SOURCING FROM THE WORLD'S FACTORY: OUR IMPORT RELATIONSHIP WITH CHINA

China is New Zealand's largest source of imports at $17.2bn in 2023, representing 16% of our total global imports. Over the last decade, imports from China have grown an average of 4.7% per annum in real terms. This trade relationship benefits Kiwi households and firms through China's comparative advantage in manufacturing, particularly consumer and household goods.

China's Role as a Manufacturing Powerhouse

China has emerged as the world's factory, with its share of global manufacturing value add rising to 28.9%, with the US in a distant second at 16.1%. This reflects a realignment from old manufacturing powerhouses – the US, Japan, and Germany – as lowered trade barriers and better transport links have enabled countries to focus on their comparative advantages.

Our import trade with China is dominated by goods, particularly consumer goods. Of our top 15 non-petroleum product imports totaling $14.9bn in 2023, $5.6bn (37.4%) was sourced from China, with shares as high as 80% for some products.

Key Import Categories and Growth Trends

Consumer Electronics

Cell phones, computers, and electronic appliances are among our largest imports from China, with strong annual growth since 2014. These high-value items typically arrive by air freight.

Electric Vehicles

China has made a dramatic entry into the global EV market. Imports of EVs from China topped $545m in 2023, over 10,600 vehicles. Chinese car manufacturers accounted for 43% of our EV imports.

Household Goods

Furniture, toys, lamps, and plastic household items are significant imports. These lower-value, bulkier items typically arrive by sea freight, with Port of Auckland handling 52% of imports from China by value.

Green Technology

Solar panels, batteries, and wind turbines are growing import categories, with China playing a crucial role in global green value chains. Imports of solar PV have risen 208% in real terms since 2014.

Transportation and Logistics

Maritime Shipping

The bulk of our imports from China arrive by sea, with goods averaging a value of $2,860 per tonne. Maritime freight costs are estimated at $155 per tonne in 2023, roughly 5.4% of the good's value.

Port of Auckland handles just over 52% of imports from China by value, reflecting its strategic position serving our largest consumer market. Overall, some 73% of imports from China land in Auckland one way or another.

Air Freight

By value, air links bring in nearly a quarter of imported goods from China. The value per tonne of goods imported via air was $223,500 in 2023, with freight costs estimated at $36,150 per tonne.

High-value items like medical equipment, electronics, and e-commerce packages from companies like Alibaba, Temu, and Shein typically arrive by air. Auckland Airport handles 21% of imports from China by value.

Indirect Imports and Supply Chain Integration

20.5%

China's Contribution

Share of overseas contribution to NZ output

18.9%

Foreign Inputs

Portion of NZ output from overseas sources

81.1%

Domestic Value

Portion of NZ output from domestic sources

Our import relationship with China extends beyond direct imports. When we look through the entire supply chain, China's contribution to our economic output amounts to 20.5% of the portion sourced from overseas. This is the largest of any of our trade partners, but we must keep in mind only 18.9% of our output is sourced from overseas.

Compared to other countries like Singapore (44% foreign inputs), New Zealand isn't particularly exposed to foreign inputs. Even when importing from other countries, we are still indirectly linked with China through global value chains. Diversifying away from China for non-market reasons is likely to be costly and challenging, as many alternative markets will themselves be integrated with China.

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