Chinese leaders say their economy has been hit by global downturn but there are signs of improvement, Prime Minister John Key said today.
Mr Key made his first visit to Beijing's Great Hall of the People last night (NZ time) for a meeting with President Hu Jintao.
He continues his visit today with an agreement on tourism and a speech at Peking University, before meeting with Premier Wen Jiabao.
While last night talks were broad ranging and an overview of the relationship, today's talks with Premier Wen will get down to greater detail on how to improve contacts and trade.
"The free trade agreement was an entree into each other's markets but the real issue is how do we convert that to the mutual benefit of both countries," Mr Key said.
"They clearly want to buy food, they have a desire for our resources, they see New Zealand as a good place to educate their young people and tourism is of growing significance so and on our side we are a huge consumer of their manufactured goods."
Mr Key said the door was open it was now a matter of how "boldly" New Zealand walked through it.
President Hu's comments on the economy were measured and a "lot more sobering" than Mr Key expected.
"He thought China would come out of this but they certainly weren't immune and while the March numbers were looking a lot stronger, the January and February numbers had been much weaker than they anticipated."
The Chinese economic stimulus package had worked in the interior but the exporting cities on the coast had been badly hit.
China was still growing though and there were signs of confidence returning.
"They have self-imposed limits on the growth of credit from their banking institutions because they are worried that if they grow too quickly the quality of credit growth will be poor."
The limit was around 5 trillion RMB ($NZ1.268 trillion) and 4.5 trillion of that had been lent in the first quarter.
"I think they take it as signs that investments and confidence are returning."
China was keenest to do more in building agricultural links despite the contaminated milk scandal.
Mr Key took Fonterra chairman Henry van der Heyden to the meeting and had him sit at the top table during talks.
"It certainly is an acknowledgement that it is both in New Zealand's interests and our strong desire for Fonterra to be able to play a major role in the agriculture sector in China," Mr Key said.
"While there is great regret that the events at Sanlu occurred, New Zealand has worked hard to put that incident behind us. Fonterra has worked hard domestically to put that incident behind them and I thought it was a very important symbolic step that we had Henry van der Hayden at the table."
