NZ PM reminds Australia of China's importance to both countries

The big game in global commerce for Australia and New Zealand is China, visiting New Zealand Prime Minister John Key told business leaders and members of parliament (MPs) in Australia on Friday.

China's demand for Australian and New Zealand goods is insatiable and the country will soon host the next silicon valley, Prime Minister Key said at Trans-Tasman Business Circle Luncheon in Sydney.

"Despite all the things you occasionally see and the odd jitters around the Dow Jones at the moment, the big game in town for all of us is still going to be China," Key said.

He said China was becoming more heavily focused on domestic consumption.

"It's good for both Australia and New Zealand."

He said New Zealand now exports 3 percent of the world's dairy exports, while global demand is growing at roughly 3 percent a year.

"That's occurring because of the demand that's happening out of China," Key said.

"It will be the same for many of the products produced out of Australia, whether it's in the resources sector or anywhere else."

Key said China will be the home of the next silicone valley with its increasing recognition of intellectual property rights.

"The next silicone valley won't be on the east coast of the United States," he said, "The next silicone valley is going to be on the east coast of China."

"They are going to have a very different production base, and if Australia and New Zealand companies want to succeed they are going to have to keep investing big time in terms of their intellectual property."

He said equally, New Zealand and Australia need to hold on to their people, or not lose talent to other countries.