For NZ, upgrade of FTA beckons

Exports from New Zealand account for 70 percent of China's dairy imports, and China now stands to benefit from the China-Australia free trade agreement by getting cheaper products in the same category.

However, the China-Australia agreement includes additional sectors such as infrastructure, energy and services, which is likely to mean many more business opportunities for Australia, said Zhang Jianping, director of the International Economic Cooperation Institute of the National Development and Reform Commission.

Australia's agricultural goods, such as beef, rice, wheat, wool and cotton, will not be levied with tariffs, which is what has fueled New Zealand's enthusiasm to upgrade its agreement with China.

Under such circumstances, said Todd McClay, New Zealand's trade minister, it is important to New Zealand that it can talk about dairy products as part of the upgrade, and there are a number of issues both sides will work through together.

"We're going to take the time during the course of this year to explore and discuss those fully before we get to a stage where I think we are confident to recommend to our leaders an upgrade should be launched," McClay said.

He said China and New Zealand also need to discuss technical barriers to trade — "non-tariff barriers which often are just around standards of mutual recognition" — as these could cause increasing frustrations on both sides.

Tourism is another key area of competition between New Zealand and Australia. One million Chinese traveled to Australia as tourists last year, and 400,000 traveled to New Zealand, 42 percent more than the year before, the China National Tourism Administration said.

New Zealand is also seeking a closer relationship with China as part of the Regional Comprehensive Economic Partnership trade deal being negotiated by the Association of South East Asian Nations and six other countries including New Zealand, Australia, India and Japan.

Liu Chenyang, a researcher at the APEC Study Center at Nankai University in Tianjin, said structural changes similar to those being made in China are also taking place in New Zealand, as well as globally.

Driven by market forces and government incentives, a growing number of Chinese companies have invested in New Zealand, including dairy giants Mengniu, Yili and Bright Dairy & Food, the infrastructure company Beijing Capital Group and the telecommunications equipment provider Huawei Technologies.

"The two countries' industrial complementarity will continue to increase their trade in both goods and services in the long term as China, a manufacturer, needs to import many agricultural goods from New Zealand," Liu said.

The country is also one of the founding members of the Asian Infrastructure Investment Bank and an important hub in the Belt and Road Initiative.