done by one or two people. And my hard and fast rule is that any conspiracy that involves more than two people inevitably leaks out. Frankly it is the realms of fantasy to think an entire company could be installing secret back doors and not a single person would ever reveal the truth.

The fourth and final factor is impact. I’d say the economic success of Huawei is worth far far more to China, than any data they might pick up if there was some secret back door. If there was a secret back door, and it got discovered, it would destroy the company overnight. They’d lose every contract they have, and a $20 billion a year company would be worthless. So would you rationally make that choice?

As it happens I have a session with their head of security, and if any readers have questions they want me to ask, feel free to suggest them below.

Anyway the security issue is for me a bit of a red herring. I understand neither the NZ Government, or its security agencies, have found any justification for them at all. I only mentioned them here, as I’m sure people would raise it if I didn’t. The fact every telco in NZ uses Huawei speaks volumes. I’m a big believer in free markets and think it is great companies like Cisco and Alcatel-Lucent have vigorous competition. Consumers are the winners when you have competitive markets.

Now somewhat ironically, I’m not sure how much I’ll be able to blog while in China. Last time I was there in Beijing a few years ago, Kiwiblog seemed to be on the blocked list for the Great Firewall of China. So if you don’t see any blog posts for a while, that is why. However also in Hong Kong for a bit, so definitely will be able to do updates from there.

Is Labour’s policy in breach of the FTA they signed?

July 30th, 2013 at 5:27 am by David Farrar

Stephen Franks blogs:

The Labour Party’s new policy to prevent non-residents from buying existing houses seemed inconsistent with the equal treatment Article of the NZ China FTA. That FTA was a proudly claimed achievement of the last Labour PM – Helen Clark.

The FTA’s definition of “investor” refers to a person “who seeks to make, is making, or has made an investment….”. So it clearly looks at prospective investments.

But a technical reading of the equal treatment Article suggests that it may demand equal treatment once an investment has been made, but does not protect intending investors.

Under Article 138 of the NZ China FTA (National Treatment)  all investments and activities associated with such investments made by investors of both parties must be treated, “with respect to management, conduct, operation, maintenance, use, enjoyment or disposal”  no less favourably than investments of its own investors. The list does not include “acquisition” or similar words.

So under that provision a Chinese house buyer must be treated the same as a New Zealander after acquiring residential property, but the protection does not extend to prospective buyers. Whew for Labour!

But wait – another Article (the most favoured nation clause) commits New Zealand not to pass law that discriminates against Chinese investors in comparison with other overseas investors (such as Australians).

Article 139 requires that investors of [China] be treated no less favourably than investors of any third country [Australia] “with respect to admission, expansion, management, conduct, operation, maintenance, use, enjoyment and disposal” of investments.

So Chinese would-be  investors do not get direct rights to insist on investor equality but they can’t be treated worse than Australians.

Labour has said Australians would still be allowed to buy residential property under their policy. This would breach Article 139.

The policy may also breach the Malaysia FTA and the ASEAN FTA it seems.

Also Rob Hosking at NBR reports:

It is a mark of how bogus the housing debate has become that Labour’s figures about foreign owners of New Zealand houses almost definitely include former leader Helen Clark and her four  houses.

The current Labour leader and Miss Clark’s successor as MP for Mt Albert, David Shearer, claimed at the weekend there are “more than 11,000 overseas investors [who] own properties here that they don’t live in”.

What Mr Shearer did not say is the figure comes from Inland Revenue’s numbers about “non-resident” taxpayers who pay taxes on houses they  own in New Zealand.

“Non-resident” taxpayers are largely made up of  expatriate New Zealanders and in this context are those who have gone overseas and who have rented out their properties here.

There are no figures on this but it is a highly common practice – although most who go overseas will have only one, or maybe two, properties to rent out and not, as in the case of Miss Clark, who departed to the United Nations in 2009, who owns four.

Half the Labour caucus have investment properties. If they all sold them to aspiring first home buyers, that would probably do more to help the market, than this policy!

Last year’s Productivity Commission report looked at the issue, but only in the context of immigrants buying houses.

In that context, it found the main inflow was – again– not from Asians, as Mr Shearer dog whistled at the weekend, but expatriate New Zealanders.

There is, the commission said, “no evidence of an inflow of foreign-born immigrants to an  area impacting on house prices”.

There is, though, “a strong positive relationship between inflows of returning New Zealanders into an area and local house prices (with a 1% increase in population resulting from an inflow of returning Kiwis associated with a 6%-9% increase in house prices)”.

The commission concluded the main cause for higher house prices in recent years is  shortage of supply, driven by a mix of investment nervousness since the end of 2007, plus poor regulation leading to slow consenting processes for new developments and some evidence of high building  costs because of a lack of competition.

Labour’s bid on housing, in short, is not aimed at what is causing problems in the housing market and will do nothing to solve them. It is aimed rather at the party’s political problems.

Mr Shearer’s weekend launch was a clear, unsubtle and some would say desperate bid to pick up votes from the segment of the population which does not like foreigners, especially foreigners of a different coloured skin, very much.

Labour is, in short, dog whistling for the New Zealand First and Green Party xenophobic vote.

It is classic dog whistle politics. Blame the immigrants and foreigners.

Migrant flows

May 31st, 2013 at 7:00 am by David Farrar

Tony Alexander at BNZ writes:

For your guide, now that debate about migration soaring and the insular side of Kiwis is starting to be revealed again, here are the numbers showing who the migrants are. 

Winston and others would have you believe they are mainly Chinese. The actual figures for the last year:

  • Kiwis returning 28%
  • UK 10.1%
  • China 8.9%
  • India 7.0%
  • Australia 6.4%
  • US 2.9%

So only 1 in 11 people migrating to NZ are Chinese.

Also of interest is the change, from the previous year. Here’s the change:

  • France +16.4%
  • Australia +12.7%
  • Kiwis +8.3%
  • China +3.2%
  • Germany +2.2%

Alexander notes:

What I want to highlight is this. The gross inflow of migrants to New Zealand has risen by 3,410 or 4.1% in the past year. Pure Kiwis account for 1,870 or 55% of that change, Chinese account for 7% of that change – hence the idea that there is a soaring Chinese inflow driving the Auckland housing market is not accurate. 

But they make a convenient scapegoat.

What Winston didn’t tell you about those sinful Chinese

May 27th, 2013 at 9:00 am by David Farrar

Winston’s recent attack on Chinese immigrants was appalling. He takes a few cherry picked examples and portrays an entire race as being bad for New Zealand. Vernon Small summarises:

Despite his disclaimers that his party was not anti-immigration, you could not read the speech and miss the message: Chinese immigrants (or at least a demonised subset of them) drive up house prices, stretch infrastructure to breaking point, break the law, access health and superannuation they have not paid for, and import corruption and depravity.

We actually have an immigration policy that is blind to people’s race and ethnicity – which is how it should be. With the exception of a small quota for the Pacific, immigrants are not judged on their race or ethnicity. That is as it should be. It is appalling to judge someone not as an individual, but based on their race. That is why immigration decisions are based on skills, work offers, education, assets, family status etc. There will always be changes we can make to our immigration settings but I absolutely reject Winston’s approach of pilloring Chinese immigrants.

In his speech he had a few “horror” stories about some Chinese businessmen building a brothel, and Chinese tourists who like to gamble etc.

What Winston will never tell you is that overall Chinese New Zealanders commit far far fewer crimes than other New Zealanders, and contribute highly to the economy.

People may be surprised by how significant the difference is in crime rates, by ethnicity. These graphs are based on Stats NZ data from the Police. It is the number of apprehensions for each ethnicity, per 10,000 population.

Let’s look at the overall offending rate.


Yes the Asian crime rate is 52 apprehensions per 10,000 population. Caucasians are five times higher at 254, Pacific 10 times higher at 545 and Maori sadly at around 25 times the rate at 1,240.

Maybe Winston will just claim that the problem is the Asian criminals are much smarter than the other criminals, so don’t get caught as much!


The overall crime rate is not a very useful figure, so I also thought I’d look at four common and penacious categories. The worse tends to be violent and sexual crimes and as you can see the Asian rate for violent crimes is less than a third of caucasions and one seventh of the overall violent crime rate.



The sexual crime rate also relatively very low.


And when it comes to robberies, the rate is one twenty fifth of the overall NZ rate.



And for burglaries, the rate is one fortieth the overall NZ rate!

So the next time Winston goes on about how Chinese immigration is turning Auckland into a city of sin, remind him how crime is a sin – and that his xenophobic scaremongering is repugnant.


Winston declares war on China

May 24th, 2013 at 3:41 pm by David Farrar

Winston has proclaimed:

John Key and his ministers have made it clear that our future lies with the Peoples’ Republic of China. …

The Government is talking of a million more people in Auckland soon and there is no prize for guessing where most of them will come from.

It’s the Yellow Peril!

But to this government it’s a great chance to bring in rich Chinese tourists through a half-baked – fast track, special treatment visa scheme.

Not available to you or any other nation.

Absolute lies. Scores of countries do not need any visa whatsoever. The only scheme in place for China is allowing airlines (including Air NZ) to use frequent flyer status as a proxy for a certified bank statement.

And when the so-called rich tourists have finished at the blackjack tables or the pokie machines there’s another attraction nearby.

If Winston is suddenly against gambling, why then as Minister of Racing did he double taxpayer support for racing – one of the most destructive forms of gambling.

The Hong Kong born Chow brothers are thoughtfully providing a fifteen storey brothel, in what used to be an historic building, just across the road from the casino in the heart of Auckland!

Those evil Chinese – also building brothels. There were none in Auckland of course before the Chinese got here.

One concerned citizen sent me a copy of that scurrilous magazine Truth.

It’s chocker with page after page of sex ads – most based in this fair city.

Is that what you voted for?

Whale Oil will be pleased Winston reads Truth. As far as I know Truth has had sex ads in it for 40 years or so. Blaming it on the Government or the Chinese is rather pathetic, but probably lapped up the a few dottery people.



This is a word cloud of Winston’s speech. To think he was once Foreign Minister!

Of course some Chinese immigrants are criminals, are involved in the sex trade etc etc. But Winston cherry picks a few horror stories to effectively demonise several hundred thousand New Zealanders. No mention of the fact Asian crime rates are far far less than other ethnicities. No mention of the fact their educational achievements are way higher than other groups. No mention of the fact they tend to have a lower unemployment rate etc.

It’s classic old Winston. Find a group and make them the scapegoat for everything wrong in society.

Oh dear

May 10th, 2013 at 4:00 pm by David Farrar



The Daily Telegraph reports:

Unamused Chinese censors have been at work to stop people sniggering over the new Beijing headquarters of the People’s Daily newspaper, which bears an unfortunate resemblance to part of the male anatomy. 

A journalist friend commented that when studying journalism they were told sub editors needed dirty minds to ensure no possible double entendre got into print. She suggests  the same requirement should apply to architects!

Annual change in exports

April 26th, 2013 at 12:00 pm by David Farrar

Stats NZ has reported that China has just over-taken Australia as the biggest export destination in the last quarter.

It is worth recalling that the Greens and NZ First battled against the free trade agreement with China. Thank God they lost.

Labour signed the China-NZ FTA. However their economic policy moves closer and closer to the Greens. I hope they do not abandon their belief in free trade, as they have with free markets.

Here’s the change in export volumes over the last year for our top 10 export destinations:

  1. China +25%
  2. USA +8%
  3. Singapore +4%
  4. Taiwan +1%
  5. Hong Kong -1%
  6. Korea – 2%
  7. Malaysia -7%
  8. Japan -8%
  9. UK -9%
  10. Australia -9%

The fall in exports to Australia, UK and Japan would be devastating if it were not for the growth to China and the US.

Audrey Young on the NZ China relationship

April 11th, 2013 at 1:00 pm by David Farrar

Audrey Young writes:

Why does the world biggest country pay so much attention to such a small country as New Zealand?

Before the changing of the guard in the Beijing leadership last month, of the nine former members of the powerful group Standing committee of the Politburo, seven had visited New Zealand.

The only other country to receive such a concentration high-level visits is said to be Singapore.

The new Standing Committee has been reduced to seven and only two have been to New Zealand, but the most important two, the President Xi Jinping (three times) and the Premier Li Leqiang in 2009 both in former capacities.

New Zealand has had annual talks with Beijing for some time. Australia has just got them this week.

Prime Minister John Key is being accorded time with both the Premier and President this trip.

So why does one of the smallest countries in the world have such a good relationship with the largest country in the world?

New Zealand is also small enough for China to test out ideas without complications, such as the joint aid project to provide Rarotonga with clean water. …

China is usually secretive and defensive about its aid budget. The Cook Islands joint aid venture is a first for them.

I wasn’t aware of that. The Pacific was in danger of becoming an arena for competing aid diplomacy. A co-operative approach is in fact much better for the Pacific.

One of the least recognised reasons China is so well disposed to New Zealand is the late Rewi Alley, the New Zealander who lived in China for 60 years helping to establish co-operatives -though these day the most famous Kiwi is probably Sir Peter Jackson.

No Hobbit or Jackson haters in China.

The growing strength of China

April 9th, 2013 at 10:00 am by David Farrar

Audrey Young reports:

New Zealand’s ambassador to Beijing, Carl Worker, passed on a salient fact to Prime Minister John Key while they were waiting for President Xi to welcome them into the meeting room at the stately Bo’ao guest house.

If the southern Guangdong province (where Key arrived last night) were to break away from China – and there’s no suggestion it ever would – its economic strength is such it would immediately be in the G10, the top 10 economies of the world.

That’s quite extraordinary. That one province would make the G10.

Key recounted the fact on the balcony of his own hotel in Bo’ao before a mad dash to the airport for the next leg of his trip (to Guangdong) because the meeting with Mr Xi had gone well over time.

Mr Key was fizzing about the meeting about the state of relationship so far, the personal rapport between the leaders themselves but mainly because of the readiness of both parties to take it to a new level.

The fact that Key could raise something as serious as direct currency conversion between the Kiwi dollar and the reminbi with a senior minister at lunchtime and have it ticked off by Xi for further work in the talks a few hours later would make any former banker go giddy.

The possibility of direct currency conversion is fascinating. Not so much for what it means for China and NZ, but equally the decline of the US dollar as the global reserve currency. This is what happens when you start to print money because you are spending too much.

The scale of development is huge – Xi said yesterday within five years it is projected that China’s imports could be worth $US10 trillion.

He could see a day when 400 million Chinese a year could be outbound tourists.

I noticed in South Africa that a huge proportion of tourists were Chinese. As a Chinese middle class numbering several hundred million gets wealthier and spends more, the potential economic growth is immense.

Fran O’Sullivan also reports:

Like other leaders Key planned to acknowledge Xi’s recent ascension to the presidency. But his main game was to position New Zealand as a valuable partner to China in developing global supply chains to feed its people. “It makes sense to team up with Chinese capital and use other countries’ land masses to produce food we can’t produce in New Zealand,” Key says.

New Zealand has limited arable land left for developing new farms. If the nation’s agricultural businesses want to expand, they should take their expertise overseas and form partnerships in countries with bigger land masses.

Which is why the Landcorp partnership with Shanghai Pengxin should be seen as a great opportunity, instead of being condemned by xenophobic MPs from the left.

China Exports


This graph shows annual exports to China. Readers will recall that the Greens and NZ First railed against the Free Trade Agreement with China signed in 2007.