China's central bank effectively eased monetary policy overnight to pump up a slowing economy. The easing came as Donald Trump ramped up his trade and investment war rhetoric. Annual migration fell a bit, but monthly migration rose as work visa numbers kept rising. Labour's election campaign manager will jump straight into Air New Zealand in August.
China eases as trade war worsens
In another sign US President Donald Trump's trade wars against China and others may be slowing the global economy, the People's Bank of China effectively eased monetary policy overnight.
It reduced the amount of reserves banks have to put aside by US$100 billion, essentially making it easier and cheaper for banks to increase their lending. It said it would reduce by 50 basis points the amount of term deposits that banks have to put on deposit with the central bank from July 5, the day before US tariffs on Chinese exports kick in. This technique is known as easing the Reserve Requirement Ratio and is another way to effectively ease monetary conditions, as well as reducing interest rates.
China's economy has already been cooling a bit in recent months because of the Government's attempts to crack down on easy and reckless lending to private companies and local governments by state-run banks and the shadow banks that are often linked to the state-run banks.
That has begun to effect some commodity prices and activity in the Chinese economy. Log prices have fallen five percent in the last month because of reduced demand in China for New Zealand logs, which are often cut up into simple box wood used to set concrete in construction projects.
The easing is in direct response to concerns about Trump's threats last week to impose tariffs on US$200 billion worth of Chinese exports to America. This is on top of tariffs already put on US$50 billion worth of Chinese imports from July 6. China has threatened to retailiate in turn, without giving details.
Trump then upped the ante over the weekend by indicating America would use 1970s-era legislation normally reserved for national security and economic emergencies to ban Chinese companies from buying US robotics and other technology companies linked to China's Made in China 2025 drive. Inward Chinese investment in America has fallen 90 percent to US$1.8 billion in the first half of 2018 from a year ago.
For good measure over the weekend, Trump also announced via Twitter that he would impose a 20 percent tariff on European car imports and that he wanted to send illegal immigrants back over the border without due process or court hearings.
Migration still high
The then-Opposition talked a good game about cutting migration during the election campaign, but have done little since becoming the Government.
Migration has only slightly eased since October, and even then that is because of the natural exit of people on older work and student visas. New work visa and student visa numbers are rising. Changes to work rights for students actually eased and extended access for some students and nothing has been announced to tighten settings for visas for temporary low-skill work visas.
The strong contribution of migration to total GDP growth (but not per capita growth) was evident in last week's figures. Near-record-high net migration is set to remain a tailwind for growth for some time, although it could become a politically difficult headwind for relations between Labour and New Zealand First, given such limited policy action and only modest natural reduction.
Figures out from Statistics New Zealand on Friday showed annual net migration edged down again in the year to May to 66,200 as more people on old temporary work visas and holidaymaker work visas left the country and a few more New Zealanders left.
But seasonally adjusted net migration actually rose to 5,090 in May from 4,930 in April as new work and student visa numbers are still rising.
Net migration remains up near record highs and more than three times higher than long term averages. New Zealand's net migration rate remains three times that of Britain, twice as fast as Australia and five times faster than America's net migration rate.
There were 70,206 people on new student and work visas who arrived in the year to the end of May, up from 68,199 in the previous year. Work visa arrivals from China and the Philippines were up 21 percent and 23 percent respectively in the year to May from a year ago, while work visas from South Africa and the United States were both up 14 percent from a year ago.
Labour Party President Nigel Haworth announced on Friday afternoon that Party General Secretary Andrew Kirton would be leaving in August to join Air New Zealand in an unspecified role.
Kirton, who was Labour's campaign manager, is expected to take up a government relations role with Air New Zealand. The current head of Government relations, Duncan Small, is married to National List MP Nicola Willis.
The move is one of several by senior figures close to or inside the new Government and out into the private sector in recent months.
This sort of 'revolving door' move is typically restricted in other democracies.
“I worked for Heathrow Airport in the UK, so the opportunity to get back into the industry working for such an iconic and progressive company was too good to turn down,” said Kirton.
Haworth said Kirton indicated soon after the September election that he wanted to move back into the private sector.