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China-NZ trade, connectivity to coast on RCEP, upgraded FTA Release date: 2021-06-04    Source:China Daily

The Regional Comprehensive Economic Partnership and upgraded free trade agreement between New Zealand and China will generate fresh momentum for their trade ties in the coming years, boosting trade in goods and services and expanding regional connectivity activities, said government officials and business leaders.

They said many opportunities occurred after the two sides inked an upgrade to their 12-year-old bilateral FTA in late January on the basis of the RCEP agreement that they signed along with 13 other countries in November.

Under the new deal, China and New Zealand have committed to reinforcing cooperation in areas including e-commerce, competition rules, government procurement, the environment and goods trade.

The content concerning environment and trade is of a higher level than that in the RCEP, with the two sides achieving higher-level cooperation in stepping up environment protection, enhancing enforcement and implementing multilateral environmental protocols, said Yu Benlin, director-general of the Department of International Economic and Trade Affairs at the Ministry of Commerce.

Jiang Feng, director-general of the General Administration of Customs' Department of Duty Collection, said the move is an indication that both countries hope to achieve a comprehensive, modern and high-quality agreement. Trade and economic ties between the two sides will expand in terms of scale and become more dynamic in the next stage.

China and New Zealand signed an FTA in April 2008 and implemented the same in October that year. They launched upgrade talks in November 2016 and concluded the talks in November 2019, said the Ministry of Commerce.

Following the implementation of the free trade deal in October 2008, duties totaling 28.39 billion yuan ($4.36 billion) were exempted from China's imports of New Zealand goods.

"The upgrade of the China-New Zealand FTA will improve logistics efficiency and cut other operational costs, which in turn creates more value for businesses," said Leo Liu, general manager for China of Grin Natural Inc, an Auckland-based oral care brand. The company, which entered the Chinese market via e-commerce platforms in 2018, said it sold half a million toothpaste tubes from late 2019 to the end of March this year.

Boosted by Chinese consumers' strong purchasing power, the company's sales revenue jumped 300 percent on a yearly basis in China in the first three months of 2021. Liu said the firm will increase the number of local teams by three times and work with top-tier Chinese universities and institutions to develop new products by the end of this year.

"The Chinese economy will continue to grow steadily and rapidly, and consumers are demanding more high-quality, professional products to improve their quality of life," he said, adding that the country's e-commerce sector will continue to lead consumption, based on its convenience, service efficiency and mature infrastructure across China.

The upgraded FTA will make exporting to China easier for New Zealand companies by saving more on operational costs. The new rules will mean, for instance, faster border clearance of fresh foods as well as other goods that may have transited through other countries or regions en route to China, said Cui Fan, an international trade and economics professor at the University of International Business and Economics in Beijing.

Thanks to closer business ties, the easing of the pandemic and vaccinations, Sino-New Zealand trade soared by 31.1 percent on a yearly basis to $7.96 billion in the first four months of this year, said the General Administration of Customs.

Timber, dairy and leather products, meat, pulp and raw materials for textiles are China's main imports from New Zealand, while clothing, machinery, telecom equipment and parts, computers, furniture, toys and sporting goods make up most exports to New Zealand.

Apart from their complementary trade structure, all the RCEP members' willingness to ratify the deal before the end of this year and push for it to take effect on Jan 1, 2022, will benefit more New Zealand businesses in China's lucrative market in the next growth stage, said Ren Xingzhou, a research fellow and former director-general of the Institute for Market Economy of the Development Research Center of the State Council.

Ren said China's economic vitality and resilience have also generated growth opportunities in New Zealand and other parts of the world. And driven by policy support, domestic companies have also accelerated the pace of going global to diversify global market channels through making outbound direct investment.

"The two countries' industrial complementarity will continue to increase their trade in both goods and services from a long-term perspective, as China, a manufacturer, needs to import many agricultural goods and commodities from New Zealand," said Zhao Ying, a researcher at the Beijing-based Institute of Industrial Economics, which is affiliated with the Chinese Academy of Social Sciences.

KiwiRail, New Zealand's state-operated railway company, ordered 10 new diesel locomotives from CRRC Dalian Co Ltd, a subsidiary of China Railway Rolling Stock Corp in February, on top of the 63 that have already been purchased since 2009, according to Beijing-based CRRC, the country's largest rolling stock manufacturer by production volume. These locomotives will build on the mature design and concepts of the previous generation, said Wang Jun, CRRC's vice-president.

By Zhong Nan