Clarky's Comment

The NZ delegation was led by Hon Shane Jones, Minster of Forestry. Most of the Executive Board of The New Zealand Forest Owners Association as well as its CEO and Research Manager attended, as did the CEO of Scion. The PF Olsen contingent of 4 included incoming CEO Te Kapunga Dewes. Developing personal relationships through face time can help a lot as we jointly face US imposed trade tariffs and resolve log fumigation challenges over the next few years.

The fact that New Zealand was so well represented at the Chongqing conference was not lost on our Chinese hosts. Peter Clark presented the New Zealand Situation on behalf of the NZ delegation, with the main theme of the presentation being global trends that will likely favour NZ pine wood processing taking place in New Zealand rather than China. These include:

  • possible imposition of a carbon tax on ship bunkers as part of a future international climate change agreement;
  • New Zealand’s access to renewable electricity and biomass energy;

  • rising labour costs in China as well as increasing automation of wood processing that reduces the significance of China’s lower cost labour;

  • increasing social pressure to reduce the use of chemical fumigants when shipping bark-on logs.

So far, the trade dispute with US has not had too much impact on trade of logs into China or wood products sold from China to the US but there is an underlying nervousness that if it continues to escalate all industries will be negatively impacted and wood products will be no exception. The Chinese side are forecasting a protracted “war” lasting quite a few years. The outcome from mid-term US elections in November will be closely watched by the whole world!

One theme that came through strongly in all our discussions both at the PF Olsen level in Chengdu and with the wider delegation is the Chinese government's focus on improving the environment, and the recognition that increased afforestation is part of that. This mirrors the NZ and more recently Australian governments’ policies to increase forest planting. The delegation also noted that the air quality while it was in Beijing was much improved.

Having Minister Jones attend with senior forestry representatives gave the visit much greater profile than would have otherwise been the case. The Minister explained that for forestry and wood processing Foreign Direct Investment New Zealand was “open for business” as demonstrated by recent changes to the Overseas Investment Act. He also emphasised that NZ would not be taxing log exports, but that investment and trade go hand in hand. Chinese firms invited to the NZTE event showed genuine interest in both forestry and wood processing investments and NZ visits are planned by some of these in the near term to better understand the investment environment.