Friday, March 29, 2024

Exporters deny China threats

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If this country’s biggest primary industries have been strong-armed by the Chinese government in the opening exchanges of a trade war they are not willing to admit it. Media this week reported the kiwifruit, dairy and wool industries had been approached to lobby the Government to drop an investigation into dumping of cheap Chinese steel on the local market or face retaliation against their own businesses in China.
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Farmers Weekly followed up the allegations with industry groups and companies covering the three sectors.

Queries about strong-arming by the Chinese government were met with denials and general bemusement.

Fonterra’s director for global stakeholder affairs Philip Turner said while the co-operative was reported as having been “heavied” by the Chinese government that was not the case.

“There has been no approach to Fonterra at any level.”

Fonterra director and Dairy Companies Association chairman Malcolm Bailey confirmed Turner’s account and said he had been in touch with other dairy companies and none had been approached by the Chinese.

“Nobody knows anything about it.”

Zespri International’s Shanghai-based corporate relations manager Matt Crawford was reported as having been approached by representatives of a Chinese industry association who expressed unhappiness about a possible investigation of dumping of Chinese steel on the NZ market.

Zespri issued a statement confirming an employee had passed on “unsubstantiated” information from sources in China about trade reprisals against NZ exporters to embassy officials in Beijing.

Any inference that information was directly from the Chinese government was false.

Contacted by Farmers Weekly in Spain this week Crawford said he was on leave and had been in Europe for the previous fortnight.

The former Ministry of Foreign Affairs and Trade communications specialist said he had been reassigned by Zespri to work in the United States and any other comment should come from the company’s corporate relations staff in NZ.

The managing director of wool exporter John Marshall and Co, Peter Crone, also the chairman of the National Council of NZ Wool Interests, said all he knew was what he had read in the media.

“We are a reasonably big exporter to China. There has been absolutely nothing said to us.”

Meat Industry Association chairman John Loughlin was also in the dark.

“China is a really important market for the NZ meat industry, not only for current exports but we have opportunities for different and higher value products.

“There has been no approach to Fonterra at any level.”

Philip Turner

Fonterra

“But we prefer to work with a clear understanding of what is going on than rumours.”

The Government’s agricultural trade envoy Mike Petersen said he had accompanied Prime Minister John Key to China in April and had been in regular contact with Trade Minister Todd McClay since then.

“If this thing has been going for a little while it would have been raised while we were in China. It wasn’t.”

An executive at one of NZ’s largest meat exporters said his company had not been contacted but nor would he expect it to be even if the Chinese were serious about retaliation – it would instead be raised through official channels.

“When it comes to access issues officials raise it with the embassy and it is done at a lower level first … a few whacks around the ear and it goes on from there.

“The Chinese don’t do things through the media.”

COMMENT: Doubts China would use standover tactics

It should come as no surprise if this country’s primary exports have become a pawn in China’s battle with the West over surplus steel production.

There is precedent for China to use its immense economic clout to further its own interests.

In April the Irish Times revealed threats from a Chinese government official to scrap a planned lifting of a long-standing ban on Irish beef after the government in Dublin supported a United States-led vote on China’s human rights record in the United Nations.

Perhaps better-known is the collapse of Norway’s near-monopoly in China of the market for imported salmon after the country’s Nobel committee awarded a peace prize to Chinese dissident Liu Xiaobo in 2010.

None of this is to say similar standover tactics are being used against NZ.

The denials – on and off-the-record – have been strenuous and evidence the Chinese government is making threats directly has not emerged.

Businessmen big-noting or letting off steam with NZ industry representatives in the Chinese market doesn’t meet the threshold for the first shots of a trade war.

At the same time China is engaged in a high-stakes battle over alleged dumping of cheap steel in Western markets.

NZ is seen both as an honest broker in international trade and with no axe to grind when it comes to its own steel industry.

A diplomatic source with extensive experience of the Chinese political system said the Chinese potentially viewed NZ as the “canary in the mine” in the global steel dispute.

If it acted on a complaint from its own steel industry and launched an anti-dumping investigation against China and other countries could follow.

The source, however, remained dubious that China would go as far as heavying exporters.

Such an approach ran the risk of leaking to the media and damaging China’s reputation.

More subtly it could simply stonewall NZ’s demands in planned free-trade agreement upgrade negotiations which NZ sees as its best chance for the early removal of penalty tariffs costing the dairy industry $100m in lost sales to China annually.

China is yet to agree the tariffs are up for negotiation.

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