BEIJING, CHINA – JUNE 19: The national flags of China and New Zealand flutter at Tian’anmen Square on June 19, 2025 in Beijing, China. Prime Minister of New Zealand Christopher Luxon pays an official visit to China from June 17 to 20.
Wang Xin | Visual China Group | Getty Images
New Zealand’s exporters are diverting shipments originally bound for China into other markets as demand from the country’s biggest trading partner cools, an official from the antipodean country’s central bank said Thursday.
“We’ve certainly seen many of our exporters looking at, and actively diverting, product that they would have been looking to put into China, into other markets as well,” said Karen Silk, assistant governor at the Reserve Bank of New Zealand. “It is not the only export market.”
Silk’s remarks reflect how the slowdown in China’s economy has rippled through to businesses elsewhere. Growth in the world’s second-largest economy slowed to multi-year lows in the second quarter, weighed down by tepid domestic demand and a prolonged real estate slump. She spoke to CNBC’s “Squawk Box Asia” on Thursday, a day after the central bank delivered its second consecutive interest rate hike to curb inflation.
China has been New Zealand’s largest trading partner and top market, buying roughly a quarter of New Zealand’s total exports over the 12 months ending in July. New Zealand’s China-bound goods in 2025 were close to double that of the next two biggest export markets — the U.S. and Australia — combined, according to the New Zealand China Council.
New Zealand supplies more than half of China’s dairy imports, a dominance built under a bilateral trade agreement since 2008, that later granted duty-free access for all its dairy products in 2024. Any sustained pullback in Chinese demand tests how quickly that trade can be diversified.
The Middle East war and the resulting shipping disruption through the Strait of Hormuz drove up global commodity costs, further squeezing Beijing’s own appetite for commodity imports.
Elevated global commodity prices, including for wheat, have handed New Zealand’s pasture-based farmers a relative cost advantage even as China-bound volumes soften, Silk said.
“In some ways, New Zealand actually benefits from a price perspective when we have those supply factors going on globally,” she said.
The RBNZ raised its key interest rate by a quarter percentage point to 2.75% on Wednesday to combat inflation, and signaled another increase could follow by year’s end.
