Chinese officials warned kiwifruit marketing company Zespri there could be retaliation if New Zealand investigated claims of steel dumping.

RNZ has also learned the company told the Ministry of Foreign Affairs and Trade about the threats.

Photo: 123 RF

It's unclear what happened next but normally the ministry would have told its ministers about the warnings, especially Trade Minister Todd McClay.

Mr McClay has not confirmed any of this and Prime Minister John Key has said he does not believe the Chinese would engage in a trade war.

But RNZ understands officials from China's Ministry of Commerce and Ministry of Trade Policy (Mofcom) made the retaliation threats to Zespri's representative in China, Matt Crawford.

World sales of Kiwifruit have risen to a record $1.9 billion, up 21 percent from the previous season, and China is set to become the biggest single recipient of that crop.

The warning from Chinese officials appears to have been sparked by fears of an inquiry into claims of steel dumping in New Zealand.

Fairfax media reported Pacific Steel, a subsidiary of New Zealand Steel and ultimately Bluescope in Australia, had complained to the Ministry of Business, Innovation and Employment (MBIE), alleging dumping by China.

Dumping is the practice of selling products below cost, and is prohibited under most trade agreements.

No one in the steel industry here is commenting about this, because trade complaints are supposed to be confidential.

But E tū union official Joe Gallagher said he was told of Chinese dumping by a senior executive of New Zealand Steel, whom he would not name.

Last week, US Department of Commerce announced a preliminary decision to impose anti-dumping duties on Chinese stainless steel. A final decision due in November.

Trade experts believe any trade action by small states like New Zealand would not normally worry an economic giant like China.

But they say this country believes in free trade so strongly that an allegation of dumping would carry more credibility than in places like the United States which are wide open to corporate lobbying.