WELLINGTON - New Zealand should learn from China and learn to channel investment into areas that boost local development, a leading China researcher said Tuesday as the election campaign debate over the sale of productive farmland continues.

Jason Young, a research fellow at Victoria University's New Zealand Contemporary China Research Centre, said New Zealand should view investment as part of the broader agribusiness relationship with China.

Referring to Chinese food giant Shanghai Pengxin Group's planned purchase of the central North Island's 13,800-hectare Lochinver Station, Young said the focus on the large-scale sale of productive land to foreign interests was understandable.

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However, he pointed out, leading Chinese agricultural companies such as Bright Dairy, Yili and Mengniu had made large investments in dairy processing facilities in New Zealand.

"On the other side of the coin, the largest and most ambitious New Zealand investment in Chinese agriculture has been led by Fonterra, a top global producer of dairy product and New Zealand's largest company," Young said in a statement.

Fonterra was involved in building three dairy farming hubs in China as part of a strategy to be a more integrated dairy business in greater China.

While sustainable growth in the New Zealand dairy industry was limited due to environmental constraints and the need for economic diversity, investing in production in the developing China market was one way to build on New Zealand's expertise in the dairy industry.

"Just as investment in New Zealand's agricultural sector is a privilege granted by the state on the basis of overall benefit to the New Zealand economy, investment in China's dairy sector is guided by a desire to stimulate development in that sector, to improve food safety compliance and to develop a technologically advanced industry," said Young.

"As would be expected, there is no shortage of debate about foreign investment in China's rural sector, about the bundling of household leases into long-term commercial subleases for investors, or about the role of foreign investors in local development," he said.

"However, the knee jerk reaction that has driven some of the public debate in New Zealand has not driven Chinese central or local government policy, nor has it created local opposition to Fonterra's activities."

Chinese people remained open to economic engagement with New Zealand with the important proviso that investment was in their long-term development interests and that local farmers had a role in the broader economic activities.

"Attempts to bar Chinese companies from investing strategically in New Zealand agriculture for their economic benefit and security of supply, do not sit comfortably on this other side of the coin," he said.

New Zealand's Overseas Investment Office has yet to approve Shanghai Pengxin's purchase of Lochinver, but the sale has become a major issue in the run-up to New Zealand's general election on Sept 20 and all the main opposition parties have formally declared they will severely restrict land sales to foreign buyers or even buy back land sold to overseas interests.