New Zealand’s trade reliance on China peaked during the final three months of last year when China, including Hong Kong, accounted for an astonishing 31% of our exports and 20% of our imports, according to Stats NZ.

Having so many eggs in any one basket might be a concern in itself.

But this is a country that has yet to condemn Russia’s invasion of Ukraine, subjugated the pro-democracy movement in Hong Kong, has refused to rule out a forced takeover of Taiwan, and that Parliament last year declared was responsible for “severe human rights abuses" against the Uyghur people in Xinjiang.

Officially at least, the Government doesn’t have a policy of diversifying trade away from China.

“The free trade agreement with China has been incredibly valuable for our economy since 2008 and that will continue,” Trade Minister Damien O’Connor says when asked.

But diversification is a good thing and the Government will continue to create new opportunities through trade agreements, he also says.

“The Regional Comprehensive Economic Partnership Agreement, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, and the free trade deals with the UK and Europe Union are all valuable opportunities.”

O’Connor says it is “up to the exporters to choose where they take those up”.

“Given the disruptions that are possible from climate change, shipping movements, pandemics or whatever, having options is always the better way forward,” he says.

“Any company or business that has a higher reliance on any one customer is always exposed.”

Trade statistics provide mixed evidence on whether that is a message that more exporters are taking on board.

Despite the record set late last year, growth in trade with China has slowed markedly since the start of the Covid pandemic and accounted for 27.3% of our export trade in the year to June, which was down from 28.9% a year earlier, again including Hong Kong.

At the same time, New Zealand has seen some impressive jumps in trade with many Asian countries that it was known to be targeting for improved trade relations when it hosted APEC last year.

Exports to Bangladesh, Indonesia, Thailand, Malaysia and Taiwan surged to just over $7.3b in the year to the end of June, up from $5.8b the previous year, accounting for 9% of exports and up from 7.8% the previous year.

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Stats NZ economics insights manager Jason Attewell says dairy exports, mostly milk powder but in Indonesia’s case also butter, have largely been behind the trade successes in Bangladesh, Indonesia and Vietnam.

He also notes that much of the slowdown in the growth of trade with China will have been the result of the tourism hiatus, which could potentially be temporary.

India appears to be a bit of a trade black-spot, with exports in both goods and services below the totals recorded in 2015.

China accounts for a huge proportion of New Zealand’s timber and lobster exports, and then there are a range industries where it accounts for 30% to 40% of exports and producers should also be taking “a good look at the market”, he says.

Finding other countries to take New Zealand’s exports wouldn’t be especially challenging, as such, Finny says.

“We can sell our products many times over.”

That was demonstrated when exporters “lost the China market for several weeks” during the early stages of the Covid pandemic in 2020, he says.

“A few lobsters had to be thrown back into the sea, but other exporters were able to sell their products. They may not have got the price they wanted, but they were able to pivot really well.”

And that may be the crux of the issue when it comes to encouraging trade diversification.

Right now, China is paying the best prices in the world for a number of New Zealand’s more popular exports, so it makes sense for firms to continue to export there, Finny says.

O’Connor indicates that despite the world’s woes, the Government doesn’t have an emergency plan in the wings for some sort of trade breakdown.

“Any exporter should have a plan for disruption because disruption is the one constant that we are facing as a nation and across the planet,” he says.

“I think everyone has realised that nothing is guaranteed and having ‘resilience’, which is the trendy word, will be the measure of long term success.”

But the Government can’t prejudge the options that individual exporters have, he says.

“Some can adapt quite quickly to different markets and interruptions and others less so.

“We will work with them as necessary, but we can’t plan for all those possibilities.”

Finny’s assessment of the speed at which exporters can pivot might seem to justify that approach.

But what proved more problematic during the darkest days of the Covid pandemic and worries Finny more is New Zealand’s high reliance on certain sources of imports.

That included personal protective equipment (PPE) made in Wuhan where Covid broke out, he says.

Some sort of disaster planning for essential imports could be useful in case of future disruptions, he agrees.

“I’ve got great faith in the private sector being able to move really fast [but] I think there is a role for government to be in that space.

“It’s oil, essential pharmaceuticals, essential PPE. Where is that coming from? Have we got a ‘plan B’ if ‘plan A’ doesn’t work?”

“I don’t know if that work is happening on a regular basis and perhaps it should be.”

There are signs those sorts of issues may indeed be about to come in for more attention.

In early November, Finance Minister Grant Robertson instructed the Productivity Commission to hold an inquiry and report back by early 2024 on the resilience of the economy to supply chain disruptions.

“The commission will work closely with other agencies that have existing work programmes underway in this area including the Ministry of Foreign Affairs and Trade and the Ministry of Transport,” Robertson said.

The terms of reference for that inquiry note that global supply chains are being challenged by “escalating geopolitical, environmental, societal, natural hazards, economic, infrastructural and health risks”.

And they suggest the solutions that might flow from the inquiry could include policies to promote stockpiling, the greater diversification of supply, or even “on-shoring”, meaning the ability to domestically produce some products that are currently imported if necessary.