China’s Eyes New Zealand’s Economy

The sale of the Crafar family’s extensive farming business is provoking enormous controversy in New Zealand.
China’s Eyes New Zealand’s Economy
7/17/2010
Updated:
10/1/2015
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AUCKLAND—The sale of the Crafar family’s extensive farming business is provoking enormous controversy in New Zealand with the prospect that they may be swallowed up by Chinese-backed interests.

The family’s sixteen farms have a combined area of about 8000 hectares and run 25,000 cows, but they went into receivership last October.

A bid by Natural Dairy (N.Z) Holdings, a Chinese consortium, is currently before the Overseas Investment Office awaiting approval.

More than 50 parties bid for the farms but Natural Dairy’s is thought to have been the largest, reportedly as high as $230 million.

Prime Minister, John Key, has acknowledged the angst felt by New Zealanders when national assets were sold to overseas buyers.

He was not ‘xenophobic’ about China buying the Crafar farms but agreed that it was not in New Zealand’s interest to ‘sell off large numbers of farms’ to foreign interests.

But mutual investment between New Zealand and China was likely he said as the idea of a business partnership had already been floated by Chinese leaders on two occasions.

Following a recent meeting with China’s Premier Wen Jiobao, Mr Key said in an interview on Television New Zealand that New Zealand and China were looking to double trade over the next five years -from 10 billion to 20 billion dollars - with China overtaking Australia as our largest market.

Former Waikato University vice-chancellor Bryan Gould is concerned that the sale of the Crafar farms would not be in New Zealand’s best interests.

“I think the signs are that our leaders are … starry eyed about China and are willing to do almost anything to build trade with China,” Dr Gould said.

Dr Gould says there is already a large trade imbalance between the two nations with China’s exports to New Zealand totaling $6 billion while New Zealand only exports $4 billion of goods to China. If the Crafar family farm becomes Chinese-owned it would only increase that imbalance.

“They want to control the whole process from calving right through to the butter on the shelves,” he said. “The Crafar farms for all intents and purposes would become part of China.”

“Do we really want yet more Chinese exports to displace New Zealand production?”

The deepening of trade also raises issues of whether New Zealand will continue to be outspoken about human rights abuses in China or make compromises to “to stay in China’s good books”, says Gould.

“I think there are already signs of this as we saw with the Chinese security guards beating up a protestor outside parliament a few weeks ago,” Dr Gould said.

Others like Green Party co-leader Russell Norman fear that the acquisition could help Chinese companies undercut New Zealand’s own companies, such as Fonterra, the world’s largest exporter of dairy products.

“It’s a proposal to have a vertically integrated company selling milk products back into China and they will sold at a cheaper price and undercut Fonterra,” Mr Norman said.

The Overseas Investment Office said in a statement that it hopes to make a recommendation on applications within 50 working days but there is no statutory timeframe within which decisions must be made.