(Yicai) Oct. 9 -- New Zealand companies operating in China are showing confidence in the country despite slowing growth and export challenges, according to the latest report released today by the New Zealand Business Roundtable in China, which is a not-for-profit platform established to promote New Zealand’s business interests in China.

China's economic growth was more moderate in July and in the first half of August on a five-year compound annual growth rate basis, said David Mahon, owner of Mahon China Investment Management and a member of NZBRiC.

As rising protectionism threatens China's trade outlook, the country is counting on domestic demand to hedge against a potential downturn in exports, said Xing Zhaopeng, senior China strategist at ANZ Bank.

The Chinese economy has grown over the last three decades by responding and adapting to demand and investment trends set by the world’s most developed economies, said Mahon. It also sets trends itself, initially in green tech but increasingly in other fields of innovation and technology, from manufacturing robotics to synthetic biology and radio frequency communications, such as 5G and 6G, he added.

"China now leads the world in 37 of the 44 core technologies identified by key Western think tanks," said Mahon. China holds a strong position in electric vehicles, batteries and renewable energy technologies.

ANZ Bank expects China's exports to grow 5 percent in US dollar terms this year and net exports to contribute 1 percentage point to the country's GDP growth. The Melbourne-based bank maintains its forecast of the consumer price index, a gauge of inflation, climbing 0.7 percent and the producer price index, a measure of industrial profits, sinking 1.5 percent this year.

Trade with New Zealand

New Zealand's exports to China showed resilience in the third quarter, despite global economic uncertainties, according to the report, which is published every quarter.

"New Zealand's total goods exports to China were up NZD107 million (USD65 million), or 8.5 percent, in July, compared to the same period in 2023," said David Boyle, chief executive officer of Primary Collaboration New Zealand and a NZBRiC board member.

The jump in exports to China was led by fruit, which surged NZD76 million, and in particular large kiwifruit, which soared 28 percent, as well as apple shipments. Milk and starch exports increased by NZD53 million and wood logs by NZD52 million. However, meat and edible offal exports tumbled.

China remains New Zealand's largest export market, accounting for 25.6 percent of the country’s exports. This is more than the combined exports to the US and Australia at 12.7 percent and 12.6 percent respectively.

The report revealed a notable gap in business confidence between New Zealand companies operating in China and those in New Zealand regarding their prospects in the Chinese market.

"For Kiwi businesses on the ground in China, there is stronger confidence, based on a well-tuned sensitivity to frequent change which enables them to not only navigate the headwinds, but also quickly seize any new opportunities," Boyle said.

However, Mahon cautioned that New Zealand's potential involvement in AUKUS, which is a trilateral security partnership between Australia, the UK and the US, may risk destroying 50 years of balanced, non-allied status.

Looking Ahead

China's technology sector has the potential to drive significant change, despite short-term economic imbalances. "Despite attempts by the US and the EU to hinder China's economic growth, this increased productivity and export capability which will boost domestic consumer and corporate investment confidence within the next 12 to 18 months," Mahon said.

"As a foreign enterprise, seeing China's support and friendliness towards foreign companies presents significant opportunities for our business development," said Jamie Zhu, general manager of pet food firm Ziwi and Board member of NZBRiC.

Ziwi plans to expand its distribution network and increase market share, leveraging China's ongoing economic openness. “In the next decade, we will continue to invest in the Chinese market, get closer to Chinese consumers and channels, and respond more flexibly and rapidly to market demands,” said Zhu.

Editor: Kim Taylor