Niue's Premier Toke Talagi says China aid in the small country is significant and China is a "friend" to Niue, but he does not expect it to ever rival New Zealand.

Mr Talagi met with Prime Minister John Key in Alofi yesterday and said afterward that he was hoping an increase in tourist numbers would help lure Niueans home because there would be jobs to go into and businesses to set up.

He said Chinese aid had helped fund infrastructure to support that aim, but downplayed the extent of it.

It was a more amicable discussion than Mr Key's 2009 visit when Mr Talagi hit out at New Zealand's refusal at the time to release tourism aid funding until it was satisfied it would be properly used. Mr Talagi said at that time that if he lost the next election he would blame Mr Key, and that he would go to China for help if New Zealand withheld it.


Yesterday Mr Talagi said China was "a very good friend" but downplayed its influence, saying he did not think it would ever rival New Zealand in its relationship with Niue.

He said Chinese aid was "significant" at bout $2 million a year, but the bulk of Niue's funding came from New Zealand.

Despite his assurances, the issue of China's presence on Niue is clearly causing some local concern. Mr Key was asked whether it had been wise for Niue to offer Chinese people residency on Niue as part of the aid agreements during a question session with local school children.

Mr Key responded that while there had to be balance, Niue was capable of supporting a larger population and could benefit from it. He said the Chinese had made a valuable contribution in New Zealand.

While in Niue, Mr Key also visited the Matavai Resort, recently refurbished as part of a $10 million package of aid funding to improve accommodation on the island.

He announced a $1.25 million package for tourism and to make the electricity supply more stable in Niue.