PM defends Chinese investment in NZ

Prime Minister John Key has defended Chinese investment in New Zealand, saying it can bring in capital and create jobs.

Discussing the foreign ownership of assets on TV One's Breakfast show today, Mr Key said there was no strong argument for Chinese investment in assets such as energy companies.

But Chinese giant Bright Dairy's investment in Canterbury dairy company Synlait was an example of where Chinese investment had done well, he said.

"They've come in, they're investing heavily, you're starting to see them produce infant baby formula. So they're not buying the land and they are bringing in capital, and that's creating jobs," he said.

"So I don't think we should be totally xenophobic about investment in New Zealand. It doesn't matter really whether it comes from China, Australia, or the US."

Asked about concerns over China reportedly planning to invest $6 billion in New Zealand government bonds, Mr Key said being overly indebted to foreigners was the concern.

"Bluntly, we don't want to keep owing the level of debt we have to the rest of the world, and we certainly don't want it to rise forever," he said.

"Ultimately no, it probably doesn't matter whether (investment in bonds) comes from China or somewhere else.

"The truth is that China is the big saver around the world. Because of its domestic inflation it can't bring that money home and so for a long time now they've been buying New Zealand Treasury bonds, as they are big buyers of US treasuries -- they pretty much own all of the US Treasury bonds."

Mr Key said he wanted New Zealanders to own their future.

"If you want to do that then you want the Government to be saving, you want individuals to be saving and you want to be able to control that investment. And you do that when you lift your savings rate," he said.

"Over the last nine years of a Labour government we spent money we didn't have, we borrowed it from overseas, we had far too much consumption and not enough savings and investment."

Mr Key said there was a need to rebalance the economy.

"In the end if you don't put yourself in that position you've only got two options -- don't borrow the money and therefore don't invest, or borrow it from someone else and they'll come from overseas.