In coming to any view of the sale of the Crafar farms to a Chinese-owned company, the national interest must be kept clearly in mind. The national interest lies in seeing all economic assets in the hands of those who will develop them for the best possible return.
The day is past when state ownership is thought capable of finding their most efficient use. These days a free market is considered better at ensuring resources pass into the hands of those who will extract most value from them. The question that must be asked about the Crafar farms sale is whether the purchaser is a state agency or a market participant.
That matters because a market participant is usually willing to sell an asset if a buyer believes it can be developed for better value. A government, foreign or domestic, does not behave in the same way.
A state can hold investments that are not performing for all sorts of "strategic" reasons. That is particularly true of a foreign government holding property in an economy for which it is not responsible.
The Shanghai Pengxin Group, now permitted to buy the Crafar farms, is often said to be backed by the Chinese Government. But in papers released with the decision yesterday, the company is said to be owned by an individual, Zhaobai Jiang, an engineer who founded a real estate construction company in 1988 and is now rated one of the wealthiest people in China.
On the face of it, there need be no fear the farms are passing into Chinese Government control and possibly off the market forever. Shanghai Pengxin is said to have investments in sheep breeding, wheat, soy and maize production in China and South America.
The price it has agreed to pay the Crafar receivers is clearly more than New Zealand investors, including Sir Michael Fay, believe the farms are worth.
Overseas investment in farmland can be approved when the applicant is bringing something more than capital to the land. In that respect, it is surprising that Landcorp, the state's farmer, which also bid for the Crafar farms, will be managing them for Shanghai Pengxin. It is even more surprising that the new owner will be obliged to retain Landcorp as manager for the duration of its possession.
The conditions of sale are quite restrictive, suggesting the Government has not much faith in the value the buyer can bring to this country and has approved the purchase for other reasons, perhaps diplomatic.
The Chinese Government will have been assisting the application just as any government would, but relations with a major trading partner should not be at risk as long as the application was being assessed purely on its merits.
Too much secrecy shrouds our procedures for overseas investment approval. In a politically sensitive case such as this one, much more information on the bid should have been made available before yesterday. There was no opportunity for rivals to see the application and challenge some of its claims.
But it is important now to keep the purchase in perspective. It is by no means the first foreign sale of farmland, it amounts to 7893ha of 357,056ha sold offshore in the past two years. The land and processing industry remains in New Zealand. Investment from market participants anywhere can be welcomed.