Prime Minister John Key says the Government would look at changing the law to limit foreign ownership of productive land if there is growing public concern.
However, he says such as change in response to the sale of the Crafar farms would a knee-jerk reaction.
The Government last week approved the sale of the 16 dairy farms to Shanghai Pengxin after recommendation by the Overseas Investment Office.
Under the sale, Landcorp will manage the 8000 hectares of North Island farms which were placed in receivership two years ago.
Key this morning said 72 farms had been sold in the past 18 months but an "awful lot" were being sold to New Zealanders.
"Yes, there are some sales taking place but they are relatively small," he told Radio Live.
Ministers did not have a legal right to decline a sale which complied with conditions.
"You'd be judicially reviewed and you'd lose."
No major political parties campaigned on banning foreign sales during the election, Key said.
"Obviously that's a sovereign right that we have.
"We can change the law but at this point I would have thought it would be a bit of a knee-jerk reaction.
"We should look at it, if the flow of sales starts to accelerate and people really become very concerned."
Labour leader David Shearer yesterday said any opposition to the sale was not racist.
"What concerns me is that, by implication National is labelling every New Zealander opposed to the sale as anti-Chinese and possibly racist simply because they oppose the sale of profitable New Zealand-owned assets to foreign interests."
Surveys showed up to 85 percent of New Zealanders opposed selling land to overseas owners.
Labour was not opposed to foreign investment, he said.
"However we also believe no overseas purchaser has an automatic right to buy New Zealand land. That is a privilege and any purchase must provide some added value."
In the Crafar case, local farmers could add more value than a foreign company with no farming expertise, he said.
University of Auckland law professor Jane Kelsey said the Government could not treat applications from Chinese investors differently from similar applications from other countries' investors under what is known as the 'most-favoured-nation' rule.''
She agreed with Key that the Government could have faced an international law suit for breaching its free trade agreement with China if it declined the Shanghai Pengxin purchase.
"Shanghai Pengxin's application pointed to numerous purchases of farmland by investors of other nationalities, and claimed that rejection of its otherwise well-founded application would amount to anti-Chinese discrimination.
"Such a dispute would have huge ramifications for New Zealand's diplomatic and economic relationship with China."
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