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New Zealand's trade dependence on China is gradually deepening. Shipments to China increased to 17.8 billion New Zealand dollars (13 billion U.S. dollars) in 2021, accounting for 30.2% of total exports during the same period. Compared with April 2020, sales to China increased by 6.3%, when the share was 27.8%.

u3000u3000 China is New Zealand’s largest trading partner. Australia, which ranks second, accounts for 13% of total exports, while the United States accounts for 11% and Japan accounts for 5.5%.

u3000u3000For New Zealand, forestry is New Zealand’s third largest export product, with annual income exceeding US$6.7 billion at one time. Most of these timber exports are logs. The trade problem between Australia and China means that Australia currently has no opportunity to send logs to China, and the Chinese log import business has chosen to hand over to New Zealand. 70%-80% of them will be sold to China.

u3000u3000Daily consumption in the eastern coastal area of New Zealand during the peak season in China at the beginning of the year could exceed 85,000 cubic meters, which means that in five days, the Chinese market consumes more logs than New Zealand exports in one month.

u3000u3000 For New Zealand, since 2008, the number of logs shipped to China has soared from 1 million tons per year to about 20 million tons this year. China's strong and continuous demand continues to push the number of logs exported by New Zealand has increased significantly.

u3000u3000 Although New Zealand’s export business has grown stronger under the background of Australia, domestic supply problems have begun to emerge. Due to the distortion of the log trade, New Zealand's timber processing industry is in trouble. For China, as the world's factory, it will be more willing to import logs for domestic processing, which can create employment opportunities for Chinese workers.

u3000u3000 80% of New Zealand's timber is exported, and there is a shortage of domestic supply of timber for processing construction. In addition, the shipment of New Zealand logs to China ultimately results in the local prices of New Zealand logs that cannot be afforded by processors. The lack of supply and lack of income have left New Zealand's wood processing industry in a predicament, unable to process logs into more valuable products for export.

u3000u3000 Unfortunately, the spread of the epidemic prompted New Zealand to make a policy decision to close the border, which stimulated the entire supply chain's demand for domestic construction and renovation. The real estate boom in New Zealand once set the country’s history. The demand for construction timber required to build houses once increased sharply, causing market demand to fall short of demand. Housing prices rose along with the adjustment of timber prices.

u3000u3000 New Zealand tried very hard to solve the problem of housing affordability in New Zealand, but it was hindered by the shortage of timber. New Zealand lawmakers continue to warn that Carter Holt Harvey, a major domestic construction material company, is continuously reducing the sales scale of timber inventory due to insufficient supply of domestic timber raw materials, and this decision will have a significant impact on the real estate market.

u3000u3000 Considering that New Zealand is planning to build more houses, and the ability of domestic wood processors to increase production is limited by the supply of wood raw materials. New Zealand is likely to limit the share of timber exports in the future to prevent some construction materials from offshore.

u3000u3000 In the first quarter of 2021, China imported 4,320,600 cubic meters of logs to New Zealand, valued at US$594 million, ranking first among China's log importing countries during the same period, showing the importance of New Zealand to China's timber import business. Recently, a number of timber supplier countries announced restrictions on timber export quotas, giving priority to meeting the needs of domestic operations, production and construction. The international timber supply chain is deteriorating day by day, and domestic demand for timber has begun to bottom out. The future supply of the timber market is facing tightening, and prices may fluctuate.