There is ''limited potential'' for the Chinese domestic dairy industry to grow, Xie Jianmin of the Chinese Ministry of Agriculture says.
China faced strong constraints in terms of environmental protection, the country was lacking water and land resources and labour costs were growing, he said in a recent interview with New Zealand media representatives in Beijing.
New Zealand's strong advantage in dairy production had led to investment by Chinese companies, Mr Xie, the ministry's international co-operation director, said.
As to whether he expected further Chinese investment in New Zealand, he said it was a market-based decision and companies would have to make their own decisions, according to the investment environment.
In China, the agricultural sector faced many challenges, including limited water and land resources and a very large population.
While it needed to ensure there was a balance of supply and demand, in order to meet the growing demand, on the other hand, the environment had to be conserved and that was a major challenge. Last year was not a good year for agriculture, with global food production declining due to severe natural disasters and fluctuations in the global market.
Against that background, Chinese agriculture managed to attain its goals. It registered output growth for the ninth consecutive year; all its major agricultural commodities had ''grown quite well''.
There had been rapid growth of farmers' income for nine consecutive years and, for three years, farmers' income had outgrown that of their urban counterparts.
Agriculture was still top of the Government's agenda and it was determined to advance agricultural modernisation and balance urban and rural development, he said.
Strong efforts would be made this year to develop modern agriculture to ensure food security and sufficient supply of agricultural commodities.
The Government was also taking ''all measures'' to ensure there would be no major food safety accidents or animal health epidemics.
A recently-signed strategic plan marked a ''new stage'' of development for China and New Zealand's agricultural co-operation, he believed.
The plan, signed in April by New Zealand Minister for Primary Industries Nathan Guy and his Chinese counterpart, Hang Changfu, set out areas where both countries could learn from each other.
They included animal welfare and science, increasing productivity, and building skills and knowledge.
Mr Xie believed it demonstrated the strong commitment of both China and New Zealand in agricultural co-operation, as well as the significance of agriculture to the countries' bilateral relationship.
There had been ''rapid'' growth of agricultural trade between China and New Zealand. He believed the signing of the Free Trade Agreement (FTA) in 2008 was the driving force for agricultural trade development.
New Zealand was the third largest supplier of animal products to China, the sixth largest supplier of fruit and the ninth largest of vegetables.
Since the signing of the FTA, New Zealand's exports to China have risen from $NZ2 billion a year to $6.9 billion in 2012.
Two-way trade between China and New Zealand has reached almost $15 million and the aim is to double bilateral trade to $20 billion by 2015.
Mr Xie believed the strategic plan posed several challenges - the exchange of agricultural policies, farm management practices and agricultural administration, due to the differences in farming practices; the co-operation at business level and creating the opportunities for agricultural trade and investment; and technical co-operation.
The main challenge for bilateral co-operation was the lack of good knowledge of each other, which meant the two agricultural ministries would have to strengthen exchange co-operation and information sharing, he said.
However, agricultural co-operation between China and New Zealand was ''very fruitful'' and he was optimistic about the future.
There was much to learn from New Zealand, including environmental protection, the balance between urban and rural land and the development of modern agriculture.
Ren Hongbin, executive vice-president of the Chinese Academy of International Trade and Economic Co-operation, said as the middle class in China grew, so did people's concerns about high quality food.
There was a lot of interest in agricultural products from New Zealand and after the Sanlu milk scandal, they no longer trusted Chinese dairy products.
Tom Wang, from Greenpeace China, said ''coal pollution'' was ''definitely the biggest problem for China''.
He grew up in the province of Shanxi, in north China, the home of about one-third of China's coal resource.
''I grew up watching what coal does to a place and to the crops in the region as well. To stop coal pollution in China is a personal call for me.''
Now when he visited his home town, Mr Wang saw the soil, water and air being polluted. He saw cows eating grass covered in coal dust.
''I wouldn't drink that kind of milk. You literally see all these heavy metals ... going into the cows.''
Most of the farmers had moved to the cities; they no longer did any farming but they did not have other skills to do anything else. Water and air pollution and tainted food were all visible problems in daily life in China.
Ministry of Environmental Protection spokesman Tao Detian said the Chinese Government was giving ''top priority'' to rural environmental improvement.
Sally Rae travelled to China as a guest of the New Zealand China Friendship Society.
