"If we don't do that we will be stuck with the safeguards we've got out to 2022 or 2024 and that has a financial impact and a competitiveness impact, particularly in the dairy sector."
Mr Key said he was hopeful of leaving with an agreement to start the new round of negotiations. "Sometimes these things don't happen immediately but this is my sixth visit to China and one thing we do know about China is that face time matters."
He said New Zealand was not taking sides on the territorial dispute but wanted the parties to reach a peaceful resolution between themselves. He was hopeful that would be achieved, saying China had a long term interest in a peaceful resolution because regional instability would not help its economic development programme.
He said it would almost certainly get raised, and the issue had been more prominent lately partly because of the looming judgment in the arbitration case lodged by the Philippines at the Permanent Court of Arbitration at the Hague.
Mr Key said the issue was important for New Zealand because it was a key waterway for New Zealand goods but New Zealand's approach was "a little bit less aggressive" than some other countries.