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NZCTA Commentary: Groser's way forward for NZ & China

China General Interest

Sometime back in August, we invited then Opposition spokesman for Trade, Tim Groser to be guest speaker at our AGM on 12th November. Both he and we knew the election would be about that time, so we had no idea in what capacity he would be speaking. Pleasingly and maybe bravely, Mr Groser accepted the invitation.

But we and, doubtless, he too, figured he was well enough experienced to add value to our occasion.

In the event, the election four days before, saw a change of Government and Mr Groser spoke as Minister of Trade elect, a position confirmed by the Prime Minister a few days later.

Over 100 members and guests were therefore privileged to hear his speech, of which we print extracts below, that represented his first official presentation in his new office:

China and our economic relationship with China

Given the circumstances, I will open with some remarks on China but I really want to put this in the broader context of the external economic challenges facing NZ.


If this were a different audience – that is, an audience without deep knowledge of China, I would no doubt devote a fair bit of time to telling the main story – the big picture about the transformation of the world’s largest country. But you already know the main lines:


  • In 1750 and before the Industrial Revolution, China was the dominant economy in the world. Economic historians have calculated it may have accounted for around 30% of world GDP at that time. Then, as the process of industrialisation proceeded from its base in what justifiably became known as Great Britain (the first country in the world to move from an agrarian society to an industrial society and experience sustained economic growth of approximately 2.2% for a hundred years) China began its long relative economic decline.
  • Through the Boxer rebellion and through to the Cultural Revolution, China’s share of world GDP plummeted. I have seen calculations that suggest its share of world GDP may have reached its nadir at around 5% sometime in the early 1970s.
  • Then a great Leader emerged with an agenda of economic transformation: Deng Xiaoping. With his immortal words in 1978 – ‘it is glorious to be rich’ – he set China on a path of wealth creation on a scale and speed the world has never seen.
  • Today China accounts for perhaps 18% of world GDP. It is the third largest economy in the world – second on a PPP basis.
  • The Chinese people have benefited measurably from this as hundreds of millions of people have been lifted out of degrading poverty, normally considered to be $1 a day or less, into the $1-$2 a day income band, where some 35% of the Chinese population lies – compared with 80% of India’s (the other great emerging economic and political superpower) and 52% of Indonesia’s. People tend to forget Indonesia – the world’s fourth largest country. But I don’t. In the decades ahead, we will see in China the movement of hundreds of millions more to the next income bracket: $2-$10 a day.


Obviously, the task of economic transformation is far from complete and major economic, social, political and environmental challenges have yet to be met. That said, these simple metrics describe human progress on an extraordinary scale. And what is more, they are matched by enormous improvements on most, but not all, social indicators such as life expectancy, infant mortality.


But if you step back from this ludicrously brief description of Chinese economic history, what are we really seeing? I think what we are seeing is better considered not as something novel, but rather the reassertion of China’s position in the world.


The implications of this are enormous, for NZ and globally.

To dowload the full text of Mr Groser's speach, please click here. (32KB, pdf)