China: fear not for I am a brave new world

I’ve often been perplexed by the complexity of political decisions and recently the debate about China’s ownership of New Zealand land has definitely made me think more than usual. Last night, I attended the NZ Initiative’s moot titled “New Zealand should ban Chinese ownership of farms” and was presented at first by two university teams, and finally by NBR Editor in Chief, Nevil Gibson, and Save the Farms Spokeperson, Tony Bouchier. The nigth offered great stimulation and thought provocation. This is a newly (un)formed idea; it has holes; so I thought I’d capture a few points here and learn from the readers about what you think.

Land is a finite resource

New Zealand has a total 268,021 km of land. That’s all we’ve got. Because land is a finite resource, as less of it becomes available, the price is inflated. What that means is that if we sell our land today we will have to buy it back at a higher price.

This is completely alright. However, if we sell our land today, we must ensure that what we do with that money grows more than the land’s value. For example, we sell a piece of land for $100,000 today. We invest it in startup companies, the stock market, or overseas investments, and in 10 years we grow that to $200,000.

Now, the value of the land has increased in price to $180,000. This is great because it means that we have done more to increase the value of our wealth than if we had just held onto the property. It also means that we can buy back the property if we need to.

However, if the value of the land was $250,000 in 10 years, then we would not have made a good choice. That means that we would have been better off holding onto our land. And, that we now won’t be able to buy it back because we don’t have enough money to do so.

This brings me to my major argument: If New Zealanders are going to sell off our land at all, we need to ensure we become intelligent wealth creators and grow our wealth beyond that of the value-growth that results from owning that land.

Let’s assume that we have sold some of our land. That land rightly belongs to the buyer – a Chinese citizen, business, or family (in this case). According to our laws, we can’t take any land away from it’s owner, so the control of that land then becomes out of our reach (outside of our control through regulations/laws). What happens if the owner has a Chinese association/origin?

China’s Intention?

I certainly don’t talk from a deep experience or understanding of China – but there is certainly a cultural association with the “homeland”.

What we don’t understand is China’s Intention. Chinese companies are buying up infrastructure, corporations and assets all around the world in droves. This may just be because it is a great investment. But, it could also because of control. I don’t know the intentions or complexity of China’s strategy. And, I think very few people can claim they do.

What I do know is that if a single country owns a substantial amount of the resources, societal infrastructure, corporations and assets of the world, they essentially have control (by proxy) of the world. This is a scary prospect, and I certainly understand the fear that New Zealanders (and people globally) have of China. Note though, this is only scary because we fear what it means for us – “being controlled by China”?

A Chinese Lead World

China has a unique and compelling culture. Although it has experienced some tough and powerful claims against it based on human rights, labour laws, and environmental laws (to name a few), China is a fast learner and a very intelligent country. Their middle-class is growing exceptionally fast and overall power is shifting towards the people and away from government.

I am excited by a Chinese ideal:   collectivism.

Collectivism is a philosophy where we recognise the interdependence on people. In other words, acknowledging that we rely on each other to survive and thrive – we are interlinked; connected. China has a full-on institutionalised view on collectivism which originates from it’s history with communism.

Now that the people of China are gaining more individual freedom and power, this combination of independence from the state with their cultural heritage is breeding a philosophically-aligned population. Chinese people are evolving into a democratic, empowered, values-driven society – but they know that they are ONE.

Ultimately, the idea of an autonomous civilisation living in unison, in singularity; as one; is very attractive. It means we won’t have a lot of the petty problems we face today:  war, poverty, hatred. It means we can put aside perceived differences and instead work on persistent problems together.

A New World

At the end of the day, what I aspire to is a world with true peace, connectedness and infinite knowledge. None of that is accessible to anyone until we can view each other on a level playing field and put aside our differences. China’s strategy may evolve into the very solution that evolves our entire society to a new and creative level. It may not.

Ultimately, we have a choice.

If we fear China’s intentions with the ownership of the world’s assets, let’s meet them halfway. Let’s sell our land to the NZ government and lease this land to the Chinese company. That way we retain our assets and allow Chinese investment and knowledge to penetrate New Zealand.

If we seek a brave new world, China could offer this to us. We could let them into our “country” and take a place in theirs. Perhaps we could learn a thing or two if we put our fear aside and saw China as an opportunity. I’d love to see us (as global citizens) entering China’s political, economic and legal structure – having a say in what they are doing.

Why is no one having that conversation?

This post was written to inspire debate and conversation. I don’t know enough to come up with any answers, but together we can learn enough to do so as a group. Please comment and share your thoughts, ideas, and solutions to this heavy debate. Oh, and please share this with your networks – a wider debate with NZ’ers will breed a greater perspective on this debate.

(Note: please keep your points and perspectives under control – I will not tolerate any racially-motivated slander or incoherent emotional statements. Please put your fear aside and share a constructive and powerful perspective.)

3 Comments to “China: fear not for I am a brave new world”

Hey Justin, after you posted about Vegetarianism I found my way to this article, and I thought I better get my response down. It’s on my differing views about China’s collectivism, not the sales of farms…
In regards to selling farms, I haven’t really thought much about this, but my gut feeling is that its not a very good idea.
Foreign investment in a country can about extraction (common in Africa/third world countries). Something is extracted from New Zealand by the existence of farmland/plantation, in that we forego a lot of perfect wilderness in order to have that. That ‘extraction’ is even less favourable if the financial benefits accrue overseas.
But foreign investment can also be about adding to a nation by building things that add value and are sustainable (more typical of investment in Singapore).
The sustainable type tends to involve upskilling people in the country receiving the investment.
But New Zealand knows much more about high tech farming than do the Chinese.
Sometimes, you don’t get the upskilling so much, you just get the cash – and it still occurs in a way that sustainably benefits the country receiving the investment. For example, the (China) Bright Dairy/Synlait baby formula venture in Canterbury, where there is investment of ‘dumb money’ (I admit that is kind of a mean assumption) that will likely be good for the local economy. But money for a new food processing factory is different to money for land, because investment by Chinese in land is not required to bring that land into existence. Ie. the grass grows whether it is owned by New Zealanders or by Chinese. Foreign ownership of farmland does not add value, nor is it a prerequisite to any investments that could add value, as far as I’m aware.

October 26, 2012 Reply

Hi Ben. I have responded to the article you wrote, thanks for the compelling thoughts.
From your response above, I’m not quite sure of what you’re saying, so it would be great if you will take the time to expand a bit further on your points. Then, we may be able to explore them in more detail.

October 28, 2012 Reply

My earlier comment is indeed quite hideously rambling. Hopefully this will be marginally better….

What I’m saying is that a foreign investment should increase the productivity of the country receiving the investment.

This can be by upskilling of the local labour force, add/or installing capital equipment. These things increase local productivity.

As far as I can tell, foreign ownership of farmland would not increase the productivity of that farmland. Would New Zealand grass grow any faster if it were owned by Chinese? No it would not. Especially when you consider New Zealand is at the cutting edge of (dairy) farm science already.

Thus, because I don’t see the path to increased productivity, I’m not persuaded that selling farmland passes any national interest test.

I take your bolded point about how becoming intelligent wealth creators could make the cash from selling farms pay off through other investments and entrepreneurial endeavours. However, that is a view at the macro level. At the micro level, what you have is a farmer who has sold his farm for a few million dollars. For the intelligent wealth creator theory to work, not only do you need New Zealanders to become intelligent wealth creators, but you need an efficient means to get millions of dollars from conservative, retiring farmers into the hands of young, energetic entrepreneurs.

New Zealand investors have proven themselves to be quite conservative investors by their preference for investing in housing. I would suggest that we focus on improving the systems/incentives that get the money that already exists in New Zealand into the hands of the intelligent wealth creators we already have – instead of into inflated housing prices. If we can achieve that, then I think that theory (of farmers selling farms to get a greater return in other productive sectors of the NZ economy) becomes very valid.

October 28, 2012 Reply

Leave a reply to Ben