3.4 China's other direct impacts
Closer economic ties with China have led to a number of other impacts on the New Zealand economy. As a result of more two-way trade, New Zealand has increased its foreign investment in China from $0.1 billion at 31 March 2001 to $0.9 billion (0.6% of New Zealand's total investment) in 2012, becoming the 15th largest investment destination. New Zealand investment in China is in a range of industries including dairy production and processing, wholesale and retail. Over the same period Chinese investment in New Zealand has risen from $0.5 billion to $1.9 billion (0.6% of total investment in New Zealand), becoming the 13th largest source of foreign investment.
Investment linkages are likely to be more important in the future as an extension of trade linkages. There is evidence that this is already happening, with large-scale Chinese investment in New Zealand forestry, dairy farms, dairy processing, agricultural services and manufacturing. China's motivation for investing in New Zealand is chiefly to secure supply of high quality food products in order to meet the growing demand for protein and to assist China's agricultural industry to learn from the New Zealand industry which has a reputation for quality.
Permanent and long-term migration inflows from China have risen from an average of 2,100 arrivals per annum in the 1990s (3% of the total) to an average of 7,400 (9% of total arrivals) since 2000. Net migration inflows have been found to make a positive contribution to New Zealand's economic growth.[51]
The dairy industry has been the main beneficiary of New Zealand's growing orientation towards fast-growing China. This has provided many extra jobs in the sector which currently has around 35,000 employees and up to 10,000 self-employed people. It also provides jobs for those in sectors which support the dairy industry.[52]
Food prices worldwide have increased rapidly in the past few years, partly owing to strong demand from China. There have, of course, been other influences, including higher energy prices, rising incomes in other Asian countries, periodic droughts and use of agricultural land for energy production. This placed upwards pressure on the prices New Zealand consumers pay for food products, causing higher headline inflation in 2008 and again in 2011.
