China is open for business - ANZ

In a further sign that China is open for business, it cut import tariffs on a range of household consumables. 

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The change takes effect from 1 December 2017, just in time to fill all those Xmas stockings. The cuts apply to 187 products, with the average tariff being slashed to 7.7% from 17.3%. 

At first blush from a New Zealand perspective, the biggest winners appear to be certain types of seafood, avocadoes, infant formula (20% to 0%!), some processed foods and woollen clothes. 

But it’s also not immediately easy to see how this reconciles with our existing market access and exports. In many cases it could just bring the competition closer. Equally, it’s always very difficult to say how much flows back to the consumer (i.e. lower prices) versus New Zealand businesses. 

Nevertheless, despite the fact that New Zealand’s first-mover advantage on free trade with China is eroding, such developments should still be viewed in a positive light. 

The Chinese middle class continues to grow in influence, and they want choice, with quality foreign products on the menu. Equally, their government is willing to encourage the middle class to get out shopping, as well as signal they are open for business. 

In a world of rising protectionism this is important for a small open economy such as New Zealand. Expect announcements along these lines to continue."