- New Zealand became the fourth nation to suspend its extradition treaty with Hong Kong following the controversial security law enforced on the city by China. The US is anticipated to follow suit.
- The NZ government has also amended its travel advice considering the potential threat from the new law.
- The world’s second-largest economy is New Zealand’s biggest trading partner with the two-way trade exceeding NZ$32 billion.
- The New Zealand-China Free Trade Agreement (FTA) was New Zealand’s most significant trade deal since the 1980s.
After Australia, Canada, and the UK suspending extradition treaties with Hong Kong earlier this month, New Zealand has become the fourth economy to do so. Following China's decision to pass a national security law for its territory Hong Kong, the NZ government has made several changes in the policy.
The island nation has followed in the footsteps of its Five Eyes Intelligence allies with the US likely to follow suit. NZ has also updated its travel advisory as a precaution against the perceived threat from the new law.
Foreign Affairs Minister, Winston Peters mentioned on Tuesday that New Zealand does not believe that Hong Kong’s criminal justice system is autonomous anymore. Mr Peters also said that if China adheres to the One Country – Two Framework system, then NZ can reassess its decision.
Hong Kong was a British colony until 1997 when the whole territory was transferred to China. Despite the protests from its citizens and western countries, Beijing recently imposed new legislation on Hong Kong in June. The decision has made the financial hub on an authoritarian track. China made Hong Kong a semi-autonomous territory with the implementation of the new security law.
The law has been labelled controversial for being radical and receiving criticism from the West. It defines four crimes: separatist activity, state subversion, terrorist activity and collusion with foreign forces. Even asking a foreign country to take any action against Hong Kong or China is considered cooperation with external forces and punishable under law. In a dispute with China for the same reasons, last week Britain had announced suspending the extradition treaty with Hong Kong.
New Zealand and China Share Healthy Trade Relations:
Each year China buys billions of dollars’ worth agricultural products from New Zealand. The trade relationship of both countries goes back to 1912s.
China is New Zealand’s biggest trading partner, and according to the Ministry of Foreign Affairs and Trade (MFAT), the two-way trade between the two nations is over NZ$32 billion.
The New Zealand-China Free Trade Agreement (FTA) was New Zealand’s most significant trade deal since the 1980s when Economic Relations agreement with Australia ended. The trade policy connects the trading relationship between New Zealand and China, making a substantial business space available for exporters, the service sectors, and investors. New Zealand had duty free access on over 97% of China’s tariff lines for trade. Core dairy products will shift to full free trade for milk powders in 2024, and two years earlier, in 2022, for cheese, butter, cream and liquid milk. Since the FTA was signed, the bilateral trade has grown from NZ$9 billion to the current level of over NZ$32 billion, growing over than three times.
In the past, New Zealand has adopted diplomatic ways to resolve disputes and averted a direct political confrontation with the world’s second-largest economy.
Quick Glance at CY2019 Trade Statistics
According to Stats NZ, in CY2019, China accounted for 23% of NZ’s total exports of goods and services while it accounted for 16% of the total imports. NZ exported goods and services worth NZ$20.1 billion last year to China with NZ$13.3 billion worth of import.
Education and Tourism Export:
Education and tourism sector ties have been flourishing for both the countries over the past decade. The states started a student exchange program for three students from each country. China is currently New Zealand’s largest source of international students. In the year 2017, over 40,000 Chinese students took enrolments in New Zealand. Also, tourism between the two countries has gone up recently. In the past, New Zealand and China had no direct international flight connectivity. Currently, in the peak holiday season, more than 80 direct flights fly between New Zealand and China (including Hong Kong) every week.
China is the second-biggest and the fastest-growing source of tourist to New Zealand. Around 450,000 tourists visited in 2018. New Zealand and China also agreed to celebrate 2019 as the Year of Tourism between the two countries.
As per the data from MFAT, In 2018, total investment from China, including Hong Kong was around NZ$10.6 billion. After Australia, New Zealand is China’s second-largest source for foreign direct investment. It represents around 10% of the country’s total FDI stock. The investment from China varies in sectors, including primary industries. Forestry (30%), infrastructure and commercial development (20%), and manufacturing (15%) also receive investment from China.
New Zealand will treat military and technology exports to Hong Kong in the same way as it addresses these exports to China, and the same law will be applicable. Industry experts believe that now with the diplomatic relations going sour, its impact on trade will be more apparent.