BEIJING, CHINA – JUNE 19: The national flags of China and New Zealand fly in Tiananmen Square in Beijing, China (Photo taken on June 19, 2025). New Zealand Prime Minister Christopher Luxon paid an official visit to China from June 17th to 20th.
Wang Xin | Visual China Group | Getty Images
New Zealand exporters are diverting cargo originally destined for China to other markets as demand from New Zealand’s biggest trading partner cools, the Antipodean nation’s central bank official said on Thursday.
“We have certainly seen many of our exporters looking at and actively repurposing products that they were going to put into China into other markets,” Reserve Bank of New Zealand assistant governor Karen Silk said. “That’s not the only export market.”
Silk’s comments reflect how the slowdown in China’s economy is spilling over to other companies. Growth in the world’s second-largest economy slowed to its lowest level in years in the second quarter, weighed down by weak domestic demand and a prolonged real estate recession. He appeared on CNBC’s “Squawk Box Asia” on Thursday, a day after the central bank raised interest rates for the second time in a row to curb inflation.
China is New Zealand’s largest trading partner and largest market, buying about a quarter of New Zealand’s total exports in the 12 months to July. According to the New Zealand China Council, in 2025 New Zealand’s products for China will be nearly twice as much as the next two largest export markets, the United States and Australia, combined.
New Zealand supplies more than half of China’s dairy imports, and this advantage has built on bilateral trade agreements since 2008, which subsequently granted duty-free access to all New Zealand dairy products in 2024. A sustained decline in China’s demand will test how quickly it can diversify its trade.
The Middle East wars and the resulting disruption to shipping through the Strait of Hormuz caused global commodity prices to soar, further straining Beijing’s own appetite for commodity imports.
Mr Silk said New Zealand’s pasture-based farmers had a relative cost advantage, even as rising global commodity prices, including wheat, reduced production for China.
“If you have these supply factors going on globally, then in some ways New Zealand actually benefits from a pricing perspective,” he said.
The RBNZ on Wednesday hiked its key interest rate by a quarter of a percentage point to 2.75% in a bid to combat inflation, signaling further rate hikes could occur before the end of the year.
