China Eastern will connect Auckland to Buenos Aires with new Southern Link service out of Shanghai
It comes after Immigration Minister Erica Stanford announced that Chinese passport holders transiting through Aotearoa would be eligible for a New Zealand electronic Travel Authority (NZeTA), removing the
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NZ Herald
7 minutes ago
- NZ Herald
Never mind the tariffs, NZ must prepare for the Chinese consumer rebound
Tourism has been a bigger problem. Chinese visitors to New Zealand remain well down on pre-Covid numbers, and it's not clear that this will be easy to turn around. Then, as we look forward, China will play an increasing role in driving the technology in our lives: think electric vehicles. Two leading international experts on China's economic outlook – Pulitzer Prize-winning journalist Andrew Browne and ANZ China chief economist Raymond Yeung – attended Auckland's China Business Summit this month to unpick what's going on. Their conclusions offered some real hope for New Zealand businesses in the years ahead. First the bad news There's no question Chinese consumer sentiment is low and there is slowing economic growth. 'The number one issue dragging the Chinese sentiment down is the property market,' says ANZ's Yeung. 'We definitely need to see a recovery of the property market in order to see a sustainable recovery in sentiment and consumer spending because of the wealth effect.' The latest numbers show the property market is still dropping month on month, he says. A report from Goldman Sachs last month estimated prices have fallen 20% over the past four years and could decline another 10% before bottoming out in 2027. That matches ANZ's estimates. 'I believe it will be another 18 to 24 months of contraction of the property market,' Yeung says. 'That sounds bad. But that is a national strategy to turn the country from a property-led economy to a tech and renewable energy-led economy. 'There is a view from the top that China simply has to go through this transition,' he says. It's one of the features of the Chinese system that its leadership can look through often painful periods of transition and focus on bigger, longer-term goals. As Chinese Ambassador to New Zealand, Wang Xiaolong (also speaking at the summit) put it: 'No matter how turbulent the global landscape is, or will be, China remains unremittingly committed to development to deliver better lives for the Chinese people, in the historic process of the great rejuvenation of the Chinese nation. 'There is a firm, unshakeable national consensus that has not changed and will not change.' Trade war showdown The ability to absorb more short-term economic pain is one of the big advantages China has in its current trade war showdown with the US, says Browne. 'I think it is important to know that Xi Jinping thinks he is winning! And he may not be wrong,' Browne says. 'Obviously, China has problems in its economy. We're in the third year of a real estate meltdown. Youth unemployment is high, it is crushing the dreams of an entire generation of college graduates and their families. 'Xi Jinping is enormously concerned about all of this but he is focused on a different prize,' Browne says. That prize is technology. China is laser-focused on developing a high-tech manufacturing industry to enable China to escape the American choke hold, he says. '[Xi] sees what he says are changes 'unseen in a century' ... meaning the rise of China and relative decline of the USA. 'This, from Xi's perspective, is China's moment to seize.' When it comes to tariffs and the trade war, both Yeung and Browne see China having the upper hand. Yeung believes it's likely the present US/China tariffs (currently sitting at 30%) will fade into insignificance in the coming years. ANZ China chief economist Raymond Yeung. 'I expect this tariff will be gone very soon,' he says. 'There is too much stakeholder interest.' Basically, the US needs China's rare earth metals, and China needs access to US semiconductor chip technology. Vietnam is the most highly vulnerable to US tariffs, with 8.3% of its GDP exposed to the US, Yeung says. 'For China it is just 3%. They can give it up, just let it go.' He notes that China is also currently suffering from deflation – something that helps mitigate any inflationary impact from tariffs. Browne isn't so convinced Trump will back down further on tariffs. However, he does believe the US got outplayed by China in the showdown earlier this year. 'Nobody knows how this is going to play out. We haven't seen this since the 1930s. So I still wouldn't rule out an inflationary surge.' We can't even exclude the 'possibility that Trump isn't stark raving mad', he says. We may see some positive outcomes emerge from the tariff policies. 'We've already seen a few. It has galvanised Germany, and it has galvanised Europe. It is possible Europe might get its act together and launch a unified capital market and start issuing bonds, and compete with the US and China. 'It's equally possible that the US could convince China to shift its economic model further to consumption.' Or, it could all end up relatively benign for the US economy. Trump might continue to reduce tariffs, and a combination with 'cutting taxes, slimming the government and cutting red tape may usher in a golden era for the US ... we don't know.' Another possible outcome is that the world economy 'bifurcates' around the US and China, and countries like New Zealand are caught in the middle, he warns. But regardless of what happens next, Trump has made the fundamental cardinal mistake in his second term of underestimating China, Browne says. '[Former US President Joe] Biden, whether you like him or not, had the measure of China, so when he wanted to put export controls on chip-making materials, his team worked very hard with governments in the Netherlands and Japan. 'At one point in the Biden administration, he decided to get rid of all of the cranes in all of the ports in the US because there were fears they'd be counting things like military equipment going in and out. 'Unfortunately for the US they don't make cranes anymore. The Japanese do so he put in place a technology transfer agreement with Japan. Biden understood the challenge.' The US is the world's financial superpower but China is the world's manufacturing superpower, Browne says. 'It now has an industrial base that is equal to the US, plus Germany, plus Japan, plus South Korea, and then some.' That gives China a critical advantage in all the technologies that are coming of age at the same time. That came to the fore during the recent trade negotiations, where Browne says US Treasury Secretary Scott Bessant also underestimated China. 'He said, 'When China exports five times as much to the US as we export to them, we have all the cards'. 'He said the Chinese were 'playing with a pair of twos ... It turned out that when he turned the cards over that China had a couple of aces.' One of those aces was rare earths. 'China threatened to choke off the supply of rare earths to the US and in doing so would have closed down vast swathes of the manufacturing industry, the defence industry, the entire car industry.' The US attempted to retaliate, denying China exports for jet engines and threatening to close down China's civilian airline project. The tariff war morphed into a supply chain war that was far more serious, Browne says. 'It turns out the Chinese had played the US, and they completely caved. 'Trump brought the tariffs down from 145% to 30%. Still high but no longer prohibitive. That's where we are now. We have a truce.' Browne says he doesn't see Trump completely abandoning tariffs. 'We were warned about recession and inflation and we haven't seen that yet,' he says. 'Tariffs are raking record amounts of revenue for the US Government. In Trump's mind, this is a substitute for taxation.' It may be that the lack of negative consequences actually emboldens Trump. 'I would not count out that possibility, that he really does come through with the big tariffs he's promised on August 1.' Tech wars Technology is at the heart of US-China competition now, Browne says. 'A lot of people got the socialist market economy wrong,' he says. 'There was this idea that it would collapse under its own contradictions and an enormous amount of waste. 'And look, the waste in the Chinese system is spectacular but it is also spectacularly well co-ordinated.' It's a whole-of-nation approach, he says. 'Private/public partnerships, centralised R&D, centralised marketing and bottomless supplies of capital and this incredible winnowing process through dog-eat-dog capitalism in the marketplace. What emerges are these apex predators.' There's the rapid rise of car manufacturers like BYD and the big advances China is making in battery technology. But even in the media space, in the most highly censored economy in the world, China produced TikTok, which now has greater insight into the minds of young Americans than Meta, he says. 'They have a system for producing world-beating companies in sector after sector.' Tariffs are mostly a bad thing, Browne says. If they are well-targeted, however, they can sometimes do some good by protecting the industries that a country seeks to develop. 'The Biden administration identified semiconductors, clean tech, batteries and so on,' he says. 'When I talked to investors and asked, 'what are you interested in?' number one was the US. They were attracted by all of the money going into these sectors.' All of that is now being dismantled. 'The big beautiful tax bill doesn't just eliminate the subsidies and incentives in these areas, it actually penalises companies operating in these areas,' Browne says. The US is essentially handing the entire landscape over to China, he says. 'If you want to do your green transition now, whether you're in Africa or Latin America, you want Chinese technologies. And the United States will never catch up.' Can the US and China be friends? Browne says he's very sceptical that there is such a thing as a US-China grand bargain. 'I think the relationship is defined by a core tension. At a high level, there is an almost complete absence of trust,' he says. The idea China is a threat and must be treated as competition is one of the few areas of bipartisan political consensus in the US, he says. 'But these two economies are deeply enmeshed; they are joined at the hip. It creates all kinds of mind-bending paradoxes. 'The Chinese hypersonic Carrier Killer missile cannot find its target without high-end chips manufactured by TSMC in Taiwan, using US tech,' Browne says. 'By the same token, the American Patriot missile cannot defend against Chinese rockets without magnets that come from Chinese rare earth materials.' This is a relationship that is best described as 'weaponised interdependency', he says. Never mind the tariffs ... Yeung and Browne agree on a lot. But Browne still sees China as an exporting nation – as evidenced by its US$114 billion ($188.3b) trade surplus with the world. Yeung believes focusing on this can lead to a misunderstanding of what's really driving China's economic policy. He sees China as an importing nation, based on the fact 88% of its total GDP is domestic now. 'It's domestic growth that will drive China's development,' he says. Here in New Zealand we shouldn't pay too much attention to whether China hits 5.3% GDP or 5.1%, he says. 'If China is going to transition, it's not about how many percentage points of GDP, it is about the changes in lifestyle, the quality of life.' In order for New Zealand to make the most of the Chinese market we need to speed up our ability to adapt, he says. 'You really need to think about the Chinese speed. Maybe we talk about annual planning but even within one year the Chinese business cycle changes a lot.' New Zealand needs to be ready and to position itself for when Chinese consumer confidence eventually rebounds, he says. 'This tariff issue is not the core issue. 'I don't need to reiterate, this is a US$18 trillion economy. There is also US$36 trillion in household deposits sitting in bank accounts in China, ready to unlock and unleash. 'Once consumer sentiment comes back, that will be a massive wave of consumption power waiting for you guys to tap. 'Consumption is the future of China, supported by technological change. And China is going through this with or without the US.' Liam Dann is business editor-at-large for the New Zealand Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Heraldin 2003.
NZ Herald
9 hours ago
- NZ Herald
Eight of the cheapest Asian city break destinations
Ipoh, Malaysia Unlike Malaysia's capital, Ipoh, a pocket-sized city in northwestern Malaysia, remains wonderfully affordable – double rooms in many of its quaint boutique hotels cost under $53 a night, and guided tours of the limestone caves surrounding the city start at around $33. We grilled Janice Young, co-founder of Explore Ipoh, about her favourite admission-free spots. 'Han Chin Pet Soo is a small heritage museum run by volunteers, and the Kong Fook Ngam cave temple has a massive tunnel system,' says Janice, who recommends fuelling up on her favourite snack. 'Ipoh is famous for taufu fa – a cheap, simple dessert comprising a block of tofu in sweet syrup,' she says. In Ipoh, a heritage museum is run entirely by local volunteers. Photo / Unsplash Bangkok, Thailand Despite being Thailand's capital, Bangkok can be surprisingly cheap. We're huge fans of both its BTS Skytrain and MRT railway networks (fares start from around $0.71), and its river taxis offer great value, too – single fares on the Chao Phraya Express Boat start from $0.81. And while the city has numerous observatories from which to take in the view, they often charge hefty fees. Suzy at Co Van Kessel, which offers guided cycling tours of Chinatown, suggests an alternative approach. 'Head to the top floor of the ICONSIAM mall for stunning views over Chao Phraya River,' she says. 'It's free, and a great spot for photos, especially at sunset.' As for Suzy's go-to snack for travellers on a budget? 'Try khanom buang – crispy pancakes. These delicious little treats, often made with shredded coconut, cost just a few baht.' Want a big city adventure on a shoestring? These Asian destinations have you covered. Photo / Unsplash Hoi An, Vietnam Cheaper and less crowded than Ho Chi Minh, canal-streaked Hoi An, on Vietnam's south-central coastline, is a Unesco-listed gem with a rich history and a beautifully preserved old town. Nothing beats a stroll along its cobbled laneways, illuminated by Chinese lanterns and lined with ancient buildings that date back to its heyday as a trading port. Food, accommodation and souvenirs here are incredibly cheap, and one of the best spots for retail therapy is the Nguyen Hoang Street night market, where you can feast on local snacks such as banh xoai (mango cake) and stock up on souvenirs – we recommend the beautiful ceramic teapots. Hoi An. Photo / Unsplash Busan, South Korea This coastal city might not be on many travellers' radars – unlike Seoul – but that's precisely the reason it's so much cheaper. It's another place where public transport deserves a shout-out – a one-day pass for its fantastic metro system costs just $7. It's also packed with historic sites, many of which are free to visit. 'Haedong Yonggungsa Temple is one of Korea's few seaside temples, with serene Buddhist architecture and sweeping views of the East Sea,' says tour guide Dylan Kim from 'It's free to enter and it's especially picturesque at sunrise. Then there's Gamcheon Culture Village, a colourful hillside village famous for its murals and quaint alleyways. It's a great spot for photography.' Hanoi, Vietnam Full disclosure – as Vietnam's capital city, there are plenty of opportunities to splash the cash here, but sticking to a budget here is surprisingly easy. One reason is its size – this is one of Asia's most walkable capitals, much smaller and easier to navigate than Ho Chi Minh, and with a logical layout and numerous landmarks which make it easy to find your bearings. Two of our favourite areas include the Old Quarter and Hoan Kiem Lake. 'Hoan Kiem Lake is a lively yet peaceful area in the heart of the city,' says Chloe from Hanoi Local Tours. 'There are lots of free local performances, and it's a great spot for people-watching. In the Old Quarter, you'll find dozens of food stalls serving food, which is delicious, authentic and incredibly affordable. Hanoi in Vietnam. Photo / Frida Aguilar Estrada on Unsplash Jakarta, Indonesia One of the main reasons Jakarta makes the cut is its wonderfully cheap public transport. 'Hop on the MRT or on a TransJakarta bus – these buses are clean, cool, and ridiculously cheap,' says Wibi Hananto, a manager at our favourite boutique crash-pad, 25hours Hotel The Oddbird. 'They'll take you across the city without eating into your satay fund. There's simply no need to splurge on rideshares when Jakarta's public transport is this easy.' Its markets are another reason Jakarta is a hit with budget travellers. 'Blok M Square and Santa Modern Market are where the good stuff's at,' says Wibi. 'Think vintage finds and street food, and stalls that double as great Instagram backdrops.' As for the go-to snack? Kerak Telor – an old-school favourite made with sticky rice, egg, coconut, and a sprinkle of crispy shallots. Singapore. Photo / Unsplash Singapore Finally, a wildcard entry, but one we feel is justified. Yes, Singapore is, in many ways, one of Asia's most expensive urban destinations, although it can also be much more affordable than many realise. Take its super cheap hawker centres, home to Michelin guide-listed street food vendors, or its great bike share scheme, Hello Ride. Single journeys on these sky-blue bikes start from $0.64. As for where to head for some free fun? Peck Lin, co-founder of Singaporean ice cream brand Udders, has some advice. 'Top on my list would be the Singapore Botanic Gardens,' says Peck. 'It's an admission-free, Unesco-listed oasis in downtown Singapore, metres from Orchard Rd. I also love the waterfront Esplanade area for the free performances, especially during weekends.' Finally, if you love sport, prepare to be shocked by the cost of tickets for the Singapore GP, in October. A three-day grandstand pass for the event starts from $678, and to put that into perspective, a three-day general entry ticket for Silverstone starts at $846.
NZ Herald
2 days ago
- NZ Herald
South Island surges ahead as regional economic divide deepens
'Interest rates have come down, which is starting to ease pressure, but many households and businesses are still doing it tough.' Kiwibank General Manager Troy Sutherland said 'The further south you go the better the business climate seems… That pretty much sums up our latest look into the regions.' Southland retained its top spot, buoyed by sustained construction and a regional building boom. Otago, meanwhile, leapt to a score of 5 thanks to a sharp rebound in international tourism and an 8% increase in employment - the strongest growth in the country. 'Our friends from across the ditch are lacing up their boots and hitting the ski fields,' said Sutherland. 'The few Americans that have a map beyond the USA are exploring the edge of the Earth. And Chinese visitor arrivals are finally recovering.' Economic activity has improved across most of the country, with the average score lifted from 3/10 to 4. Image / Kiwibank Canterbury's economy remains steady at 4 out of 10, with post-earthquake infrastructure works and a relatively strong housing market driving momentum. House prices there are up 1.5% year-on-year, compared to the national average decline of 0.3%. Despite strong commodity prices and a weak New Zealand dollar boosting rural incomes, Kiwibank notes many farmers remain cautious. 'Like many other households and businesses, crawling out of a recession means rebuilding equity. That's step one,' Sutherland said. 'Once balance sheets are in better shape, there's reason to spend. And once demand in the economy strengthens, there's reason to invest. We're not quite there yet.' The story in the North Island is less rosy. The average economic score across Te Ika-a-Māui is stuck at 3.2, with a wide range of performance. Taranaki, Northland and Gisborne all saw their scores decline, with Taranaki posting the country's largest drop in employment at -8%. 'Regions like Taranaki, Northland and Gisborne are going backwards,' said Kerr. 'These regions are grappling with falling employment, softer housing markets and softer activity across the board.' Otago and Southland are New Zealand's economic bright spots. Photo / Mark Mitchell Gisborne saw the weakest housing activity, recording no growth in house sales in the three months to May. Northland experienced a double-digit drop in new dwelling consents and scored just 2.6 out of 10, making it one of the worst-performing regions in the country. Not all is bleak in the north. Manawatū-Whanganui was crowned 'Most Improved,' with strong employment growth and infrastructure investment lifting its score nearly two points. Auckland rose to 4, buoyed by continued population growth, and Wellington improved modestly from 2 to 3, though employment and housing remain soft. 'Retail sales remain subdued,' said Kerr. 'Wellington recorded the steepest annual decline at -3.3%, but some regions like Waikato and the Bay of Plenty showed signs of improvement.' Even in cities where the numbers improved, underlying challenges persist. Wellington's score may have risen, but its unrounded score is just 2.7, and house prices in the capital have fallen more than anywhere else in the country. With interest rates falling and a wave of mortgage refixing expected, Kiwibank economists are hopeful this will free up household budgets and spur an eventual broader economic rebound. 'There's a Nazaré-type wave of mortgage refixing due,' said Sutherland. 'The move onto lower rates should help improve household disposable incomes, boosting consumption, supporting the housing market and wider business activity. But we may have to wait until summer for things to heat up.'
