Why China and New Zealand’s FTA upgrade will foster a ‘unique competitive advantage’

In January of this year, China and New Zealand strengthened their Free Trade Agreement (FTA), in what is believed to be the highest level of commitment that China has agreed in any FTA globally. David Ritchie, Country Director, New Zealand at Intertrust Group, discusses what this means for both countries.

In 2008, New Zealand became the first OECD country to sign a comprehensive FTA with China. This not only fostered a unique competitive advantage, it was also a catalyst for closer cooperation.

The upgrade has progressed China’s push towards multilateralism, while for New Zealand it greatly eases access to the lucrative Chinese market – notably, by reducing compliance costs for their exporters. China is now New Zealand’s largest trading partner, with two-way trade (exports and imports of goods and services) exceeding NZ$32 billion.

The New Zealand primary industries that are set to benefit are forestry and dairy, both of which are anticipated to be almost entirely tariff-free by 2024 with reduced barriers to entry for services involving the environment, aviation, audiovisual, real estate, advertising, education, and e-commerce.

With growth hotly anticipated in China, trade and demand for New Zealand-based products are expected to continue. The upgrade of the FTA is likely to provide New Zealand with a positive stimulus for its economic recovery in the wake of Covid-19.

The New Zealand Overseas Investment Office (“OIO”) will also lift the screening threshold for non-government Chinese investments to NZ$200 million from NZ$100 million when considering an inbound investment for significant NZ business assets. These are alternative monetary thresholds for Chinese investors, and applicable under certain circumstances. Government investments will continue to be screened at NZ$100 million. In contrast, Australia has tightened its laws recently to reduce all screening thresholds for foreign investments to zero.

We are already seeing notable evidence of Chinese investment in New Zealand. Intertrust Group serves some of the major Chinese tech companies that are attracted to the country because of our current Covid-19 free status and strong economic climate. We are well equipped to assist our clients from China in bridging the cultural differences when doing business successfully in New Zealand.

In addition, our colleagues in China are looking forward to welcoming New Zealand exporters to the mainland. We are aware of the consumer demand for premium quality products from New Zealand and are confident we have the appropriate solutions to help establish those companies in China, more swiftly and effectively than companies may have done so in the past.

If you wish to find out more about China and New Zealand business, please contact:

David Ritchie

Country Director

New Zealand

Felix Deng

Director, Business Development

Shanghai, China

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