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China’s recent growth and its impact on the New Zealand economy

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Abstract

The People’s Republic of China has become increasingly important to the New Zealand economy since the start of economic liberalisation in China more than 30 years ago, particularly in the past decade. This paper is the first of three looking at the impact of China on the New Zealand economy. It examines China’s recent economic expansion and traces the channels through which this expansion and the subsequent increased demand for commodities have impacted on the New Zealand economy, concentrating on exports in the past decade. The second paper (Bowman & Conway, 2013) examines the outlook for China’s impact on the New Zealand economy through these same channels. The third paper (Osborn & Vehbi, 2013) quantifies the impact of China’s expansion and commodity demand on the New Zealand economy through the framework of an econometric model. This paper concludes that China’s expansion has had a large positive impact on the New Zealand economy, mainly through increased merchandise exports, but also through services exports, merchandise imports and other channels. Merchandise exports to China were equivalent to 3.3% of New Zealand’s nominal GDP in 2012, up from 0.8% in 2000. The trend increase in exports to China since 2000 has mainly been a result of higher volumes, with higher prices providing a boost to incomes. The increase in exports to China has generally not come at the expense of lower export volumes to other markets. Since 2001, dairy and forestry exports have outperformed the rest of the economy, contributing 7.9 percentage points to expenditure GDP growth, versus an expected contribution of only 1.9 percentage points if they grew at the same rate as the economy as a whole. Chinese demand has also been the main driver of increased dairy and forestry production recently and they have also outperformed the rest of the economy. Since 2008, the dairy and forestry industries have contributed 2.1 percentage points to real production GDP growth versus an expected contribution of 0.2 percentage points.

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  • Scott Bowman & Patrick Conway, 2013. "China’s recent growth and its impact on the New Zealand economy," Treasury Working Paper Series 13/15, New Zealand Treasury.
    • Handle: RePEc:nzt:nztwps:13/15
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    File URL: https://treasury.govt.nz/sites/default/files/2013-07/twp13-15.pdf
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    Cited by:

    1. Osborn, Denise R. & Vehbi, Tugrul, 2015. "Growth in China and the US: Effects on a small commodity exporter economy," Economic Modelling, Elsevier, vol. 45(C), pages 268-277.
    2. Perrot, Christophe & Chatellier, Vincent & Gouin, Daniel-Mercier & Richard, Melanie & You, Gerard, 2018. "Le secteur laitier français est-il compétitif face à la concurrence européenne et mondiale ?‪," Économie rurale, French Society of Rural Economics (SFER Société Française d'Economie Rurale), vol. 364(April-Jun).
    3. Vincent Chatellier, 2017. "International, European and French trade in dairy products: trends and competitive dynamics," Working Papers SMART 17-05, INRAE UMR SMART.
    4. Shweta Saini & Ashok Gulati, 2017. "Price Distortions in Indian Agriculture," Working Papers id:12042, eSocialSciences.

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    More about this item

    Keywords

    China; New Zealand; commodities; dairy; forestry; merchandise trade;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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