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    Speech by Prime Minister John Key at Peking University 2009

    New Zealand and China: Our Shared Economic Future Speech at Peking University

    Thank you for the opportunity to speak to you today at Peking University. I am delighted to be addressing a group of young people who represent the great achievements of today's China, and who will play an important role in shaping the China of tomorrow. Like young people all over the world, you represent the expectations and hopes for our shared future. It is your efforts and your talents that will allow the next generation to live better lives than the generation before.

    Today I wish to share with you New Zealand's aspirations for that future and the importance I believe our relationship with China will play in it. I want to acknowledge the increasingly important role China is playing on the world stage and I want to point to the contribution I believe China, and Asia more generally, could make to the global economic recovery. Most importantly, I want to mark and celebrate the growing relationship between our two countries and the significant opportunities this presents for Chinese and New Zealand citizens alike.

    It is appropriate that I am giving this address at a university that has long connected our two countries. For many years New Zealanders have come here to study Chinese language. They have developed friendships with fellow students like you, immersed themselves in your culture and have developed a real affection for your country. Many have returned to lecture here, and others have gone on to teach Chinese to New Zealanders back home.

    There are several stories about New Zealanders on your campus but one in particular stands out to me. It is the story of the friendship formed between China's former Foreign Minister and Vice Premier Huang Hua and a New Zealander by the name of James Bertram. James Bertram came to study here in the 1930s, at what was then Yanjing University, and which was later merged into Peking University. While he was here he formed a friendship with Huang Hua. This friendship must have left a good impression. Because 40 years later, it was Huang Hua, acting as China's ambassador to the United Nations, who went on to sign the Joint Communiqué on establishment of diplomatic relations between China and New Zealand.

    That was 1972. The changes in the world since then have been remarkable. China in particular has undergone an economic and social transformation unparalleled in world history. The process of economic reform and "opening up", set in motion by Deng Xiaoping, has delivered benefits to hundreds of millions of people. Today China continues to be one of the world's fastest growing economies with growth that averaged 9.5% per annum between 1979 and 2005. With this economic growth has come a huge expansion in China's trading relationships, your engagement in international forums, and your person-to-person links with other countries. New Zealand is one of many countries that has benefited from this "opening up".

    We have welcomed Chinese tourists, students and workers. We have exchanged ideas and goods. And we have welcomed China's growing involvement in the regional architecture of the Asia-Pacific region. This is all despite the fact that our two countries are in some ways very different, not least of all in size. New Zealand is home to only just over four million people. Our economy is tiny when compared to yours. But this size disparity has been no barrier to the development of an effective and mutually beneficial relationship. New Zealand is proud to have joined China in celebrating ‘four firsts'.

    We were the first developed country to agree to China becoming a member of the World Trade Organisation (WTO). We were the first developed country to recognise that China had established a market economy system. We were the first developed country to begin a negotiation towards a bilateral Free Trade Agreement (FTA) with you in November 2004. And, around this time last year, we took huge pleasure in being the first OECD country to sign an FTA with you.

    The New Zealand-China Free Trade Agreement

    The signing of this agreement was a significant achievement for both our countries.

    For China it set a blueprint for future FTAs you may sign with other larger economies. While from New Zealand's point of view it was an opportunity to be the first FTA partner with a country that we believe will play a vital role in our future.

    We look to China as a driving force in Asia's growth engine, and indeed the growth engine of the world. The FTA we signed provides a framework for future growth by forging cooperation in goods, services and investment.

    It has got off to a good start. In the year since its signing, trade in both directions has grown, despite the state of the global economy. According to our statistics, two-way trade between China and New Zealand grew by 19% to over $9 billion New Zealand dollars in the year to February 2009.

    The trade balance is still solidly in China's favour, but that does not diminish the importance of the FTA to both our economies. China is now New Zealand's third largest trading partner overall - our second biggest source of imports, and our fourth biggest export market. We also enjoy one of the fastest growth rates in our exports to China of any economy in the world, with our exports growing 35% in the past year. These increasing levels of trade benefit New Zealanders and Chinese alike.

    New Zealand's exports are helping to meet the growing needs of your fast-growing economy and your increasingly wealthy population. Kiwi businesses look to China as a new market in which they can sell quality food and beverages, including milk, fish and meat. While large numbers of New Zealanders are keen consumers of the increasingly sophisticated manufactured goods that China produces, including electronics, machinery and clothing.

    In addition to this trade in goods our two countries have strong education links. Some 30,000 Chinese young people study in New Zealand at any one time, making China our biggest source of overseas students. All around our country you can find Chinese students living with Kiwi families. New Zealand students live with Chinese families here too. Our universities are increasingly involved in strategic partnerships. The focus is on research, and the exchange of students and faculty.

    It's a mark of the importance of education that our FTA has provision for PhD scholarships for each country. If you want to study at PhD level many of you will find that you and your family will effectively be treated as New Zealanders when it comes to student fees, the right to work and family entitlements. Our tourism markets are also made for each other. 2009 marks the 10th anniversary of New Zealand being granted "Approved Destination Status" by China - the very first western country to gain this status.

    The number of Chinese people visiting New Zealand has grown exponentially since that time, with growing numbers coming to enjoy our rugged scenery, ‘100% pure' environment and adventure tourism. While on the New Zealand side, many more Kiwis are travelling to China, visiting your world-renowned tourism sites, and learning about your culture and history.

    I am delighted with this trend. As Chinese and Kiwis enjoy more of each other's hospitality, the friendships between our nations will grow, and our trade, education, and business ties will become stronger.



    Converting the Opportunity

    Indeed, it is that desire to see those ties strengthening that has brought me to China. I am keen to see New Zealand make the most of the opportunities presented by China's formidable economic growth. That is why, as a newly-elected Prime Minister, I have chosen to visit China as a matter of priority. I believe there is much more our two countries can achieve together for the benefit of both our peoples.

    When we signed the FTA last year we opened an important door, and now our task is to boldly walk through it. Walking through that door could deliver huge rewards. As China becomes wealthier I believe your demand for high-quality food, like the meat and dairy products New Zealand is so good at producing, will continue to grow. Tourism and travel have great potential for growth, as does education and resources.

    From New Zealand's perspective, it's not really a question of identifying the potential. The potential is huge. The question is how we best convert that potential into real economic growth opportunities for our country. For a small open economy like ours, converting the potential that China presents could deliver a huge economic boost. My Government is keen to help this conversion take place and to help support business linkages between New Zealand and China. I have asked our government agencies to be focused on ways to help New Zealand companies make their mark in China. As part of that commitment we are investing heavily in our trade presence in China, with Consulates-General in Shanghai and Guangzhou and a major new business centre in Shanghai.

    We are also planning to develop smaller business offices in cities that New Zealand businesses are typically less familiar with, including Shenzhen, Qingdao and others. And we are committing heavily to the Shanghai Expo in 2010. The New Zealand pavilion will be the biggest New Zealand has ever built for an international Expo, befitting what will be the world's largest Expo ever. Our National Day at the Expo will be 9 July 2010 and I hope to lead a New Zealand business delegation to Shanghai for that purpose. From what I have seen New Zealand businesses are becoming increasingly aware of what China has to offer. On this visit I am accompanied by representatives from several of our major exporters who wish to learn more about China, to strengthen relationships and to seek our future opportunities. Because, despite the best efforts of the Government, it is New Zealand businesses, and Chinese businesses, that will pave the way for increased trade between our countries. We look to them for the new ideas, the fresh approaches and a sense of the possible.

    So I am pleased to report that it is my sense that New Zealand businesses are optimistic about the future. They share my vision for a step-up in the trading relationship between China and New Zealand. They are keen not only to knock on that door, but to kick it wide open. I know that achieving this will not always be easy. New Zealand businesses wishing to gain access to markets in China typically have to accustom themselves to a new and different environment. Not everything in China is the same as it is in New Zealand. There are language differences, cultural differences, legal and regulatory differences.

    People-to-people relationships

    So it is of huge benefit to New Zealand that we have extensive and long-standing people-to-people relationships with China. I think this gives our two countries a huge advantage when it comes to doing business with one another. These people-to-people relationships help us to break down our differences, to understand each other a little better, and to make faster progress towards our shared goals. They go back hundreds of years, beginning with the arrival of Chinese immigrants in the middle of the 19th century and travel by New Zealand missionaries and others to China to live and work.

    Today one in every 25 New Zealanders is of Chinese ethnic origin. I am proud to have with me today one such New Zealander, our Minister for Ethnic Affairs, the Honourable Pansy Wong. She can trace her family roots back to Shanghai, but New Zealand is proud to claim her as our own. Pansy is one of many high-profile New Zealanders of Chinese ethnic origin, who, along with thousands of others, help New Zealanders understand a little more about Chinese culture, history and business.

    In addition to these relationships, Chinese and New Zealand citizens get to know each other through many different interactions including student visits, our more than 30 sister-city relationships, and our shared business associations and cultural societies. I also sense that New Zealanders are becoming increasingly familiar with Chinese culture. The success of Chinese Lantern Festivals in New Zealand is one good example of this. This means that while doing business in China may be a little unfamiliar at first; increasingly New Zealanders are able to tap into networks and relationships that make the going easier. The same applies to Chinese wishing to do business in New Zealand. There is nothing like a trusted friend to show the way.

    As we look to the future, I expect more opportunities for person-to-person engagement to emerge. Indeed, to encourage greater people-to-people contact New Zealand introduced a new working holiday scheme last October. This provides young Chinese with a chance to work a little in New Zealand while holidaying and surveying our study options if they wish. My hope is that the word will get around Peking University that this is a great way to check out New Zealand before finalising your postgraduate study options.

    Our roles in the Asia-Pacific Region

    Our economic relationship is also underpinned by our involvement in a shared backyard - the Asia-Pacific Region. New Zealand participates with China in the ASEAN regional forum, in APEC and in the recently founded East Asian Summit. There is discussion, as always, on whether these current forms of regional architecture are best suited to meet our collective needs in the decades ahead. While it's true the membership and indeed the regional architecture may over time change, New Zealand remains committed to the idea of regional co-operation and development.

    We are supportive too of China's own constructive role in the six party talks process for the Korean Peninsula - and hope this can be restored. Looking to the future, I anticipate an increasing role for China in the South Pacific in keeping with its growing economic strengths and interests. I know, for example, that the leaderships of many Pacific countries have welcomed China's involvement and its willingness to provide generous development assistance. Well-spent aid is always supported and there is certainly a need for it in parts of the Pacific. As a long established donor in the Pacific, and with close community and political links to many of the Pacific islands, New Zealand would welcome closer dialogue with China on development cooperation in the Pacific.

    The Global Economy

    In describing my vision for the shared future of our two countries, I must acknowledge the impact of the global financial crisis that has shaken the world in recent months. We are all facing a very serious economic situation. In New Zealand's case, as in China's, we are a trading economy that is highly connected to the rest of the world.

    Though New Zealand's banking sector is relatively robust, and our government debt levels are relatively low, we are still feeling the negative effects of the global downturn. However New Zealand is determined to use this time to sharpen-up our economy so that when the world starts growing again we can be running in better shape than some of the other countries we compete with. We have taken a number of steps towards this, including a programme of personal tax cuts, fast-tracked infrastructure spending, a small business support package and a programme of regulatory reform.

    Despite these steps, we remain vulnerable to falling demand for our exports, and reduced credit flows. So I have been encouraged by the contribution made by the G20, of which China played a major part, in devising a coherent response to the economic crisis. Domestic stimulus plans throughout the world, including the large package here in China, are having a positive effect and are beginning to rekindle demand throughout the world.

    I have also been encouraged by the seeming strength of the Asian banking system. The serious faults that have been exposed in large parts of the global banking system elsewhere have not led to similar collapses in this part of the world, perhaps as a result of measures following the Asia debt crisis in the late nineties. Taken together, these factors give me confidence that the Asia-Pacific region will play a driving role in kick-starting the global economic engine in the months ahead. This is good news for New Zealand. As we look ahead however, the biggest risk to New Zealand is that this global economic crisis unleashes a new wave of protectionist measures.

    I am firmly of the view that such a move to protectionism would be a retrograde step. It's true that the scope of the current economic recession has been widened because of the inter-connectedness of global markets for goods, services and credit. But just as this inter-connectedness has had a downside, so does it have a significant upside. It means that when an economic upswing comes everyone will benefit.

    Raising protectionist barriers now will slow down economic recovery in the short-term. And, in the medium-term, it will reduce the world's capacity for economic growth. That is a recipe for more hardship, not more prosperity. I have been very pleased to see China's leadership on this issue. President Hu has made it clear that he supports free trade, that he wants to see a successful Doha round and that he doesn't want to see a return to protectionism. New Zealand and China certainly see eye-to-eye in this regard. In particular I think that the China-New Zealand FTA is a good model for others in our region as it points the way to openness at a time when protectionist pressures are building. Even so, as the global economy recovers there will be some difficult economic challenges for the world in the years ahead.

    Serious attention will have to be paid to the rebuilding of the international financial architecture. And in my view, any repairs will have to include bigger participation for the big Asian Economies, and China in particular, in that architecture. Protectionist pressures may continue to grow. And throughout the world, countries may re-examine their economic settings and policies. In facing these challenges, New Zealand is determined that the gains of the past decades will not be lost. We wish to see a continuing focus on the prosperity that can be gained from international trade, from the connectedness of international financial systems, and from an increasingly shared global economic outlook.

    We accept that improvements must be made, but we think they should be made in a way that while preventing future failures, also maximises the possible gains of our increasingly connected global economy. I believe China will have an important role to play in helping shape the response to these challenges over the next few years. And I am optimistic that our ties and shared interests are such that our two countries will continue to see eye-to-eye on many of the issues that arise.


    In conclusion let me restate that the relationship between New Zealand and China is in very good heart. I am delighted to be here for this visit, so that we can strengthen our relationship further. I have painted a picture of increased cooperation in many areas but it doesn't mean we will always agree on everything. True friendship occurs when you can speak your mind and walk away from it and still be friends. It is my hope that can be the case for us. After all, there is much at stake.

    In these challenging times, citizens throughout the world have become very aware of the unprecedented levels of interconnectedness in the global economy. Some see this interconnectedness as a weakness. I do not, and my sense is that China does not either. Economic integration has brought huge benefits to the world, and in troubled times it can provide a way of working together to manage risks and maximise opportunities. I believe China and New Zealand must continue to do what we can to pursue the economic integration that has made such a difference to our people.

    It has been my pleasure to visit Peking University today.

    I look forward to seeing growing links between Peking University and New Zealand universities, and the people of China and New Zealand.

    Because, as the words of the Maori proverb say:

    He aha te mea nui?

    He tangata.

    He tangata.

    He tangata.

    What is the most important thing? It is people, it is people, it is people.

    Thank you.



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