New Zealand’s exports to China surged in the first quarter to surpass shipments to Australia, underscoring the importance of the world’s second-biggest economy to the South Pacific nation.
Overseas sales to China rose 32 percent to NZ$2.31 billion ($2 billion) in the three months ended March 31 from a year earlier, Statistics New Zealand said in a report released in Wellington today. Exports to Australia fell 7.3 percent to NZ$2.17 billion, the lowest since early 2008 and the first calendar quarter it fell behind China.
Shipments of dairy products, logs and meat to China are helping counter faltering markets in Japan, Europe and neighboring Australia, where demand from consumers outside the mining industry is slowing. Chinese purchases could also lessen the impact on trade from the strong New Zealand dollar, up more than 4 percent against the U.S. currency in the past year.
“Australia is not doing nearly as well as they were compared to the rest of the world,” said Nathan Penny, an economist at Westpac Banking Corp. (WBC) in Auckland. “China could come out on top this year” as demand for commodities like logs and dairy picks up, he said.
Exports, which make up about 30 percent of gross domestic product, could be curbed by the strength of the currency, according to the central bank. The monetary authority forecasts the economy will expand 3 percent this year.
The New Zealand dollar climbed to 85.29 U.S. cents at 2:48 p.m. in Wellington from 84.98 before the trade data was released. The so-called kiwi has surged 28 percent against the yen and 4.7 percent versus the U.S. currency in the past year.
“The high New Zealand dollar continues to be a significant headwind for the tradables sector, restricting export earnings and encouraging demand for imports,” central bank Governor Graeme Wheeler said in a statement April 24.
In the 12 months through March, sales to China rose 25 percent to NZ$7.41 billion, lagging behind NZ$9.74 billion of exports to Australia. Shipments to China exceeded Australia for the first time in January and have done so for three straight months.
Prime Minister John Key met China’s President Xi Jinping this month and reaffirmed the target of achieving two-way trade between the nations of NZ$20 billion by 2015. In the 12 months through March, two-way trade was NZ$15.2 billion, today’s report showed.
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