Iceland government turned down Chinese investor Huang Nubo's planned purchase of 300 square kilometers of the?island's land through his company Beijing Zhongkun Investment Group Co. on Friday local time.

The island country's Internal Affairs Ministry claimed such a transfer of property would be "incompatible" with the country's laws.

It said Icelandic law "imposes strict conditions on corporations wishing to acquire ownership or the right to utilize Icelandic properties and it's clear that the company in question doesn't fulfill any of the requirements."

"The question is not how can we turn down direct foreign investment of this magnitude, but rather how can one nation do anything else but comply with the laws it has passed for itself?" Internal Affairs Minister Ogmundur Jonasson said by phone.

Huang Nubo, chairman of China's Zhongkun Group, announced the plan to purchase the untapped wilderness in northeastern Iceland for US$8.8 million from a group of farmers in September. Huang was estimated by Forbes magazine to have a fortune of US$1.02 billion.

He was planning to invest some US$200 million in the land to build a resort with a hotel, golf course and racecourse, China Dialogue reported.

The plot, equivalent to 0.3 percent of Iceland's total land area, is said to sit near to a potential deep-water harbor and one of Iceland's glacier-fed rivers.

Critics fear the provisional deal, which would be the largest investment made by a Chinese company in Iceland, will give China a strategic foothold in the country as global warming opens up the nearby Arctic to oil exploration and shipping.

Huang said that his investment carried no political implications and was purely a commercial project.