China allegedly threatens NZ on trade

The Sunday Star Times claims that “behind the scenes” China has threatened “retaliatory measures” against New Zealand trade if inquiries continue into the quality of Chinese supplied steel.

If accurate this is chilling. It puts a small country like us, dependent to a significant degree on trade with China, in a difficult and relatively powerless position.

China threatens reprisals on NZ dairy, wool and kiwifruit if government doesn’t back off cheap steel inquiry

China has threatened “retaliatory measures” against New Zealand trade, warning it will slow the flow of dairy, wool and kiwifruit imports.

The world’s biggest trading nation is angry at New Zealand inquiries into a glut of Chinese steel imports flooding the market; the Chinese believe New Zealand is part of a US-led alliance to target Chinese national interests.

New Zealand is angry that China should take such a combative approach, and is asking that it desist.

New Zealand ‘anger’ may be futile in a trade war between China and the US.

The quality of steel from China is becoming a concern.

Pacific Steel, the sister company of iron miner and processor NZ Steel, has lodged a confidential application, under local and World Trade Organisation rules, for an investigation into China dumping cut-price steel on the New Zealand market.

The local industry is struggling to compete with the glut of sometimes substandard Chinese metal, which is being used in major projects like the $1.4 billion Waterview Connection and bridges on the Waikato Expressway.

Competing with cheap imports from China has been a problem for New Zealand manufacturers for a long time, as has the quality of imported goods.

The durability of structural steel is is of much greater concern than the durability of track pants and onesies.

Right now, lawyers for the Ministry of Business, Innovation and Employment are deciding whether the investigation should proceed, which could result in punitive anti-dumping tariffs against China.

But somehow, China learned of the application – and it is taking retaliatory action.

In the past week, representatives of New Zealand’s biggest export industries have been called in by Chinese officials, and told to exert their influence to make sure the MBIE investigation does not go ahead.

To up the ante, they have been told China has begun consulting with its local food producers about imposing reprisal tariffs to slow down the access of New Zealand dairy, wool, kiwifruit and potentially meat to the 1.35 billion-strong Chinese consumer market.

Local producers are alarmed. 

So the should be – and not just local producers.

A trade war with China is definitely not in our interests,” says Andrew Hoggard, a Manawatu dairy farmer. “It’s about 20 per cent of our markets and we’re getting good market penetration with added value products in there.”

Highly-placed sources have confirmed China is applying pressure in an attempt to sway regulators away from imposing anti-dumping or countervailing duties – which are imposed when goods are subsidised – on imported Chinese steel. Zespri and Fonterra are said to have been heavied, and other exporters may have been.

But I don’t thing New Zealand can compromise on the quality of critical things like structural steel.

The world’s biggest trading nation believes the United States is leading an alliance of sycophantic nations, doing the US bidding by shutting down Chinese trade and trying to force its military out of the contested islands and atolls of the South China Sea.

China’s unusual tactics have caused government and industry to close ranks. The Ministry of Commerce of China (MOFCOM) has denied consulting on retaliatory tariffs. Fonterra spokesman Phil Turner and Zespri’s chief operating officer Simon Limmer both denied any knowledge of the Chinese industry consultation.

But trade expert Charles Finny, who has worked on China-New Zealand trade issues for decades, said sources in Government confirmed at least one major exporter had been told “the Chinese Government would like pressure to be applied to MBIE”.

I don’t think we have a choice – New Zealand has to stand firm on our procedures for dealing with potentially substandard imports of building materials.

If China takes retaliatory action in other markets then we just have to bear the brunt of that. We can’t allow another country – any other country – to dictate how we do things via threats.

It may adversely effect some of our trade but the alternative is worse.

UPDATE:  McClay to follow up on China retaliation claims (NZME)

Trade Minister Todd McClay says he will ask officials to contact the Chinese Embassy in Wellington to clarify China’s position on competition issues.

He was commenting about news reports that China could take retaliatory action against dairy and kiwifruit exports from New Zealand if a formal investigation into alleged steel dumping by China is launched by the Ministry of Business, Innovation and Employment (MBIE).

McClay said he would be asking his officials to contact China’s embassy.

“Certainly I would be asking officials to clarify the Chinese position in as far as any competition issue was concerned,” he said today from Townsville, en route to Indonesia with a trade delegation, where he is meeting up with Prime Minister John Key.

Retaliatory action was serious.

“Market economies don’t do that with each other. WTO [World Trade Organisation] rules don’t allow it,” McClay said.

“I will certainly be talking with my colleagues and the Prime Minister when we get to Indonesia.”

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36 Comments

  1. Conspiratoor

     /  17th July 2016

    Wow, who would have seen that coming. Get down on your knees john and start grovelling

    • Kitty Catkin

       /  17th July 2016

      Buy a book of punctuation, Conspiratoor, and start reading.

      • Conspiratoor

         /  17th July 2016

        Sure, when you drop the shield of sanctimony babe

  2. David

     /  17th July 2016

    Pete this story is a almost a complete fabrication, the only thing in it that had any truth is there has been a complaint about cheap steel from China and that is it. It’s a bloody disgrace to have a national newspaper print such crap.

    • Corky

       /  17th July 2016

      That’s good to know, Dave. How do you know?

    • Conspiratoor

       /  17th July 2016

      Is there an MBEI investigation and will it go ahead dave?

      • David

         /  17th July 2016

        The journalist hasnt told us he just hints there might be a secret one, Hoggard just says we do a lot of business with China, Finney says China might exert pressure on MBIE if there was an investigation, Fonterra and Zespri know nothing despite being strong armed. Its a complete fabrication that is totally fact free.
        When Fonterra has been accused of unfair trade practices our MFAT has been in there boots and all defending it just because its China there is this yellow peril paranoia. 9 billion 2 way trade is hardly under threat over a couple of hundred million of steel.

  3. Corky

     /  17th July 2016

    I, and a few others, saw this coming. Tienanmen Square told me all I needed to know about China. That and the vicious torture of Tibetan resistance fighters shouldn’t have been ignored by us. Stuff them…lets look to Indian and Brazil and Old Limy for new trade deals.

    People called me xenophobic at the time for disagreeing with our trade deal with China. ”Think of the advantages it gives us, they said.” I just said, ”lets see what they do when our aims don’t align with theirs, or we piss them off.”

    We now know.

    • Blazer

       /  17th July 2016

      So are you for or against the TPPA?

      • Kitty Catkin

         /  17th July 2016

        What a memory; you remember your exact (and prophetic) words from so long ago.

  4. David, are you saying that Charles Finny is making it up? What gives you the authority to make such a claim? The Chinese Embassy have been asked to confirm or deny the claims. Let us not go off on another wild goose chase driven by hysterical media or other comments yet. Time to be rational, and evidence based lest our worst fears be confirmed. To claim that China would act like it is claimed to be does not make sense as New Zealand is only a small scratch mark in the scheme of things and the fall out on China would be beyond what appears to be at stake with NZ. In the cold harsh reality of the day we will soon find out who are real friends are.

    • David

       /  17th July 2016

      Charles Finney is claiming he was mis reported by Fairfax

  5. Blazer

     /  17th July 2016

    Why should lil ole NZ be the fallguy?This looks like a job…for….Super MURRAY MAC and a sack full of cash!

  6. J Bloggs

     /  17th July 2016

    bjmarsh: On the contrary, the fact NZ is small is precisely why China is going to strong arm us. We make a good example. In just the same way the US made an example of us over the Nuclear free policy in order to head of similar tendencies in (at the time) West Germany & Britain, who were much more important strategically. NZ wasn’t as important, so freezing us out of ANZUS sent a message to Europe that following our lead would not be a good idea.

    Same thing here – If this is true, and China hammers us down over this issue, then they are signalling to everyone else whose economy is tied up with chinese trade what the consequences of arguing with China is.

    • Blazer

       /  17th July 2016

      well if they follow through ,I for one am going to stop eating Chow Mein,will you you join me?

      • Kitty Catkin

         /  17th July 2016

        Ooh, yes, that’ll show them ! Stop eating something made in NZ from NZ ingredients, show the Chinese government what you think of them ! The thought that someone in NZ isn’t eating Chow Mein will cause a real panic. That’ll bring them to their knees; they’ll be begging and pleading with you to change your mind and not bring the Chinese economy down.

  7. Joe Bloggs

     /  17th July 2016

    Just one of the pitfalls of trading with a country that doesn’t recognise international law or basic human rights,… for a start their foreign policy is far too assertive and coercive to make productive two-way trading relationships viable for smaller trade partners like NZ.

    • Blazer

       /  17th July 2016

      ‘ basic human rights,’…tell that to Murray McCully ..re Saudi Arabia!

  8. I fail to see what the relationship between Mc Cully and Saudi Arabian sheep have to do in an as yet unproven WTO case on steel prices. Dumping is very difficult to prove as anyone of a number of MFAT trade negotiators will tell you. Fairness does’t feature in the vocabulary of the big battalions, where might is right. I would suggest that we remain cool calm and collected and allow matters to develop while reminding China that their case against the Phillipines would not appear to be helped by a knee jerk reaction of threats to the New Zealand economy. The Chinese are not stupid, and they will realise that they stand to lose far more than they could gain by threats, especially when they are trying to argue on the world stage for bilateral discussions to resolve international disputes.Japan, Indonesia and India would be very good new markets for our foodstuffs and agricultural products. There are also huge opportunities in South America and Africa. Would you do business with a bully?

  9. Blazer

     /  17th July 2016

    With respect Colonel….a number of obvious contradictions in your post…’Fairness does’t feature in the vocabulary of the big battalions, where might is right.’….’ Would you do business with a bully?’….we have and continue to do so….pragmatism,the U.S is the worlds biggest bully.The link between Murray and the steel story is …’basic human rights’…would you do business with people who ignore them?

    • It is a tried and true adage Blazer that words prefaced with “With respect…” normally signal a statement properly ignored. Have you read the NBR article David has provided? It seems that I was correct in my assessment.

      • Blazer

         /  17th July 2016

        article confirms…’chinese whispers’ nothing less.

      • Blazer

         /  17th July 2016

        Ignore the answers to the questions you posed…if you wish.

  10. David, thank you for showing that link because it stands as support for my view that Charles Finny knows a lot more than most of us about China. It also gives strength to my contention that we should wait for the facts to resolve themselves before kneejerk reactions kick in. There are many forces at play here, and New Zealand’s position should not necessarily be regarded as lacking strength internationally. This is not “the Mouse that Roared” revisited!

  11. China is not above this. It is the price for being small, when the big dog gets angry you are relatively defenseless.

    • My experience is that if you speak clearly and softly you are more likely to be heard, than by shouting. I still believe that the claims that China is throwing its weight around do not make sense in the current diplomatic situation. Cool heads please.

    • Blazer

       /  17th July 2016

      Only if you’re a poodle.Its not the dog in the fight,its the fight in the …dog and remember ,every dog…has its day!

  12. Also relevant to this discussion are these highlights of the China NZ FTA:
    “Agreement highlights
    Better market access to China for New Zealand trade, service and investment businesses.
    Duty free access for 96% of the categories of goods New Zealand exports to China. This represented about $115.5 million in annual saving to exporters at the time of signing. In 2012, the saving was estimated at $250 million.
    Future-proofing rules under our most favoured nation status that ensure service suppliers in some sectors will benefit from any improved access that China grants to other FTA partners in the future.
    Faster and easier temporary entry to China for business people through improved visa processing.
    Greater cooperation in the areas of customs, sanitary and phytosanitary measures and intellectual property.
    Improved security of investments in China, as well as a provision to ensure that New Zealand investors remain competitive with investors from other countries.
    A clear process for settling disputes.
    New Zealand will phase out all tariffs on products originating from China by 2016.”
    You will notice that it includes a clear process for settling disputes. I am not sure if all the tariffs have been removed but they could be up for grabs if China moves away from the agreement.

  13. Blazer

     /  17th July 2016

    Its Labours fault,they got the agreement.

  14. ” … puts a small country like us, dependent to a significant degree on trade with China” – or any large trading nation e.g. Britain in the old days – “in a difficult and relatively powerless position.” Like, towing the line you mean?

    We’re a powerless little nation? No shit Sherlock! What’s new? Like we had neoliberalism compulsorily foisted upon us by the US and Britain?

    “Competing with cheap imports from China has been a problem for New Zealand manufacturers for a long time, as has the quality of imported goods.”

    F+%k this is informative! “Cheap imports from China” decimated NZ manufacturing – or moved it offshore where labour was cheaper so we could import the goods back again instead – and now all who can’t afford to shop anywhere other than the Big Red Shed (hmmm?) know all about the quality. Never mind the quality, feel the price. Don’t repair it, it’s not worth it, just replace it instead.

    “Local producers are alarmed.”

    “So they should be” – and should have been 30 years ago – “and not just local producers.”

    “I don’t think New Zealand can compromise on the quality of critical things like structural steel.” Really!? Like, REALLY!? What about all the other building materials we’ve compromised on? Plumbing and electrical for example, recently in the news regarding calls for the reintroduction of …. wait for it … independent testing to industry standards!? We’ve compromised on practically everything else …

    “The world’s biggest trading nation believes the United States is leading an alliance of sycophantic nations, doing the US bidding …” Oh, FFS! I wonder where they got that idea!? Could something like the “geopolitical” TPPA have something to do with it? Are they supposed to be too “socialist stupid” to see the perfectly friggin’ obvious!?

    “I don’t think we have a choice …” Nope. Me neither. I don’t think we’ve had any real choice on very much for about 32 years now. Nuclear ships ban could have been a kind of “appease the greenies” agreement between the US and NZ for all I know. Regardless, we only did it because we could afford to energy-wise? It’ll be interesting to see how the government ‘buckles under’ on this steel issue and the spin they put on it to make it look like they haven’t buckled under …

    Probably involve setting up a NZ monitored structural steel testing regime in China, at our expense of course, or some such?

    Anything but local producers … anything … please? *sarc*

  15. UPDATE: McClay to follow up on China retaliation claims (NZME)

    Trade Minister Todd McClay says he will ask officials to contact the Chinese Embassy in Wellington to clarify China’s position on competition issues.

    He was commenting about news reports that China could take retaliatory action against dairy and kiwifruit exports from New Zealand if a formal investigation into alleged steel dumping by China is launched by the Ministry of Business, Innovation and Employment (MBIE).

    McClay said he would be asking his officials to contact China’s embassy.

    “Certainly I would be asking officials to clarify the Chinese position in as far as any competition issue was concerned,” he said today from Townsville, en route to Indonesia with a trade delegation, where he is meeting up with Prime Minister John Key.

    Retaliatory action was serious.

    “Market economies don’t do that with each other. WTO [World Trade Organisation] rules don’t allow it,” McClay said.

    “I will certainly be talking with my colleagues and the Prime Minister when we get to Indonesia.”

  16. Blazer

     /  17th July 2016

    McClay is one of very few Nat ministers that is capable and has a future imo.