New Zealand's ambassador in Beijing says the investment relationship between China and New Zealand is underdeveloped.
Ambassador Carl Worker, speaking at the opening of a Fisher & Paykel Appliances' store in the city of Hangzhou, said two-way investment would be beneficial for both countries.
"Investing in each other's countries isnot simple stuff, but it's essential because it then tends to provide the basis for boosting trade," he said.
Worker said the commodity trading relationship between the two countries was worth $10 billion annually.
The most recent Statistics New Zealand figures show China's direct investment in New Zealand was only $129 million in 2005.
New Zealand's direct investment in China was worth $164 million last year.
But Chinese investment in New Zealand has become a contentious issue lately.
Hong Kong-listed Natural Dairy (NZ) Holdings' attempt to buy Crafar dairy farms in the North Island has attracted widespread comment and criticism, including from politicians.
Haier, China's largest whiteware manufacturer, bought a 20 per cent stake in Fisher & Paykel Appliances last year, and a Chinese firm now owns a cornerstone stake in PGG Wrightson.
Worker said investment always involved risk.
"There are procedures and processes to make sure you get the right balance between investment being good for the country and not getting into areas where New Zealand values and New Zealand interests are pushed aside."
Asked if an element of xenophobia lay behind New Zealand opposition to Chinese investment, he said: "I wouldn't want to characterise it in that way at all.
"I think there are issues over Chinese investment in the same way as all other countries have issues over investment."
Market commentator Arthur Lim said much of the opposition towards Chinese investment in New Zealand was caused by xenophobia, as well as the negative experiences of some Kiwi companies in China, such as Fonterra's Sanlu debacle and Lion Nathan's unsuccessful attempt to crack the Chinese beer market.
But it was not the Chinese who should be blamed for New Zealand business failures in China, he said.
"It's much more a case that New Zealand companies are not being very good at going overseas and making investments."
He said New Zealand needed to be careful that it had a "good alignment of interests" when a firm from China wanted to invest in the country.
But he agreed with Worker that two-way investment could boost the trading relationship.
