Kiwi cosmetics are set to hit Chinese store shelves and a new air freight route to South America will open, after NZ diplomats strike deals in Shanghai

The Prime Minister’s office says the trade delegation have signed deals worth $871 million during the Shanghai leg of the diplomatic mission to China.

Shanghai is the country’s commercial hub. It is home to 24 million people and has an annual economic output per person of US$30,486 last year, making it a middle-income city.

For comparison, Auckland’s gross domestic product per capita was about US$52,600 that same year and China’s average output was just US$13,445.

Prime Minister Christopher Luxon spent a day and a half in Shanghai, mostly helping to promote various Kiwi businesses and products.

Political leaders are important in China in a way that can be hard for laid-back New Zealanders to grasp, but it means local businesspeople are genuinely excited about meeting a Prime Minister.

This star-power can be used to help Kiwi exporters build relationships with key Chinese decisionmakers that might put NZ-made products on their store shelves or hotel menus.

Luxon visited Trip.com to promote tourism, toasted a flute of milk at a Fonterra event to launch a grass-fed certification scheme, tested some natural Kiwi cosmetic products, attended a Meat Industry Association promotion, spoke at the launch of a new airline route, witnessed the signing of 10 collaboration agreements, and hosted a business dinner.

Many of these events, deals, and announcements were very light on substance.

For example, meat cooperative Alliance signed a memorandum of understanding reconfirming Grand Farm as the exclusive importer of its lamb and venison products in China. The press release notes the relationship had existed for 25 years and was already formalized in 2016.

Belt and Road (ish)

But others were more consequential. Perhaps the biggest was news that China Eastern Airlines would begin to offer flights from Shanghai to Auckland and then onto Argentina.

This opens a route for Chinese freight to reach South America without having to stop in North America, Europe, or the Middle East, thus avoiding trade wars and military conflicts.

It is a commercial arrangement between Auckland Airport and China Eastern, but the NZ government helped by waiving an expensive transit visa for Chinese passport holders.

The increased flight frequency and transiting passengers are expected to boost annual visitor spending by $48 million each year.

Oddly, the Chinese state-owned airline and officials consider the new airline route to be part of the Belt and Road infrastructure development initiative – but NZ doesn’t.

This isn’t such a big deal, as China attaches the Belt and Road name to a wide range of projects that broadly fit within its strategy of developing trade routes.

Make up for lost time

Another big announcement was a regulatory breakthrough for cosmetic companies, which were previously only allowed to sell products online due to China’s animal testing rules.

It has been a huge frustration for the industry and former Prime Minister Chris Hipkins raised it directly with Chinese Premier Li Qiang during the previous mission in 2023.

Two years later China and NZ have agreed on an exemption to the animal testing rules and Kiwi cosmetic companies will be able to sell $200 million worth of products in stores.

According to the Prime Minister’s office, the primary and manufacturing sector signed deals worth $400 million, the education sector $43.8 million, and tourism $228 million.

Not bad for a day’s work, although still relatively small in the context of a $38 billion trading relationship.

On Friday, Christopher Luxon will meet with President Xi Jinping and Premier Qiang where they are expected to have wide ranging discussions on trade and geopolitical issues.