China trade realpolitik

Written By: - Date published: 1:45 pm, July 18th, 2016 - 137 comments
Categories: business, capitalism, China, Globalisation - Tags: , , ,

Little NZ is getting a bit of a reminder of its significance in the global economy:

China threatens reprisals on NZ dairy, wool and kiwifruit if government doesn’t back off cheap steel inquiry

China has threatened “retaliatory measures” against New Zealand trade, warning it will slow the flow of dairy, wool and kiwifruit imports.

The world’s biggest trading nation is angry at New Zealand inquiries into a glut of Chinese steel imports flooding the market; the Chinese believe New Zealand is part of a US-led alliance to target Chinese national interests.

We are well within our rights to inquire into the quality of this steel. It is being used in our infrastructure and it has failed strength tests (doh!). We could be building ourselves another leaky homes disaster here.

The behind-the-scenes threat comes just days before the arrival of US Vice President Joe Biden in New Zealand, forcing government and commerce officials to scramble to open urgent talks with China. New Zealand is angry that China should take such a combative approach, and is asking that it desist.

Exactly what we should be doing.

In the past week, representatives of New Zealand’s biggest export industries have been called in by Chinese officials, and told to exert their influence to make sure the MBIE investigation does not go ahead.

To up the ante, they have been told China has begun consulting with its local food producers about imposing reprisal tariffs to slow down the access of New Zealand dairy, wool, kiwifruit and potentially meat to the 1.35 billion-strong Chinese consumer market.

Local producers are alarmed. “A trade war with China is definitely not in our interests,” says Andrew Hoggard, a Manawatu dairy farmer. “It’s about 20 per cent of our markets and we’re getting good market penetration with added value products in there.”

But these are the realities. China expects to be able to exert its “influence”. China wouldn’t even notice a “trade war” with NZ, whereas it would have a huge impact on our economy.

The government is trying to calm the waters:

John Key downplays retaliation suggestions over potential China steel import sanctions

Prime Minister John Key has downplayed fears of a trade war from China if sanctions are slapped on its steel, saying he has received “no indication” the world superpower is upset with New Zealand.

However, Kiwi trade officials have been asked to “seek assurances” from the Chinese embassy about the country’s stance on competition issues, as local exporters worry about a backlash. …

Exactly what they should be doing. We can’t afford to be using sub-standard steel. We shouldn’t have to buckle to pressure to do so, but we have no leverage at all. A very difficult task for our negotiators, and a hard lesson in trade realpolitik.

137 comments on “China trade realpolitik”

  1. Draco T Bastard 1

    The lesson is obvious: We should not be reliant upon trade.

    • r0b 1.1

      We do make steel in NZ too. But as usual we ignored warnings and went with the (apparently) “cheapest” option, at the expense of the big picture. Hillside workshops and the railway carriages all over again.

      • leftie 1.1.1

        +1 Rob.

      • Kevin 1.1.2

        Not only do we make our own steel, but the entire process is done within NZ. The coal from Huntly, the ore from west coast beaches, the manufacture at Glenbrook.

        An industry that pumps around $120 million to the local economy.

        And that will be sacrificed so we can keep the Chinese happy.

        Fuck FTA’s, they are a millstone around our necks and now we are really seeing what they mean.

        • Fustercluck 1.1.2.1

          While I agree that we should use our own steel (and build our own trains) this issue is not one of NZ steel vs inferior Chinese steel.

          This is not an issue of an FTA screwing local manufacture.

          It is a straight up regulatory fuckup of the highest order.

          Details are hidden behind ‘commercial’ veils but either somebody didn’t write the specs correctly or somebody didn’t get the steel properly tested. Or both.

          Can’t blame the Chinese, or anybody else, if we are going to let ourselves be screwed by incompetence. Or willful blindness.

          This sits squarely on the shoulders of the regulators, or more accurately, with the neoliberal small government fetishist non-regulators that permit debacles like this, Pike River, etc., to happen.

          Investigate, prosecute and imprison those responsible!

        • Macro 1.1.2.2

          The millstone has been around our necks a lot longer than the China FTA. We put the noose around our necks when we opened the floodgates to all and sundry to dump inferior products on us long ago in 1984. Our clothing industry was one of the first to go.

      • Jones 1.1.3

        Agreed… we got what we paid for.

      • Smilin 1.1.4

        This govt knows nothing about what is true sacrifice because our money is not our own to control so we make these deals to appease the chance of worse happening to our exports but if some people had a brain we would forgo the building program we are being conned into and having to import steel
        Get Key and his bank buddies plus the share market to take a cut in pay so we can afford to run our industries but that would mean Key would have to cut his ego driven presidency off at it bs mouth and actually gets some guts to run the country from here not London Brussels Berlin NY Singapore Paris Beijing Canberra Washington or South America while hes dancing in the streets but I noticed he hasnt gone to see Putin yet , is that to close to being a wise decision considering the Russians have the biggest fishing interest here I believe .
        You actually dont need as much steel to build a railroad as you do to build roadways strange that
        But Key who couldnt give a uno what like his money he’ll keep makin it and et one will be happy until buildings collapse and the motorways crack up
        I wonder how much we owe China now give them the whole damn country I suppose is the next step

      • jcuknz 1.1.5

        Another person who writes carraiges when they are writing about wagons and locomotives … the former come from the EU the latter from China I think 🙂

        If it is in our interest to maintain sales to China, as it appears to be, then we simply adjust building practice to accommodate the weaker steel.

        I doubt if we can go back to a ‘made in nz’ policy … we have to accept the world as it is, however much it grates.

        The real problem with all this is cost assessment not taking a holistic approach but merely how it affects the immediate.

    • McFlock 1.2

      well, we should not be overly reliant on one trade partner, anyway

      • Draco T Bastard 1.2.1

        Wrong.

        Being reliant upon trade makes us weak and unable to support ourselves thus forcing us to be dependent upon stronger countries for our well-being. The only way such a situation can possibly end is as us being supplicants of the strongest country.

        We could, and should, have built this here, but, as per normal, the government has gone to another country.

        Why would they do that? It’s not actually beneficial to NZ to do so as it prevents the development of our economy.

        • Colonial Viper 1.2.1.1

          Autarky is a national strategy that NZ must seriously examine, and soon.

          • Draco T Bastard 1.2.1.1.1

            Who said anything about autarky?

            • Colonial Viper 1.2.1.1.1.1

              I thought you were keen for NZ to supply most products and technologies for itself.

              • Draco T Bastard

                My mistake. I was thinking that autarky precluded trade while I was thinking that trade would be maintained at some level but that we wouldn’t be reliant upon it as we are now.

                • Colonial Viper

                  Autarky is a strategy that NZ thinkers explored in depth in the 50s and 60s.

                  You’d always have some trade of course, but if you could make a quality light bulb, tyre or TV for yourself (as NZ used to do), why would you buy it in from someone else.

                  • Draco T Bastard

                    …but if you could make a quality light bulb, tyre or TV for yourself (as NZ used to do), why would you buy it in from someone else.

                    As I keep saying, under actual free-trade conditions trade would be minimised rather than maximised as they are now.

                    Free-trade conditions don’t exist and so we have FTAs to make it look as if we do. Most of the conditions in those FTAs are more about freeing up money flow between countries and allowing rich people to do whatever they want to make even higher profits than actual trade.

                  • jcuknz

                    The joke regarding that policy is that the TV were made overseas, dismantled for Kiwis to re assemble as “NZ MADE”

        • Pat 1.2.1.2

          although Im inclined to agree that we could and should build a lot more locally i think thats a little overambitious….few things to consider, we have NO large vessel design and fabrication experience nor facilities, even Australia which has spent decades trying to develop a shipbuilding industry is still turning out more dogs than successes (thank god korea got the job and not aussie) and we are sadly lacking in the skilled staff required for such an exercise

          • Draco T Bastard 1.2.1.2.1

            few things to consider, we have NO large vessel design and fabrication experience nor facilities…

            This may come as a surprise but it’s just engineering and we have the universities and education that actually provides that necessary skill set. A quick look on Google shows that we actually have quite a capable ship build and repair industry. Large parts of the ANZAC frigates were built in NZ.

            Then there’s the simple fact that if we don’t do this sort of stuff then we’ll never have that capability which makes saying that we can’t do it a self-fulfilling prophecy.

            Being reliant upon other countries for our defence capability is just really stupid as it means that we’re essentially defenceless. The US has a law that requires all defence equipment to be made and sourced from the US itself.

            even Australia which has spent decades trying to develop a shipbuilding industry is still turning out more dogs than successes

            [citation needed]

            • McFlock 1.2.1.2.1.1

              First of all, building sections of a 3600 tonne vessel is nowhere near the ballpark of manufacturing something thirty or more times the size.

              Secondly, NZ might need one or two big ships to guarantee their coming and going, but this isn’t necessarily worth developing a highly specialised industry to make them when we can buy them from experienced producers overseas. Not just designers and workers, but massive dry docks, hoists, development and construction of massive engines – all of that needs to be developed before ship one gets floated a decade down the line, and then what do we do? We don’t need many more of ’em, and now we’ve got all this shit to maintain or let rust and factor in to the cost of construction.

              Fuck it, pop by Hyundai heavy industries and buy one if you need it.

              • Draco T Bastard

                You mean dry docks like this one?

                And don’t knock what was built for the ANZAC frigates. Building an entire ship just means building more such modules and if we can build one then we can build them all.

                In WWII we actually built the engines as well – in the rail yards.

                We used to believe that we could do stuff and did it but now we just whinge that it costs too much – and then we choose the option that actually costs more

                • Colonial Viper

                  IIRC we used to build the engines for the Cook Strait ferries.

                  Nevertheless let’s not go to the extreme examples. We may never want to develop the capability to build a super tanker.

                  But coastal freight ships? We can definitely do that.

                • McFlock

                  No, not like that one.

                  That one’s around 100 metres too short and 10 metres too thin for a panamax bulk carrier, for example. The 40 tonne crane is quite cute, though.

                  • Draco T Bastard

                    And who said anything about building a panamax bulk carrier?

                    The ship I linked was a navy refueller. A replacement for the Endeavour in fact and I think you’ll find that it’s designed to fit in that same dry dock or the dry dock will be expanded to fit it.

                    • McFlock

                      Fair call on the logistics support ship vs panamax.

                      Still getting awfully specialised for something that we only need one of every thirty years or so.

                    • Draco T Bastard

                      Going to need to replace the frigates shortly. There’s probably a good demand for coastal carriers of that approximate size. Maintenance on existing ships of course.

                      Never mind the fact that I think we need a bigger navy. We have a huge EEZ that we need to be able to patrol and we simply can’t do that effectively with what we have.

                      It’s infrastructure that won’t be standing idle.

                    • McFlock

                      Again, handwaving and probablies. How often do you think they’ll need drydocking? Probably good demand for coastal freighters?

                      Like there aren’t already A-grade (high price high quality) through C-grade (low price, immediate maltese registration) shipyards pumping them out already.

                    • GregJ

                      I agree. We are are being nowhere near ambitious enough. We already have yacht & ship building base to build on (lets see if that America’s Cup money was actually worth it). Here’s a rough plan:

                      1. Create a new Public Works Department to build & maintain infrastructure (local firms only may partner on 50/50 basis) that sources it material as much as possible within NZ.

                      2. Announce that within 20 years all fishing vessels fishing in our EEZ are NZ owned, crewed & built. Use that as the basis for building u p our ship building capability & look to establish at least 2 shipbuilding locations (Whangarei & somewhere in the South). Develop rail infrastructure to support these (re-open carriage making workshops and expand the Railways) as part of a regional development strategy. Look to 50/50 Joint Ventures with overseas firms if you have to for a fixed period of time to develop local talent and capability. Develop education and training for the shipbuilding, fishing & seafaring industry. The intent is not to look at the individual cost of building a ship – we’ll never compete with cheap labour and resources in other countries (and we’re not looking to compete in selling ship to overseas markets). Rather we are looking at generating our own economic infrastructure, capability & employment.

                      2. Triple the size of the Navy, bringing it in size to about the same as the Danish Navy, within the intention that all RNZN vessels will be built, maintained & updated in NZ with as much NZ sourced resources as possible. It doesn’t matter if they aren’t the flashest or most sophisticated warships – just adequate to patrol and police our EEZ. Open Naval Bases in Whangarei, New Plymouth & somewhere in the deep South. Run the infrastructure into them built by Public Works (including housing, training facilities etc).

                      3. Create a new state shipping line – again with the intention to have vessels constructed in NZ within the next 20 years as our shipbuilding capacity expands. Use them to ship around the country – in conjunction with rail and to carry goods (that which we aren’t consuming ourselves) across the Pacific. (The Union Steam Ship Company was NZs largest private employer in the early 20th Century).

                      4. Get on the phone to Rio Tinto – make them a fair offer for Tiwai point (based on the discount they get for electricity plus the age of the plant). If they bulk – announce they’ll pay the full price for electricity or the plant will be Nationalised. Sweeten the deal by giving them the concession to supply bauxite for the next 20 years on the condition that within 5 years the Bauxite is shipped to NZ on the NZ Shipping line. Perhaps look at adding another Steelworks in the South Island. Plan on mitigating their carbon emissions through Govt led research financed by the profits out of these industries to develop cleaner, new manufacturing techniques and materials.

                      I have no problem partnering with Australia on joint projects as they are our most likely strategic partner but make it clear it’s on our terms – we’ll go it alone if they don’t want to play ball.

                      Extent the concept into our industries and areas – housebuilding, wind power generation etc.

                      The plan is very, very rough but unless we are bold and have some vision we’ll remain as victims rather than securing our own future. We used to believe we could do these things – I see no reason why we couldn’t again.

            • Pat 1.2.1.2.1.2

              lol…sorry DTB but that is the sort of bullshit argument Nick Smith would try to sell.

              “This may come as a surprise but it’s just engineering and we have the universities and education that actually provides that necessary skill set. A quick look on Google shows that we actually have quite a capable ship build and repair industry. Large parts of the ANZAC frigates were built in NZ.”

              It is a little more than engineering….it is a specialized field, as the Aussies have found(citations to follow). The largest powered vessel ever built in NZ was the piddling 1056 ton dredge New Era over 30 years ago…and how much of that limited experience would still be available today even if it was transferable which by and large it is not.

              so we spend years and billions to create the requirements to build what? maybe a couple of ships every 20 years…and maintain those facilities at great cost when as McFlock says you can buy a superior (as it undoubtably will be because as much as you would like to think otherwise you don’t become competent at this sort of stuff straight off) for a fraction of the cost and in a shorter delivery time.

              By all means advocate for NZ made but I think you do your argument a great disservice with harebrained proposals like this.

              • Draco T Bastard

                You still don’t get it. If we want to develop the capability then we actually have to do it rather than complaining that we can’t.

                The largest powered vessel ever built in NZ was the piddling 1056 ton dredge New Era over 30 years ago…

                [citation needed]

                Oceania Marine: New Construction:

                The largest was over 1000 tonnes and recently included four 55 metre naval craft.

                Something tells me that it was less than 30 years ago.

                and how much of that limited experience would still be available today even if it was transferable which by and large it is not.

                As I said, we actually have quite a capable ship building industry already so we’re talking about expanding that capability.

                so we spend years and billions to create the requirements to build what? maybe a couple of ships every 20 years

                Probably more like 1 or 2 ships per year. We’re talking about replacing old ships and increasing the size of the fleet.

                as it undoubtably will be because as much as you would like to think otherwise you don’t become competent at this sort of stuff straight off

                I don’t think that. What I’ve shown is that we already have the skills which is contrary to your assertion that we don’t.

                • McFlock

                  I really don’t think you get how piddling small the ships we’re currently capable of building, or even just drydocking and repairing, are.

                  Look at the websites for some of those companies you yellow-paged.
                  They’re all maxed out at something vaguely approaching the size of the Endeavour. That’s as much as they can handle. They wouldn’t have the experience integrating advanced weapons or logistics systems, or even what’s required for a fully operational combat management system. They might, just might, be able to build an empty shell and include an engine if they significantly upgrade their crane[s].

                  Where’s KJT when you need him 🙂

                  And you want them to build an incident- and combat-ready platform that can operate everywhere from the tropics to antarctica.
                  Might as well buy structural steel from China.

                  • Draco T Bastard

                    And you want them to build an incident- and combat-ready platform that can operate everywhere from the tropics to antarctica.

                    Mostly I want to build up the nation’s capabilities and we simply won’t do that if we keep saying that we can’t do it.

                    Neither the US nor the UK nor South Korea came into existence with the built in capability of building massive ships. They built that capability up over time and they did it mostly through government contracts.

                    • McFlock

                      Why should we do it if we don’t have to do it?

                      If we try to make as much of everything as possible, we’ll end up with a massive labour shortage because of all the specialist AESA radar software developers, smart cannon shell makers, helicopter avionics designers etc that we need to build a few things that other countries build better than us, anyway.

                    • Pat

                      “Neither the US nor the UK nor South Korea came into existence with the built in capability of building massive ships. They built that capability up over time and they did it mostly through government contracts.”

                      population

                      US 321,000,000

                      UK 64.000,000

                      South Korea 49,000,000

                      They had the tax base and GDP to support the development of a shipping industry over time, though I note the UK shipbuilding industry is on its death bed.

                      Australia with a population of 23,000,000 are not competitive and are struggling even to provide even their own partial shipping supply…..we should by all means develop niche industries in many fields but need to concentrate on endeavors that match our scale and investment capacity.

                    • Draco T Bastard

                      @McFlock

                      Why should we do it if we don’t have to do it?

                      Because if we want to develop our economy then we actually have to.

                      If we try to make as much of everything as possible, we’ll end up with a massive labour shortage…

                      No we won’t. That’s what increased productivity addresses. Increased productivity isn’t about having more money but about being able to do more stuff while still fully providing what was provided before hand. As I point out here we have over allocated ~100k people (~5% of working age population) to farming and that applies across more than one industry (farming’s just the most obvious). Other industries don’t have enough people allocated.

                      This misallocation is the result of our financial system.

                      …that we need to build a few things that other countries build better than us, anyway.

                      And there’s the Cultural Cringe. The belief that others can do it better than us and so we just shouldn’t do it.

                      They’re just people the same as us and so we can do it just as well.

                      @Pat

                      They had the tax base and GDP to support the development…

                      And you’re getting the economy wrong again. It’s not money that supports development but availability of resources.

                      Australia with a population of 23,000,000 are not competitive and are struggling even to provide even their own partial shipping supply…

                      Yes, competition doesn’t work to well for developing societies. Great for making a few people rich and destroying them and the environment though.

                      Here’s the thing, if prices were properly assigned in the global market place taking into account all resources used then we wouldn’t be looking to import ships from Korea as all the added costs would make them more expensive.

                      That’s actually how bad our monetary system is.

                • Pat

                  “You still don’t get it. If we want to develop the capability then we actually have to do it rather than complaining that we can’t.”

                  Oh I get what you’re proposing and i will submit this for your perusal….

                  https://www.theguardian.com/world/2014/jun/06/navy-vessels-to-be-built-offshore

                  http://jwpm.com.au/blog/posts/ships-of-fools-australian-navy-supply-ships-to-be-built-in-spain-why

                  “A new higher capacity ship yard isn’t required for future Australian Navy requirements and an Australian shipyard will not win contracts from global customers against overseas competition due to high cost and lack of track record.”

                  I suggest you go back to your link as you will find the “over 1000 ton ” vessel is mysteriously missing and your link deals mainly with yachts and most of the facilities are now closed.

                  http://www.teara.govt.nz/en/shipbuilding/page-3

                  “I don’t think that. What I’ve shown is that we already have the skills which is contrary to your assertion that we don’t.’

                  we have nothing of the sort and repeating it or wishing doesn’t make it so, if you know anything about engineering then you will know full well there is a world of difference in the design and fabrication skills required when you move into the construction of large heavy structures….and NO ONE gets it right first time and its an expensive learning curve only justified by production at scale which we will never have or need.

                  There is a very pertinent observation in one of the links above how although anything is possible at a cost that cost may be more than its worth or what anyone is prepared to sacrifice….this is such a case.

              • GregJ

                I think you are looking at it through the wrong eyes.

                The Australians are trying to build a ship building industry to compete in the global shipbuilding market, to produce sophisticated warships while still somehow thinking they’ll do it cheaper than other places.

                It’s deluded thinking.

                NZ should develop shipbuilding (for example) to build NZ ships using NZ resources supported by NZ infrastructure – we can use it to build fishing, naval & shipping vessels suitable for our own purposes as part of a combined package of infrastructure, regional development, economic independence, employment, education and research.

                It’s not about building the cheapest ships, the most advanced ships or competing on the international shipbuilding trade – it’s about securing our own economic independence and capability and forging our own path.

                [Edited to add] yes there will be a “$” cost but it is not simply about money – its about building a self reliant economy not one closed off to the rest of the world but one that can survive among the rest of the world.

                • Pat

                  wrong…if you look at the links Ive posted you will see that to be self sufficient in say shipping the cost would be such that something else would have to give….something expensive and vital like heath or education…..are you prepared to sacrifce those so we can thumb our nose at the world? (after we Import half the gear thats required to build the damn things anyway)

                  It is simply about about money….and it is foolish to suggest otherwise.
                  Of course we could develop a shipbuilding industry…..and bankrupt the country in the process.

                  • GregJ

                    I maintain you’re looking at it too narrowly and only through the “$”.

                    There is no need to sacrifice education or other services. Indeed the point would be to make it an integrated plan of infrastructure, education, development and employment.

                    Still I suspect you don’t really get the point.

                    • Pat

                      How many billions do you think it would take to develop a ship building industry and how many years do you think it would be before it was profitable, if ever, and given the our size and ability to invest when do you think we may be cost and performance competitive with the existing shipbuilding countries?

                      And where is that money and expertise coming from if not health or education or welfare?

                    • Pat

                      The Australian government are providing over 90 billion in industry support over the next two decades and …”.In the short term these two measures will sustain around 1,000 jobs that would otherwise have been lost. Once both programmes ramp up they will guarantee around 2,500 Australian shipbuilding jobs for decades.”

                      Thats 1.8 million per year per job……

                  • Colonial Viper

                    It is simply about about money….and it is foolish to suggest otherwise.
                    Of course we could develop a shipbuilding industry…..and bankrupt the country in the process.

                    Pat, your fixation on a fundamentally false premise – that a limited number of electronic NZ dollars held in the spreadsheets of the Reserve Bank is the true constraint – is leading you to extremely incorrect conclusions.

                    We have to transition NZ to an economy focussed on the successful mobilisation and utilisation of real resources.

                    Not on balancing electronic numbers which are entered in by keyboard. And which can be changed at will by keyboard.

                    • Pat

                      “We have to transition NZ to an economy focussed on the successful mobilisation and utilisation of real resources.”

                      And shipbuilding at a cost of 1.8 million a job per annum (and an inferior product) is your solution?….god help us

                      “Pat, your fixation on a fundamentally false premise – that a limited number of electronic NZ dollars held in the spreadsheets of the Reserve Bank is the true constraint – is leading you to extremely incorrect conclusions’

                      Ah you and Nic both….and how do you propose we source those items we cannot produce/source here…after you have equated our currency with that of Zimbabwe and Venezuela?

                    • Colonial Viper

                      What the hell is your problem Pat?

                      As I said previously, we may not need or want to design and build our own supertankers.

                      But we’ve proven able to design and build 80 metre luxury yachts, as well as the most advanced Americas Cup boats in the world.

                      Geeezus get a grip. The globalised economy is going away in the next 40 to 50 years.

                      We’re not going to be getting very many ships from South Korea or a lot of electronics from China any more.

                      So if you want anything built and done in that near future, NZ should get prepared to build it and do it ourselves.

                    • Colonial Viper

                      Ah you and Nic both….and how do you propose we source those items we cannot produce/source here…after you have equated our currency with that of Zimbabwe and Venezuela?

                      You really are not that stupid.

                      Do you even understand why the currency of Zimbabwe collapsed?

                      I’ll give you a clue as to the Zimbabwe situation. You destroy your productive economy and destroy the production of your agricultural sector. Then you collapse the rule of law throughout the land, your ability to collect taxes and negate the frameworks which safeguard private property and private firms. Then you ensure that no one in the world wants the products and services you produce.

                      Does any of that sound like what I am suggesting for NZ?

                      Grow up.

                    • GregJ

                      Thanks CV (sorry I can’t reply to your comment). You articulated it better than I could. (Snuffling through a head cold – no bloody fun when it is 41+ degrees outside and humid as f&*k).

                    • Colonial Viper

                      Thanks GregJ.

                      People who hold the $$$ as sacred drive me nuts. Like this cheap useless Chinese steel saga. It LOOKS cheaper to buy in steel from a country with 1.5B people as opposed to have our own steel industry based on 4.5M people.

                      But then we get shocked when doing it cheaply $$$-wise ends up costing our country far more.

                      $$$ are created by central banks out of thin air by keyboard, at will, with no public control, and then distributed at almost no cost to those privileged in the current system to force the rest of us to do their bidding for a trickle of those $$$.

                      The sooner people understand that, the better.

                      (41+ deg…where the heck are you…you probably already said…sounds like the wet bulb temp where you are is as high as the body temp…not a good thing!)

                    • Pat

                      “Do you even understand why the currency of Zimbabwe collapsed?”

                      You obviously don’t

                      “Not on balancing electronic numbers which are entered in by keyboard. And which can be changed at will by keyboard”

                      “Does any of that sound like what I am suggesting for NZ?”

                      Which statement would you like to go with?

                      Clare Curran is looking like a better choice by the day

                    • Colonial Viper

                      Dunedin South deserves an MP with senior Cabinet potential.

                      It got that with Michael Cullen, it got that with David Benson-Pope.

                      Yet after 3 terms Clare Curran remains an unranked backbench MP with zero Ministerial potential, and who is disliked more and more each time she stands in what was a safe Labour electorate. She has taken the 11,000 majority given to her and shriveled it up to under 4,000 in 2014.

                      Even newer Dunedin North MP David Clark is transitioning to the Labour front bench and holding key portfolios, leaving Curran far behind.

                      Support Curran if you want, but that says more about your poor judgement than anything else.

                    • Pat

                      “Support Curran if you want, but that says more about your poor judgement than anything else.”

                      As I’m some distance from that electorate my judgement (poor or otherwise) will have no impact, however my statement is an exclamation of understanding of how one you describe as ‘Yet after 3 terms Clare Curran remains an unranked backbench MP with zero Ministerial potential, and who is disliked more and more each time she stands in what was a safe Labour electorate.” managed to be selected ahead of yourself.

                      still wondering which statement you wish to go with?

                    • Colonial Viper

                      Pat are you knowledgeable about Labour Party LEC elections, selection processes and other constitutional aspects?

                      BTW I sorta find the “you didn’t beat Clare Curran so Clare Curran is better than you” logic sort of absurd but whatever.

                    • Paul

                      NZ Labour needs a Momentum group…….

                    • Pat

                      You will make a fine politician CV….all those words and the question remains unanswered.

                • Draco T Bastard

                  +111

                  Said it better than me.

        • McFlock 1.2.1.3

          as per normal, the government abrogated the decision to contractors who chose the cheapest supplier and it bit them in the arse.

          In the case of the bridges, it was caught in time (by luck or by established testing regime). Whether other projects have been hit by the too-cheap-to-be-true steel is a serious question for our country.

          Having a NZ supplier would not necessarily avoid this problem.

        • Outdoor 1.2.1.4

          When you take everything that involves an overseas input out of your life you will learn why we trade. The other option is to have another 20-30 million people to eat all the food we produce, as long as they stay in the North Island I could live with that. It would be nice to have more local production even at a higher cost as it provides jobs & keeps the wealth within NZ.

          • Draco T Bastard 1.2.1.4.1

            When you take everything that involves an overseas input out of your life you will learn why we trade.

            No, then we’d learn the value of producing it ourselves from our own resources.

            The other option is to have another 20-30 million people to eat all the food we produce,

            Or we could not produce so much food and use the freed up people to produce other stuff.

            It would be nice to have more local production even at a higher cost as it provides jobs & keeps the wealth within NZ.

            Diversification would create far more jobs than our present practice of just doing more of the same. And if the system was set up right the prices wouldn’t actually be high compared to now either. As I say, higher productivity in a given area should reduce wages in that area.

  2. Keith 2

    “Free trade” deals, ironically will be this countries undoing. Of course they’re anything but free.

    I can see Key throwing the NZ Steel industry under the bus on this one. And kissing the US’ s arse whilst maintaining China as our number 1 trade partner is getting difficult. What say you Key about the Spratly Islands?

    • Colonial Viper 2.1

      And who signed the FTA with China to great fanfare? There must be adequate protections within that FTA for NZ, right?

      • McFlock 2.1.1

        Yes dear

        • Colonial Viper 2.1.1.1

          The agreement took over three years to negotiate. On 19 November 2004, Helen Clark and President of the People’s Republic of China, Hu Jintao announced the commencement of negotiations towards an FTA at the APEC Leaders meeting in Santiago, Chile. The first round of negotiations was held in December 2004. Fifteen rounds took place before the FTA was signed in April 2008 by New Zealand’s Minister of Trade Phil Goff and the Chinese Minister of Commerce Chen Deming at the Great Hall of the People in Beijing.

          https://en.wikipedia.org/wiki/New_Zealand%E2%80%93China_Free_Trade_Agreement#History

          • McFlock 2.1.1.1.1

            Yes dear.

            And how is Labour responsible for China not living up to the agreement?

            • Colonial Viper 2.1.1.1.1.1

              If Goff and Clark negotiated in good protections for NZ we’ll have clear recourse, won’t we.

              • Draco T Bastard

                Well, apparently we can go to the WTO because this action by China is also breaking those rules. But that will, of course, take many years. So will engaging any protections in the FTA after which time the damage will have been done.

                • Colonial Viper

                  It seems a bit ridiculous to sign an agreement with a far more powerful party than yourself, when you have no effective way of enforcing it, no?

                  • leftie

                    Wasn’t John key tinkering with the FTA with China not that long ago? after he sold us out to the Americans with the TPPA?

                  • McFlock

                    lol

                    A bit like every insurance or mortgage contract, ever.

                    • Colonial Viper

                      RE: Christchurch NZ has effective courts and an effective government who forced the big bad party to sit down and work it out.

                      Who is going to force China to sit down and work it out.

                    • McFlock

                      Read chapter 16 of the fta.

                    • jcuknz

                      Hasn’t China just thumbed its nose at the world over the Spratly Islands business?

                    • McFlock

                      really subtle summary of geopolitical manoeuvering, there…

              • leftie

                Labour is not responsible for what key/Nats have done Colonial Viper.

                • Colonial Viper

                  The NATs aren’t responsible for signing a free trade agreement with China.

                  • leftie

                    Nats voted in favour of it when Labour took the FTA with China to parliament and put it to a vote. Labour are not responsible for what the Nats have done with the FTA during the last 8 years. Stop trying to absolve National from any responsibility Colonial Viper, it doesn’t wash.

                    • Colonial Viper

                      Just making sure people know about Little’s strong advocacy of free trade with China.

                      Now it appears that the National Govt has approved FVEY spying stations against the Chinese govt based in NZ diplomatic buildings in China.

                      The vociferous Chinese reaction becomes clear.

                    • leftie

                      It’s not new Colonial Viper, it’s not as if Andew Little has never said it publicly, is it? Because he has, a number of times, particularly when Labour publicly refused to support the TPPA.

                      No, Colonial Viper you were shitstirring. And everyone knows John key plays both sides.

                      You don’t need to sound so happy about it. It’s not the first time China has issued a warning to John key.

          • leftie 2.1.1.1.2

            The Labour government took the FTA to a parliamentary vote. National voted in favour of it.

            • adam 2.1.1.1.2.1

              “The labour government took the FTA

              Need you say more, neo-liberalism 101. Bugger the name on the party, actions speak louder than words.

    • leftie 2.2

      Agreed, there is no such thing as a free trade, it always comes at a cost. John key always throws NZ interests under the bus. He’s done that from day one.

      • ropata 2.2.1

        well he has no hesitation in throwing workers under the bus, but he would sell out his grandmother to get more fake $$$ piling into his mates bank accounts

  3. Colonial Viper 3

    I have to shake my head.

    Does anyone here have any understanding of how to successfully deal with China?

    I’ll give you a clue: setting up an official and very public inquiry humiliating Chinese manufacturing quality right after being a major supporter of a US sponsored trade deal which deliberately locks China out, is not the way to go.

    For China to bring the hammer down on this issue so publicly says that the NZ Govt (and that includes the public service) has fucked this up big time, over quite some time.

  4. Wensleydale 4

    If a product is crap, don’t buy it. This particular batch of Chinese made steel is demonstrably not fit for purpose. So don’t buy anymore. We could, instead, use steel manufactured here in New Zealand (“We still manufacture things?! Yes. Yes we do. Mad, isn’t it?”) — where we know it doesn’t have the structural integrity of a warm marshmallow, and making it keeps people in jobs.

    • Colonial Viper 4.1

      In a normal commercial relationship, if the steel fails specifications, you send it back, you don’t pay, and you wait for the supplier to replace the batch. And you keep doing it over and over again, with more stringent testing each time.

    • Andre 4.2

      Here’s my experience of getting goods manufactured in China:

      Development samples will be made extremely quickly and very high quality

      First few production runs will be high quality, exactly like development samples

      At some point, the supplier will try to reduce costs by making changes they won’t tell you about. It’s up to you to have in place the testing procedures to ensure that the product you receive continues to meet your specifications. Supplier certificates are so unreliable as to be worthless.

      If you jump hard on anything not up to standard, the relationship gets back on track quickly. Let things slide and you’ve got problems forever. It’s quite different to most western suppliers where you can correct things by saying “ok, we can make these work but we really need the future lots to be better”.

      So yes, there are significant savings in having things made in China, but some of those savings get eaten up by the extra inwards goods QC you have to do, and by the cushion you need to maintain against the high probability of having to reject goods. Unfortunately in the modern management style of ISO, certifications, just-in-time etc, it’s really hard to get managers to accept these extra steps need to be done. It’s not that Chinese suppliers are out to diddle the customer, it’s simply what the business culture is in China.

      • Colonial Viper 4.2.1

        Sounds very Chinese to me

      • DoublePlusGood 4.2.2

        That’s exactly Chinese suppliers being out to diddle the customer.

        • Andre 4.2.2.1

          By our business culture, definitely. If I was dealing with a western supplier that did that, I’d be very wary of doing any future business with them. But to successfully work with Chinese suppliers, you need to adapt your expectations and responses to their culture. Those undisclosed changes seem to be a perfectly legitimate practice in the local business culture, and maybe even seen as a way to be able to reduce pricing for future projects. With a western supplier, it would be a material breach of contract and a good reason for cancellation and go to another supplier. For Chinese suppliers, you send it back and they cheerfully redo the order. Treat them like a western supplier and you’ll run out of potential suppliers really quickly. It took me a long time to get my head around that.

        • Jack Ramaka 4.2.2.2

          Just like the Chinese milk powder manufacturers putting melamine in the milk to increase their profitability.

    • leftie 4.3

      Lets not forget Wensleydale, the National government just gave a multi million dollar government contract to the large Chinese government owned construction company.

    • dukeofurl 4.4

      You cant have a complaint to WTO about steel quality.

      This dispute is about dumping- or in laymans terms selling for less than cost of production

  5. Colonial Viper 5

    Andrew Little a self proclaimed ‘strong advocate’ of free trade with China

    My own commitment to free trade goes back to my union days when I advocated strongly for the China FTA and worked with the employees of some of our biggest exporters. The CEO of one of the largest exporters at the time angrily denounced me at a meeting with the company as a traitor for doing so.

    I wonder if it was a NZ steel manufacturer who denounced Little as a traitor to NZ’s economy for backing free trade with China. And even though NZ manufacturers were unhappy with Labour’s China FTA, it seems like National supporting dairy farmers liked it.

    http://www.labour.org.nz/andrew_little_on_the_tppa

    • leftie 5.1

      Lol scrapping the bottom of the barrel there Colonial Viper. If anyone is a traitor, it’s sell out John key, who has manipulated NZ’s interests to favour his foreign interests.
      This mess lies squarely on the shoulders of John Key and his National government. You trying to reframe it against Andrew Little and Labour is pathetic and nasty. You are showing yourselves up.

      • Colonial Viper 5.1.1

        The CEO of one of NZ’s biggest manufacturers called Little a “traitor” for his strong backing of the Chinese FTA.

        This is in Little’s own words, on Labour’s own website.

        I’m not “reframing” anything.

        • leftie 5.1.1.1

          Shows Andrew Little is very honest, and it also shows that he doesn’t think the TPPA is a trade deal.

          Yes you are trying to reframe it Colonial Viper.

          • Colonial Viper 5.1.1.1.1

            I’ve only talked about the China FTA, and that is what his quote about the manufacturing CEO calling him a “traitor” against NZ industry refers to.

            The TPP did not exist at the time.

            These are Little’s own words, on the Labour website.

            • leftie 5.1.1.1.1.1

              Your link was all about the TPPA and the reasons behind Andrew Little rejecting it. Interesting how you are using his honesty against him.

              • Colonial Viper

                Little’s entire anecdote, including the CEO’s comments branding him a “traitor” to NZ industry, was around his strong advocacy of free trade with China.

                • leftie

                  One can see why Andrew Little used that as a counter to any claims that he is anti trade that his opponents like National and their supporters would accuse him of.

                • ropata

                  “free” trade isn’t free, the cost is borne by workers in high wage economies who have bargained for a better position only to be undermined by a supposed “left” government. the benefits of free trade mostly accrue to the 1% capital owning class who can cut labour costs by outsourcing to slave based economies.

  6. Sabine 6

    ahhh china, does not give a fuck and people are surprised?

    https://www.theguardian.com/business/2016/apr/01/chinese-imposes-tariff-on-eu-steel-imports-tata

    “China has risked raising tensions over its role in the UK steel crisis by imposing a 46% import duty on a type of high-tech steel made by Tata in Wales.

    The Chinese government said it had slapped the tariff on “grain-oriented electrical steel” imported from the European Union, South Korea and Japan. It justified the move by saying imports from abroad were causing substantial damage to its domestic steel industry.

    Tata Steel, whose subsidiary Cogent Power makes the hi-tech steel targeted by the levy in Newport, south Wales, was unable to say on Friday whether any Cogent products are exported to China.”

    who’wudave’thunk, not our smarties in parliament, they are not paid to think.

  7. Stuart Munro 7

    One piece of advice long time China hands have for the newcomers is that they have a different concept of contract. The agreement is ceremonial – expect to relitigate everything once you get into practicalities. Seems to fit what’s happening – if only we had among the Gnat’s assortment of chancers and gimps, someone actually capable of negotiating a better outcome.

  8. Richardrawshark 8

    Bit personal this one, as the engineering co I worked for dealt with the importer, we had failing in many steel grades from 304/316l sheets including also mild steel sheet defects, and i’ll tell you what when your making a ten thousand dollar product on a lathe and you reach your final cuts, and a defect appears, that you can’t remove with the tolerances you have left, it is kind of real annoying, bloody time wasting and throws your schedule way out, if it takes me three more days to make the product, that’s three days everyone else gets pushed back, and for special orders and steel grades you have to get another piece sent and start all over again.

    There steel is bollocks and if they say it ain’t I know it’s PR and more bullshit.

    I laughed when the Chinese ambassador spoke.

    as for the certs, continually chasing them, we took careful notes, and found bulk sheets with same cert #, days waiting for cert #’s.

    • Colonial Viper 8.1

      It’s shoddy and lazy and the Chinese will continue to foist this shit on us if they think we are an easy mark.

      But all this has been politically incompetently managed by Key and co. and the proof is China going heavy handed and public with threats which they almost always prefer not to do.

      • Chooky 8.1.1

        can you trust a trading partner that “will continue to foist this shit on us if they think we are an easy mark.”?!…really this is not fair trade or respectful trade

        … and the trading partner who tries to “foist this shit” and then threatens the other party when they are not happy and protest …is a petulant bully and the ‘partnership’ NOT worth having…it is not a partnership

        …New Zealand should have deals with countries that do play fair …i would suggest a deal with Russia be substituted instead

        …ditch the deal with China…we don’t need China

        • Colonial Viper 8.1.1.1

          Check out Ralf Crown’s comment at 10

          • Chooky 8.1.1.1.1

            he doesnt sound like he knows what he is talking about …he certainly doesn t know how much NZers earn and he would like to reduce their standard of living…i would guess he is Chinese himself or some new immigrant from the third world

            this is the very reason most New Zealanders don’t need China…just as the Tibetans don’t need China…but China thinks they do

  9. Ralf Crown 9

    To avoid China as a major trading partner is not possible. To avoid trade is washing the shirts for each other, it will not give a good living standard. Our health care is already third world substandard. China is one of the biggest trading nations in the world and it will be bigger, judging by population, five times as big as the USA and seven times as big as EU. New Zealand is by comparison 0.04% of the world in trading. New Zealand does not choose, it is chosen – or not. There is not one single quality test of steel, there are many different qualities, and as usual beancounter are going to China to buy the cheapest crap they can find. What they get is the cheapest crap on the world market. The real problem is that New Zealand is seen as a appendix to then USA and Key is their man dancing to Washington’s pipe. Another problem is this. A process worker in New Zealand is paid 100,000 dollars a year. What about adapting this to the “world rules” and pay them 30,000 a year, which is more reasonable. Not even a highly qualified academic immigrant get that sort of income, so the leave, while the process worker stay, until the business has to close. There are already calls in China to dump the FTA altogether.

    • Colonial Viper 9.1

      A process worker in New Zealand is paid 100,000 dollars a year.

      The vast majority of NZ process workers, whether at Heinz or at Tip Top, are paid less than $30/hr.

      If you are a very senior operator in a gold mine or at the aluminium smelter you might be around $100K pa.

    • Jenny Kirk 9.2

      ” The real problem is that New Zealand is seen as a appendix to then USA and Key is their man dancing to Washington’s pipe.”

      I don’t think this is any surprise, Ralf Crown but its good to have it spelt out.

    • b waghorn 9.3

      “What about adapting this to the “world rules” and pay them 30,000 a year, which is more reasonable. ”
      Surely for a trade deal to be truly about a level playing field when a foreign company puts in a price the have to pay their workers the going rate for labour in the country the product will end up in.
      Any thing else is a trade advantage to the low wage country.

  10. Ralf Crown 10

    “Does anyone here have any understanding of how to successfully deal with China”

    YES – there are several very competent China- kiwis already living and working in China, but they are not allowed to have even an influence. The bureaucrats in New Zealand prefer to send out their own mates to sit in ivory towers in the big cities at fantastic pay a couple of years at the time and turn papers and swing stamps. A big problem is that New Zealand is openly spying on China on USA behalf, and has been caught red handed. The new consulate in Chengdu has already been labeled a US financed spy center. A consulate is to service expat Kiwis, but there are maybe only five of the in the region. A consulate is also handling applications for visa, but that is sent to New Zealand anyway, so a normal representative office would do, as in the case of all other nations, but making it a diplomatic mission, they can hide the spying activity. The consulate has already been trying to get local Kiwis to first individual meetings, then group meetings, to set them up as spies. The US has tried that before with US citizens, it failed and they were kicked out.

    • Colonial Viper 10.1

      Argh shit that’s bad.

      To me your explanation now accounts for China’s hard nosed and very public reaction against NZ, and why they brought the US into their media reply as well.

      Thanks for filling us in on this.

      As a nation, and as a FVEY member, we are doing a very bad job negotiating the fine line between US and China relations.

      • leftie 10.1.1

        Everyone knows John key is playing both sides.

        • tc 10.1.1.1

          Keys always plays to his backers in reality, what he gets joe public to swallow is on record in 3 successive election campaigns.

      • Ralf Crown 10.1.2

        China is becoming hard nosed towards New Zealand. The reason, Key moves around saying we are your friends, China is important to us. Well Mr. Key, friends don’t hack into friends data lines to spy on them, friends don’t let the enemy (USA) run one of the largest spy centers on their soil (Waihopa and CIA spy centres), friends don’t accuse friends with false statements, friends don’t copy the enemies (USA) propaganda (Herald), friends don’t lie about friends, friends don’t run racism against friends, friends don’t establish diplomatic consulate to spy on friends, friends don’t spread false rumor about friends, just a bit to many knifes in the back of your “friend” China Mr. Key. When will New Zealand media publish some truth about China?

        • Colonial Viper 10.1.2.1

          China knows that NZ is part of the American anglo-empire and the FVEY network. However they also expect NZ to act with some independence and integrity in its foreign policy and to not take offensive actions against close trading partners.

          So yes, they are pretty pissed off now, Key’s constant Obamafawning has not helped; it has taken China a few years to get to this stage of annoyance I think and they won’t be coming back down soon.

    • One Anonymous Bloke 10.2

      Whose interests are being served by hurting trade with New Zealand? To what extent, if any, are internecine rivalries within the party at play?

    • That does seem a reasonable assumption on China’s part, unfortunately.

      This is yet another example of why we desperately need an independent foreign policy again.

      • Colonial Viper 10.3.1

        BTW it is in the US interest to limit our economic and foreign relations with China, as that will bring us further into the alternative US sponsored economic and political fold of the TPP.

  11. whispering kate 11

    The PM has always wanted to play with the big boys, it makes him feel adequate but unfortunately he has tried to please everybody to the extent of embarrassment. He doesn’t have the talent, the cajones or the intellect to even sit at their feet. Let’s see how he squirms out of this, playing off one master against the other. Its too big a playtime for him and he is way out of his depth. The US and China don’t give a shit for us and never have – the PM wouldn’t see danger and this is serious for us as a Nation, if it came up and hit him on the nose. And we have him as our representative of all New Zealanders – what does that say of us as a Nation. We all need to go take a bath.

  12. Robertina 12

    I’m sick of seeing threads dominated by some people’s preoccupation with the Labour Party.
    This particular issue is too important for that.
    Don’t normally read comments on Stuff stories, but had a flick through the ones on the Fairfax article yesterday. It got a huge response. One succinct one said, and I paraphrase, ‘I’d rather NZ was poor than buckled to these tactics’.
    RNZ journalist Phil Pennington has done a good methodical job revealing this story.
    One of his quoted sources said that given Huntly and Waterview are ”gold standard”, it’s indicative that dodgy steel has been used in other lower profile projects.
    We don’t know if reinforcement was carried out on those projects, the way it was on the Huntly bypass when steel started ballooning as it went into the ground.
    It’s time NZTA stopped hiding behind commercial sensitivity and answers RNZ’s questions. In an update the other day it was clear RNZ had gleaned nothing of substance from its OIA requests to the agency.

    • tc 12.1

      Here here, wtf else is out there waiting to reveal itself. Time will tell but at what future cost.

      National shows the leaky homes way again. it is in their DNA to allow dumb shit like this to get done.

    • GregJ 12.2

      Time we stop contracting out Public Works to the Corporate sector to suck off the taxpayer teat.

      Time for a new Public Works Department, sourcing building material as much as possible within NZ, employing NZers.

      Time we viewed infrastructure as an investment rather than a cost (although I might question spending more money on roads).

      Time we stopped the neo-liberal paradigm from whatever political party that espouses it.

    • leftie 12.3

      +1 Robertina

  13. Neil 13

    Move along nothing to see here, Judith has it all under controll

  14. leftie 14

    How did China know, opposition asks

    “Opposition parties want to know how Chinese officials knew a complaint had been laid about the alleged dumping of cheap steel.

    During the weekend Fairfax Media reported Pacific Steel had lodged a confidential application for a Ministry of Business, Innovation and Enterprise investigation into China dumping cut-price steel into the New Zealand market.

    China got wind of it and, believing New Zealand to be part of a United-States led alliance against it, threatened reprisal tariffs on dairy, wool and kiwifruit to ensure MBIE didn’t investigate, the report said.

    MBIE will not confirm or deny that an application for an inquiry has been received.

    NZ First leader Winston Peters says either China was told about the complaint or there was a leak from MBIE.

    “Why and how does the Chinese government know more about MBIE’s steel investigation than New Zealanders do?” he asked.

    Labour’s finance spokesman, Grant Robertson, says investigations into dumping – which happens when countries export goods for less than they cost to produce – need to he carefully handled.

    “You have to have all your ducks in a row and do the investigating before the other country gets involved… it isn’t proper that China has found out about the complaint.”

    <a href="https://nz.news.yahoo.com/top-stories/a/32076723/union-supports-steel-investigation-call/#page1

    • Muttonbird 14.1

      This. The key question is whether China is dumping steel (especially as some of it does not meet AUS and NZ standards). If they are, is that allowed under NZ’s FTA with them?

      It appears the Chinese way of doing things is to try to shut down, with threats, an investigation into dumping before it got started.

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