Justice Forrest Miller yesterday ordered the Overseas Investment Office to reconsider its decision to approve Shanghai Pengxin's $200 million offer for the 16 farms, saying it overstated the economic benefits.

Investment adviser David Mahon said today it was alarming the High Court made the ruling when there had been huge investments by German interests in the South Island.

"It is concerning that it is a Chinese investor that has triggered this judgment when other non-Chinese investors did not," he told Radio New Zealand.

If the Overseas Investment Office declined the sale after reconsideration the impact would be huge.

"Because China will perceive that New Zealand is friendly to most developed nations' investment but certainly not developing countries and in particular not China."

There was a risk the court's decision would deter Chinese investors, Mahon said.

"The debate around the initial approval for the deal from political sources and general media handling in New Zealand, made New Zealand look quite a racist country and quite reactionary, which I don't believe it is.

"Unfortunately Chinese investors and Chinese people look at that."

China was about to become New Zealand's largest trading partner, he said.

"Why we would almost selectively upset China or try to push China away, doesn't make sense."