Prime Minister John Key says the decision to reject a bid by the Chinese-owned Pure 100 to buy Lochinver Station does not send mixed messages about New Zealand's approach to foreign investment.
Ministers Paula Bennett and Louise Upston announced they had rejected the application from the Shanghai Pengxin to buy the station despite the Overseas Investment Office recommending it be approved.
Mr Key said the OIO had made it clear their recommendation was a "line call" and he was certain the ministers' decision that it was not of enough benefit to New Zealand was sound.
Mr Key was in Christchurch with the Chinese Ambassador announcing new flights to China when the news broke. He said the ambassador had not raised it with him.
Although a spokesperson for the Chinese Embassy told 3 News it was "disappointed" at the decision and expected New Zealand to treat all foreign investors equally, Mr Key did not believe it would damage New Zealand's relationship with China.
"The Chinese are pragmatic, they can understand we've got the law, we apply the law. We expect the same treatment when we go into China."
He also pointed to the Silver Fern Farms' deal under which 50 per cent will go to Chinese investors if shareholders agree, said ministers had made it clear they supported that deal.
Mr Key denied it was politically driven because of a backlash over foreign buyers of New Zealand land.
He said the decisions had to be made within the criteria stipulated in the law and were open to being overturned under judicial review if they were not.
"They can't think about public opinion, they have a legal test."
Paula Bennett also denied there were political drivers behind it or that it was because of the ethnicity of the buyers. "
Ms Bennett also denied the decision was politically driven or that the ethnicity of the buyers was a factor after Labour's recent property data based on Chinese surname.
"I don't make decisions based on people's surnames."
Labour MP Grant Robertson said it was the right decision, but overall the high approval rate of overseas sales was concerning.
Mr Key said that was partly because buyers only tended to go to the OIO if they believed they had a strong case because of the time and expense of it.
He said the decision to reject the bid showed the overseas investment regime was working well.
Mr Robertson also had some sport at National's expense.
News that the OIO was considering the deal broke had broken during last year's election campaign and at the time, Labour said it would block the sale if it was in government.
In return, several National ministers accused Labour and others opposing it of 'xenophobia' for targeting Chinese buyers but not others.
In Parliament today Labour MP Grant Robertson asked Finance Minister Bill English if he stood by his claim on "we will not block that sale" - a comment Mr English during a debate on TV3 last year.
Mr English had criticised Labour for saying they would unilaterally block it, adding that National would let it go through the usual overseas investment processes.
Steven Joyce was also tackled for claiming last year that opposition to the sale was "xenophobia."
In its report to ministers, the OIO recommended the deal be approved, but conceded it was "finely balanced".
"The OIO acknowledges that this matter is finely balanced but on balance considers that the benefit is likely to be substantial and identifiable."
It listed the creation of contractors' jobs, increased exports from the conversion of forestry and wildling pine to dairy, and processing of the forestry land felled.
The OIO also listed other benefits the deal offered including a financial contribution to the local Rangitaiki School, the agreement to sell lake and river beds to the Crown, conservation measures to protect waterways and trout, and to provide walking access and preserve historic sites, including a submerged waka.
However, Ms Bennett said while the conversion of the land into pasture would create contractors' jobs it was only a short term benefit and did not meet the criteria of "substantial benefit".
Other gains were not significantly greater than a local buyer would be likely to provide.
She said the size of the station was significant and it was well run which made it more difficult for a foreign buyer to show they could add more to the New Zealand economy from it.