The National Government can no longer afford to be complacent on a possible economic slowdown in China given our economy’s high exposure to China and Australia, the Green Party said today.
The Chinese Government intervened today with new measures to try and halt the decline of the Chinese stock market, down around 30 percent from its peak last month. The correction has had flow-on effects for commodity prices, with oil and iron ore both falling in value. Iron ore has fallen to a six-year low at US$45 a tonne. Iron ore makes up 17 percent of Australia’s export economy by value.
“John Key can no longer afford to be complacent on the possible difficulties our economy faces given our $23 billion export exposure to the Chinese and Australian economies,” Green Party Co-leader Metiria Turei said.
“China’s troubles will have a double whammy effect on our export economy given the fact that our biggest trading partner, Australia, is also getting hit by China’s economic slowdown.
“Our exports to our two biggest trading partners, China and Australia, are both at risk from events taking place in China right now.
“Other parts of the economy, like domestic retail spending, can step up to offset falls in export values, but our long-term economic prosperity depends on the value we add to our exports.
“The National Government has consistently downplayed the vulnerability of our commodity-based export economy rather than fix it.
“By focusing on investing and developing the dairy sector, National’s made a short-term bet on dairy prices rather than build a diversified, resilient export sector.
“A smarter way forward is to invest in innovation and policies that support adding value to our export and import substitution sectors.
“New Zealand invests half what most other developed countries do on research and development and National has failed to turn this number around in any significant way,” said Mrs Turei.