A multimillionaire Chinese developer is livid at Iceland's rejection of his plan to build a sprawling resort, saying it reveals western hypocrisy and deep prejudice.

Foreigners also wrongly assume Chinese companies automatically have ties to China's military, Huang Nubo said in comments published in Chinese media on Sunday.

The Iceland government on Friday rejected a bid by Huang to buy 300 sq km (186 sq miles) on the island nation because it did not meet legal requirements on foreign ownership.

Some commentators had said the plan raised questions over regional security because of Iceland's strategic location in the Arctic where a number of nations are competing for resources, suggesting that Huang could be a surrogate for Chinese expansionism.

I'm not buying land, I'm investing in tourism infrastructure, Huang said in an interview with Sina Finance, an online news service.

The difficulties that Chinese enterprises encounter are numerous, like the view that state-owned enterprises represent your country, that whatever your background is you're a military business and touch on national security.

He said unspecified foreigners use all kinds of such reasons to build an invisible wall to surround and contain you.

You can come and buy a house, and you can emigrate here and bring your riches with you, or you can buy my luxury goods, but if you want to touch my natural resources, then I'm sorry, I won't let you.

Huang, who is chairman of Beijing-based Zhongkun Investment Group and was 161st on the Forbes list of the richest Chinese in 2010, accused westerners of double standards.

They come to China and say, 'this isn't open, that isn't open', which just shows their hypocrisy and deep prejudice and unjust nature.

Such western businesses encourage the opening of the Chinese market while they close their doors to Chinese investments, Huang said in an interview with the China Daily.

The denial reflects the unjust and parochial investment environment facing private Chinese enterprises abroad, he told the newspaper.

Huang had agreed to pay 1 billion Iceland krona (5.4 million pounds) to buy Grimsstadir farm in northeast Iceland, where he planned to build a golf course, hotel and outdoor recreation area.

But Iceland's Interior Ministry said on Friday that the deal did not meet legal requirements for land sales to companies outside the European Economic Area, including that company directors must be Icelandic citizens or permanent residents for at least five years, and that 80 percent of shares in purchasing firms should be held by Icelandic citizens.

The deal would have marked the first major Chinese investment in Iceland, which is still recovering from the collapse of its banks in 2008 during the global financial crisis.

(Reporting by Terril Yue Jones; Editing by Nick Macfie)