NZ/China – is our next big earner in front of us?

 As published in the NZ Herald on 3 April 2019.

Next month, hard on the heels of the Prime Minister, Trade Minister David Parker sets off for China for the second Belt and Road Forum in Beijing.  He’ll join leaders from a large number of other countries keen to explore new opportunities under the biggest and most ambitious trade and development initiative we’ve seen for decades.

The timing is perfect.  Now the Prime Minister has visited, we are moving on from earlier uncertainty in the relationship.  We have the chance to take another step forward by demonstrating to our partners in China the unique value we can add to the Belt and Road Initiative.

What is that unique value going to be?  Clearly, we need big ideas to stand out.  We’re far removed from the trade routes most often associated with Belt and Road, linking China and other Asian countries and Asia and Europe.  As a developed economy we won’t be the recipient of concessionary finance for infrastructure.  We’re global traders, with other important relationships to nurture and a strong belief in the multilateral trading system and the rights of small economies in the international order.

But we may have a big and original idea, one that’s right in front of our noses.  It’s about making New Zealand a major and natural connection between China and South America – we’re calling it the Southern Link.

The numbers point to some serious opportunity.  Links between China and South America are booming, with plans to increase trade and investment significantly.  Putting New Zealand into this picture could mean increased passenger transit and airfreight, building on our expertise in trade and customs facilitation and supply chain connectivity.

It may sound idealistic.  We’re a geographically isolated country so we’ve never been seriously considered as a hub for global travel or trade.  It will come with major challenges.  But several factors play into our hand which make the possibility of a Southern Link a lot more realistic.

People movement between China and South America is increasing, but there are no direct flights. Broadly at the halfway point, New Zealand, whether Auckland or Christchurch, provides the shortest flight distance between certain Chinese and South American cities, including important routes between Shanghai, Guangzhou, Santiago, Buenos Aires and further afield.

A Southern Link could help assist and simplify e-commerce and traditional parcel post which criss-crosses the oceans between China and South America in ever-growing quantities.  In terms of tripartite cooperation, the idea also feeds into our goal of deepening our relationships in South America, building on CPTPP and the Pacific Alliance with Chile, Mexico and Peru.  While we have ample connectivity between China and New Zealand, boosting the connectivity between South America and New Zealand with added Chinese volume and capacity could lead to a host of new connections.

It shows the Belt and Road isn’t just about hitching your wagon to China’s star, either.  It doesn’t involve any surrender of sovereignty or raise the spectre of “debt diplomacy”.  What the initiative offers is the chance to build greater connections with other participating countries on a regional or even a global basis.

A conference to take place in Auckland on 25 June will explore the business case and value proposition for the Southern Link in more detail.  The NZ China Council and the Latin America NZ Business Council are teaming up with partners in China, Chile and Argentina to bring major players and decision-makers together.

For a century and a half, New Zealand has managed to turn its natural advantages into valuable export business.  We’ve overcome the tyranny of distance and transformed our economy into one that is outward looking and diverse.  Building the Southern Link represents yet another chance to turn the Kiwi number eight wire mentality into economic opportunity.