China's economic transition reshapes export markets for Australia and New Zealand

China is undergoing a rapid economic transition from a manufacturing powerhouse to an innovation-driven economy, altering the trade landscape for its major partners, including Australia and New Zealand.

Driven by top-down industrial policies and aggressive private sector competition, China has significantly increased its investment in research and development. In 2024, China’s research spending surpassed that of the United States when adjusted for purchasing power parity. This shift toward high-tech sectors like artificial intelligence, robotics, and renewable energy is reducing the traditional demand for commodities such as coal and iron ore.

For New Zealand, China’s growth provided a significant economic tailwind during the first quarter of the 21st century. However, as China’s growth slows and the international trading environment becomes less predictable, New Zealand faces the challenge of finding new market opportunities to replace the exceptional advantages previously provided by the Chinese market.