By Liam Davies
As New Zealand’s battle with COVID-19 comes to an end, is an economic battle on the horizon? Comments made by Winston Peters have created quite the fuss with China. How will NZs economy fair as China decides how to respond?
A few ‘wrong’ statements
A word that comes to mind when thinking about the political career of Winston Peters is ‘provocative’. Peters, New Zealand’s Minister of Foreign Affairs and Deputy Prime Minister, did not miss that mark when he commented on Taiwan’s participation status in the World Health Organisation (WHO)[1]. Although Peters states he has supported Taiwan entering the WHO for decades, his current political office and Taiwan’s positive COVID-19 response gave him a platform on which to verbalise it. Peters remarked that “In the interests of international health you want every country in an international organisation designed to improve the world’s health.”
In response to Peter’s, Zhau Lijian, the Chinese Foreign Ministry Spokesperson, said that such words could damage current China-NZ bilateral ties[2]. Lijian stated that the country (NZ) should “stop making wrong statements.” China considers such a statement as ‘wrong’ because of its ‘One China’ policy. This policy means that the same international organisation cannot recognise both China and Taiwan.
Economics
In the past, China has used economic coercion to create favourable outcomes for itself[3]. This recently happened to Australia when officials pushed for an independent inquiry into COVID-19. China’s ambassador to Australia warned a boycott of Australian goods could ensue if Australia continued down that road. Following on several days later and once Australia, like Peters, backed Taiwan’s admission into the WHO, meat exports from Australia to China were suspended[4]. In the past, similar tactics were also used on other states like the Philippines and South Korea. NZ, like Australia, exports a large quantity of goods to China. Figures show that 23% of NZ exports in 2019 went to China[5], a large portion of those coming from the meat and dairy industry.
The Ministry of Foreign Affairs and Trade website further lists education and tourism as key areas of NZ and China economic relations[6]. NZs largest source of international students is China, hitting 40,000 students in 2017. The fees international students pay are important to NZs tertiary system. These fees cover approximately one-quarter of the expenditure in these institutions[7], helping subsidise domestic student costs. The students also bring money with them, contributing to the economy through the purchase of local goods and services.
On the tourism front, it is predicted that China will become NZs largest tourist market, with forecasts of the sector making $3.1 billion annually from China by 2024[8]. The tourism industry is already heavily reliant on these Chinese tourists. However, this forecast could change, as was the case back in 2016 when China reduced tourism to Taiwan as a form of economic coercion. Over 2016, the number of Chinese tourists travelling to Taiwan decreased from 150,000 per month to 37,500 by October that year[10].
Implications for NZ?
The suspension of Australia’s meat exports creates a more recent example and a similar situation to which NZ could find itself in. COVID-19 has already hit the worldwide economy hard and NZ is no exception. With NZ’s exports to China sitting at 23%, any large blow to this number will put a heavy strain on its economy; not to mention some of its most productive and quintessential industries. Similarly, a hit to the tourism sector due to the global pandemic creates an incentive for the NZ government to not further upset China. Once the borders open back up to the world, NZ will need Chinese tourists to come back full swing. Lastly, with many Chinese international students still stuck in China during the first semester of this year, the NZ tertiary education system cannot afford to have a further reduction in those enrolling to study from China.
Decision-makers in NZ need to be wary as they move forward with China. Should China find the need to employ economic coercion, NZ may find itself wishing for better days.
*The author’s personal opinion is not illustrated in this article. This article is a description of the current landscape, and what future implications could be.
Sources:
[1]https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12329737
[3]https://www.abc.net.au/news/2020-05-01/australia-still-backs-taiwan-return-who-risky-move/12204850
[5]https://www.stats.govt.nz/news/china-top-trade-partner-for-2019
[6]https://www.mfat.govt.nz/en/countries-and-regions/north-asia/china/
[7]https://oecdedutoday.com/who-benefits-when-international-students-pay-higher-tuition-fees/
[8]https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12331726
[9]https://www.mbie.govt.nz/assets/5c05b7bfce/nz-tourism-forecasts-2018-2024-report.pdf
[10]Yitan L and Enyu Zhang, “Changing Taiwanese Identity and Cross-Strait Relations: a Post 2016 Taiwan Presidential Election Analysis,” Journal of Chinese Political Science, vol. 22 (December 2016), pp. 17-35.
Images:
Winston Peters: newshub.co.nz
Zhao Lijian: rnz.co.nz