China’s Trade Appetite Is N.Z.’s ‘Big Story’

By Tracy Withers and Daniel Petrie

     May 31 (Bloomberg) -- New Zealand’s exports to China have surged 40 percent in the past year, sending the local currency to a record high as the nation of 4.4 million people helps feed a trading partner with a population 300 times larger.

     The CHART OF THE DAY shows how New Zealand has become a net exporter to the world’s most populous country as two-way trade has surged and China bought more meat and dairy products. The lower panel tracks the so-called kiwi versus the U.S. dollar and an ANZ National Bank Ltd. index of commodity prices over the past decade.

     The surplus with China contributed to an overall record trade gap of exports over imports in April, and may help an economy hobbled by a February earthquake in the second-largest city, Christchurch, as record-low interest rates and rebuilding bolster consumer spending. The currency jumped 10 percent in the past three months, the biggest gain among Group of 10 currencies, as investors see China’s demand buoying growth.

     “China is the next big story for New Zealand,” Paul Bloxham, Sydney-based chief economist for Australia and New Zealand at HSBC Holdings Plc, said in an interview yesterday.

“The New Zealand economy’s future is really very much dependent on China on the back of strengthening demand for its rural commodities.”

     Finance Minister Bill English last week said the nation is “hooked to the China-Australia train,” and that exports have shown resilience in the face of the currency’s gains. Australia and China, New Zealand’s two largest trading partners, accounted for 35 percent of all exports in the year through April, up from

22 percent a decade ago.

     The kiwi yesterday climbed to 82.19 U.S. cents, its highest level since exchange-rate controls ended in March 1985. Against the Australian dollar, it bought as much as 76.81 Australian cents, the most since Feb. 2.