REYKJAVIK, Iceland -- A Chinese entrepreneur's bid to create a vast nature retreat in Iceland was turned down by the north Atlantic island nation's government Friday, amid concern the deal would have handed a major chunk of territory to a foreign investor.
Iceland's interior ministry said it had rejected an application by the Zyongkun Group, a company controlled by Huang Nubo, a 55-year-old former Chinese government official, in part because no foreign buyer had ever bought so much land in the country.
Huang, one of China's wealthiest entrepreneurs, had sought to buy 120 square miles of land on the north shore of Iceland in a deal which would have been worth about 1 billion Icelandic kronur ($8.8 million).
He had hoped the site in Iceland's northeast -- which would have represented about 0.3 percent of the island's land mass -- would attract about 10,000 guests a year and create scores of new jobs.
Iceland's Prime Minister, Johanna Sigurdardottir, had previously said she would welcome Huang's investment, particularly as the nation recovers from the collapse of its banking industry in 2008.
Since its financial meltdown, Iceland's economy has begun to recover -- with the International Monetary Fund predicting economic growth of 2.5 percent in 2012, far better than its struggling European neighbors.
However, the interior ministry confirmed it had ruled it could not lift the country's strict restrictions on the purchase of land by foreigners to allow the deal to go ahead.
"The ministry believes that it's not possible to look past how much land the company wanted to purchase," it said in a statement. "There is no precedent for land on this scale being sold to foreigners."
Referring to Iceland's law on land sales, the ministry said "it was considered necessary to limit foreigner's rights to property in Iceland to protect Iceland's independence" and to ensure that Icelandic people -- rather than foreign investors -- are able to benefit from the country's resources.
Some critics of the proposed deal had raised concerns that allowing Huang to purchase the land could give China a strategic toehold in the Arctic Circle, where nations are scrambling to claim natural resources and melting ice caps are expected to eventually open up new, faster global shipping lanes.
Huang previously rejected those claims, and insisted that he planned the Icelandic site to be among a chain of nature resorts in China, the United States and Scandinavia.
Halldor Johannsson, Huang's representative in Iceland, said he was surprised by the government's rebuff and claimed Icelandic law did not include limits on the size of a parcel of land an investor could purchase.