zealand dairy industry is experiencing prosperous times, continuing the strong growth in export earnings of the past eight years. animal numbers and prices have increased and on and off farm productivity growth has been impressive. and the future looks bright. there seem to be important structural reasons behind the rise in dairy prices that should continue into the medium term. but cyclical elements were also present and it would not be surprising to see a continuation of the correction in auction prices that we have seen in recent months. looking ahead there are important challenges to manage. on the external front these include the oscillations in global dairy prices, the competition that dairy farmers will increasingly face from other international suppliers, and the need to continue diversifying our export markets and position ourselves for the enormous longer term opportunities that are expected to emerge in the indian market. on the domestic front, dairy farmers should be conscious that high dairy prices can turn around quickly, and will need to continue managing their cash flows and borrowings in a prudent manner. bis central bankers ’ speeches

’ s target is for annual growth of 7 - and - a - half percent over the medium term. china ’ s growth has been driven by several factors : high domestic investment and savings ratios, sizable foreign direct investment, the impact of catch up technologies, the massive shift of labour from subsistence agriculture to higher productivity roles in urban industrial bis central bankers ’ speeches production, and on - going market based reforms including, importantly, those associated with its membership of the world trade organisation since 2001. china is the world ’ s second largest economy, and the largest trading nation. it is the second largest trading partner for the united states and the european community, and the largest trading partner for the 11 countries of asean, as well as australia and new zealand. china takes 21 percent of our merchandise exports – up dramatically from 4 percent a decade ago ( figure 5 ). figure 5 : export market shares ( average annual percentage for given year ) source : statistics new zealand. china is our largest export market for every agricultural commodity except beef ( where it is our second largest market behind the united states ). it purchases a third of new zealand ’ s dairy exports ( figure 6 ). figure 6 : share of primary exports to china ( annual total ) source : statistics new zealand. bis central bankers ’ speeches provided china ’ s economy continues to expand at around current rates, growing demand for protein - based commodities looks assured. china ’ s current rate of urbanisation, which is around 50 percent and well below the more industrialised asian economies, could trend higher for another two or three decades ( figure 7 ). higher incomes, and greater access to refrigerated products, mean that urban dwellers ’ per capita consumption of dairy products in china is about three times higher than that of rural dwellers. figure 7 : urbanisation rates in industrialised asian countries source : world bank. an important issue is whether china can maintain a 7 – 8 percent growth rate over the long term. such growth rates would continue to make china an outlier compared with the development of other middle income economies. china has achieved outstanding economic growth for over 30 years, but it faces several difficult challenges in the years ahead. these include : a declining labour force and aging population ; rebalancing the economy towards stronger consumption and higher value added exports ; meeting infrastructure demands ; addressing income inequalities in the central and western regions ; tackling corruption and environmental issues ; implementing the ambitious set of reforms announced in the third plenum ; and managing