China trade delivers 'tangible benefits'

Speaking at the China Business Summit in Auckland today, Xiaolong says China has been New Zealand’s largest trading partner, largest export market and largest source of import for over ten years.

“Working together has delivered tangible benefits to the two countries and two peoples. In fact, the footprint for the evolution of our economic ties is closely correlated to the trajectory of China’s own reform and opening up, which has been a consistent and powerful source of expansion in our bilateral trade.

“China has grown to become the second largest economy in the world, and by some measures, it is already the largest. Its economic transformation has nurtured an increasing number of middle-income earners, a maturing super-sized market, with rising appetites for quality products and services.

“China’s trade in goods has ranked first globally for seven years in a row. It is also the major trading partner for over 140 countries and regions including New Zealand.
Xiaolong touched on China’s economy, dubbed by some commentators as struggling.

But he says as for China’s economic outlook, intriguingly, there are now in some Anglo-Saxon media two diametrically opposing narratives.

“One says that China has already peaked as an economy, and some naysayers even come to the conclusion that China is on the brink of imminent collapse. The other says that the Chinese economy is so strong as to threaten flooding the rest of the world with its “overcapacity”. By common sense, these two opposing narratives cannot be right at the same time. Going deeper, they are, in fact, both wrong.

“Let’s first unpack the so-called “peak China” theory. Indeed, the pace of the country’s economic growth has slowed somewhat in recent years, but the Chinese economy, defying both internal and external headwinds, managed to register a 5.2 percent year-on-year growth in 2023, faster than most other major economies. It is no small feat for a 30 trillion-dollar economy.

“And according to the latest data, the country’s GDP grew by 5.3% year-on-year in the first quarter of 2024, and from January to April this year, China’s foreign trade value registered a growth of 9.8% year-on-year, faster than widely anticipated.”

He says for many years, China has contributed more than 30% on average to world economic growth.

“Looking into the future, China will remain an important powerhouse driving global growth for many years to come. The IMF’s latest report forecasts that for the next five years, meaning through 2029, China will contribute at least 21% of global growth, bigger than all the G7 countries combined.

“More importantly, the Chinese economy is now undergoing profound transformation, focusing more on high quality development rather than high speed growth. This means we’ll actively and effectively promote higher-quality growth while increasing economic output in the coming years.

“What’s even more significant is that high-tech industry in China has grown exponentially, with new quality productive forces emerging at an accelerating pace. China’s total input in research and development, and investment in the high-tech sector have been growing at double-digit rates for several years running, enabling China to take the lead in the number of patent applications in increasing technology clusters.”