China Focus
Trade wars – will we have to take a side? THE US-CHINA trade conflict is developing into a ‘cold war’ for global economic supremacy and could result in New Zealand being forced to pick a side between the two global superpowers, according to Michael Every, Rabobank’s Head of Financial Markets research for Asia Pacific. Late last year, Every said the US-China trade conflict was developing into a “cold” war for global economic supremacy and countries like New Zealand could end up being caught in the middle. And with this threat he said New Zealand’s agricultural sector (including wine) should aim to reduce its reliance on individual trade partners and place an increased focus on diversification of its export markets “The clash between the US and China is not going away, it’s not an aberration, it’s going to get worse,” he said. “China and the US both want to be number one, they both want to be sitting in the driving seat for who gets to set the rules for the global economy and who everyone looks to as the global leader, and there’s only room for one in that chair.” Ever y said increasing tensions could produce a scenario where New Zealand is forced to choose sides. “China is aggressively pursuing trade expansion and there may come a time when a gun is put to New Zealand’s forehead and you’ll be asked are you with us, or are you with the
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Michael Every
agreements with no-market economies such as China, as “economic warfare dressed up as trade and the type of move the US may try to employ in the Asia-Pacific region.” When the US withdrew from negotiations to sign the Trans Pacific Partnership (TPP) in March last year, US President Donald Tr ump signaled he could push harder for a “substantially better” Pacific trade deal for the US. “At some point the US is going to come crashing back into the Asia-Pacific region
rapidly in recent years and China is now New Zealand’s most imp or tant trading partner. New Zealand also has a significant trade relationship with the US as well as historically strong diplomatic and cultural ties. Every said farmers and exporters should look to diversify offshore markets, before any concessions are demanded by the US or China. “New Zealand’s agricultural sector should be looking to further develop links into new growth markets like Japan,
New Zealand’s agricultural exports to China have grown rapidly in recent years and China is now New Zealand’s most important trading partner. New Zealand also has a significant trade relationship with the US as well as historically strong diplomatic and cultural ties.
US,” he said. “If you answer the US, the Chinese could slam the door shut.” Every said China’s growing global influence and use of policies inconsistent with free trade had provoked the US to retaliate with tariffs on Chinese imports and others as anti China trade policy. He described the US new trade deal with Canada and Mexico, which requires them to notify the US before entering into any
NZ WINEGROWER FEBRUARY/MARCH 2019
because it is so geopolitically important Every said. “And the message may well be that the price of protecting New Zealand is a new trade deal on their terms and which forbids, or greatly restricts, dealing with China.” An ultimatum from either of the US or China would place New Zealand in a perilous position given its significant trade ties with both countries. New Zealand’s agricultural exports to China have grown
Indonesia and India he said. “While this may take a lot more effort in the short-term, it will leave agricultural exporters in a better position should the US or China start making demands down the track. New Zealand needs to look at it as an opportunity, rather than a threat, and ask ‘what brand can we build for agriculture that allows up to thrive’, because trade protectionism won’t go away.”