No pressure on govt for sale of Crafar farms to Chinese, English says; Crafar bidder Pengxin says it may look at forestry, real estate investment too

Finance Minister Bill English says New Zealand's government is under no political pressure from China over the pending sale of the Crafar farms to Pengxin International Group, whose application to buy the farms is before the Overseas Investment Office.

Pengxin's bid for the 16 Crafar farms is the first foreign application to fall under new overseas investment rules announced last year that give government ministers the ability to turn down applications on grounds of economic interests. A new 'mitigating factor' was also introduced to the application process, enabling ministers to consider whether proposed overseas investment provided opportunities for New Zealand oversight or involvement - for example, the appointment of New Zealand directors or establishing a head office here.

The Overseas Investment Office is expected to announce its decision on Pengxin's bid in late June this year.

The Crafar farm sale is being closely watched by other potential foreign investors considering launching bids under the new rules. See more in Gareth Vaughan's article here. The opposition Labour Party has also announced its foreign investment policy would be even more stringent than the new rules. See more here.

English said any talk that the government wanted the farms to be bought by Chinese interests in order to curry favour with the Chinese would be "mischief making". The Finance Minister travelled to China last month, where he met political leaders and high-level officials. See Alex Tarrant's article on English's China trip, and a more recent one to Hong Kong and Singapore here.

“While I was over there talking to the top levels of their government, there was certainly no discussion along those lines, and no pressure [to sell to Chinese interests]," English told interest.co.nz in a phone interview.

There had also been no discussion among government ministers on that issue, English said.

"We don’t feel pressure around this. At a political level the relationship’s very positive, they [the Chinese government] have been quite explicit in wanting to have the export trade [between the two countries]  double in the next five years, and they are quite candidly understanding of the need to show that investment is beneficial [to New Zealand]," he said.

English said he was surprised at how candid Chinese officials were in their understanding of the politics around Chinese investment and the sensitivities involved.

"The [overseas investment] process is what it is. They go through the Overseas Investment Act according to the criteria that are there," English said.

When talking to the Chinese, the New Zealand government had emphasised the rationale for the new overseas investment rules, and "pointed out the positive bit of it from their point of view, which is, to New Zealand eyes, their investment.”

“If you said, ‘look we’re just going to ban Chinese investment,’ you’d be getting pressure. But it certainly wouldn’t just be from the Chinese – it would be from the WTO [World Trade Organisation] and anybody. It would be regarded as a very provocative act,” English said.

Pengxin may look at forestry, real estate in further investments

Meanwhile, a spokesman for Pengxin said if the property development company's bid for the Crafar farms was approved, Pengxin had its eyes on further large-scale investments in New Zealand, such as forestry and real estate.

Pengxin had been looking at New Zealand as an investment opportunity for several years, spokesman Cedric Allan told interest.co.nz.

"Clearly the big export products which China would be interested in from New Zealand would be based around food – it could be seafood, it could be aquaculture, it could be horticulture, it could be beef, and obviously there’s dairy," Allan said.

“They will also be interested in general business opportunities. They might look at real estate investment here – real estate being non-farming investment. They might look at forestry," he said.

“They’re open to anything that’s on a big enough scale, and which has some relevance to China."

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