John McKinnon: NZ China Council Chair on the slowing of China's investment in New Zealand

Several factors are behind a flat-lining in investment from China.

New research by the New Zealand China Council and NZIER has found Chinese investment grew steadily between 2014 and 2019, but has stalled since then.

China now ranks as our 12th largest source of foreign investment.

Council Chair John McKinnon told Mike Hosking there's a number of reasons why the investment has stalled.

He says Covid, a slow down in the Chinese economy, and changes to the regulatory environment in both countries have contributed, and it's not worrying.  

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Episode Transcript

Speaker 1 (00:00):
We've got the laser reporting from the New Zealand China Council.

(00:02):
Investment out of China increased by an average of nine percent.
This is between twenty fourteen twenty twenty four flat line.
Post COVID, China now ranks twelfth as I saw some
of New Zealand foreign direct investments. So what's going on here?
John McKinnon's the New Zealand China Council chair and is
with us. John, very good morning to you.

Speaker 2 (00:17):
Good morning.

Speaker 1 (00:18):
Something wrong?

Speaker 2 (00:20):
No, not really. I think there's a number of reasons
why the flat lining has occurred. One is to do
with COVID, the second is probably to do with slow
down on the Chinese economy. The third and fourth would
probably be changes in the regulatory environments in both countries.
So we don't see it as something which is particularly worrying,
but it's part of the purpose of this reporter is

(00:40):
to provide people with the facts that they can make
their decisions on or judgments on.

Speaker 1 (00:45):
Is it more them or more us or a bit
of both.

Speaker 2 (00:49):
Well, it'd be hard to say. I would say probably
I'd attribute more to the COVID effect, which of course
applies to both countries. But also to the slowdown on
the Chinese economy. But there have been a number of
regulatory steps taken in China which have had an effect
of altering the way in which Chinese might be able

(01:10):
to expatiate their funds. And of course we've had changes here,
although they've been more designed to encourage people to invest
in use even than the reverse.

Speaker 1 (01:18):
Right, So those Chinese changes, that's applicable to the whole world,
not just New Zealand.

Speaker 2 (01:23):
Yeah, that's right, absolutely, Yeah.

Speaker 1 (01:24):
And we've got the US as the number one direct
foreign investor. Now that's good, isn't it.

Speaker 2 (01:29):
Well, it is. I mean, if you look at the
stock though, the overwhelming stock of investment comes from Australia,
which is not particularly surprising the US. And there's a
big gap, so that I think the Australia's stock is
fifty four percent or something in the US is nine percent,
So there's quite a big gap there. China comes in
on that scale at about zero point nine percent, so

(01:51):
it's still still a long long way behind the big players.

Speaker 1 (01:55):
You reckon it'll change or not. I mean, so in
other words, is that the regulations and the regulations are
the regulations. Therefore it's constrained or well, as we come
out of COVID and move on, things will have change again.

Speaker 2 (02:06):
Well, we don't forecast a huge change. We can see
areas where there would be congruence or compatibility between New
Zealand and China in areas such as renewable energy or
food production, but it's hard to see how the current
settings are going to change in such a way that
there's an enormous boost. And I just don't think that's

(02:27):
the way that the Chinese people are looking at this country.

Speaker 1 (02:29):
Okay, John, appreciate the insight. John McKinnon, who's the New
Zealand China Council shit for.

Speaker 2 (02:34):
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