China fears overstated, English

CATHERINE HARRIS
Last updated 13:27 13/08/2012

Relevant offers

National business

Hanover Finance directors settle with Financial Markets Authority for $18m New Zealand businesses should prepare for repercussions of a Greek debt default Moody's upgrade Air New Zealand's credit rating Yealands sale transparent, say key players A hedge with an edge: 6 reasons why you need this monster grass 7 key things to know about Greece's debt crisis and what happens next Air New Zealand moves to delay competition from Qantas and American Airlines IT industry working to encourage women, banish stereotypes Inland Revenue gives out $50m more in refunds Medical innovation a pulsating heart for business

Finance Minister Bill English launched a fresh attempt today to allay fears about Chinese investment in New Zealand and also called on Kiwis to invest more overseas.

English told delegates at a Wellington conference on contemporary China that the Chinese had a comparatively small $1.8 billion invested in New Zealand and New Zealanders had similarly small interests in China worth $789 million.

He encouraged Kiwis not to be so shy about placing their money overseas, noting the country had historically relied on overseas finances to build its own infrastructure.

"As a small country, we naturally rely on FDI [foreign direct investment] to help us achieve economies of scale, and for access to ideas and consumer markets.

"We do not have the large stock of capital which older and wealthier countries have."

English praised Kiwi firms like Fonterra, Rakon and Richina that had taken the plunge in China's economy.

"The Government is doing its bit by investing overseas through the Super Fund and KiwiSaver, and we would like to see more New Zealand businesses follow this lead."

English also reminded his audience that foreign investment was vital to plug the investment shortfalls New Zealand could not fund through its own savings.

"Foreign investment can bring benefits that foreign borrowing does not," he said, referring to the lack of fixed interest payments that debt incurred.

Kiwis working for firms with foreign investors tended to be paid more, and the firms concerned often gained technology or market knowledge and access that could be hard to develop from New Zealand.

English conceded foreign investors did take out some profits of the country, "but between 2006 and 2011 they have also reinvested about 25 per cent of their returns on equity back into New Zealand".

The public expected checks and balances, and recent research showed New Zealand had one of the most restrictive overseas investment regimes in the OECD.

With the free trade agreements New Zealand had in Asia, its chief constraint would not be opportunity, English said.

"Our challenge is to assemble enough capital, people and market knowledge to take advantage of this opportunity."

Ad Feedback

- BusinessDay.co.nz

Special offers

Featured Promotions

Sponsored Content