WELLINGTON:New Zealand's prime minister, Jacinda Ardern, said on Tuesday that her government has raised concerns with China about its using an image of an Australian soldier holding a knife to the throat of an Afghan child.

Australia has demanded Beijing apologise and take down the fake image, posted on Twitter by a senior Chinese official on Monday, marking another downturn in deteriorating relations between the two countries.

"New Zealand has registered directly with Chinese authorities our concern over the use of that image," Ardern told reporters in the parliament in the capital Wellington.

"It was an unfactual post, and of course that would concern us. So that is something we have raised directly in the manner that New Zealand does when we have such concerns."

The tiny, trade-focused Pacific island nation has stayed clear of the growing feud between China and Australia, and has long-standing diplomatic, trade and political interests with both countries.

New Zealand has a shared history, close cultural ties, geographic proximity and a strong economic relation with Australia. China is its largest trading partner, with two-way trade exceeding NZ$33 billion.

New Zealand, which is part of the Five Eyes intelligence-sharing group with Australia, Britain, Canada and the United States, joined a statement calling on Beijing to reverse its decision to disqualify elected legislators in Hong Kong.

Ardern's government also backed Taiwan's participation at the World Health Organization (WHO) despite a warning from Beijing.

New Zealand will host the Asia-Pacific Economic Cooperation (APEC) next year, taking over from Malaysia, where the global event was held this year.

Australia's relationship with China has deteriorated since Canberra called for an international inquiry into the origins of the coronavirus pandemic.

Last month, China outlined a list of grievances about Australia's foreign investment, national security and human rights policy, saying Canberra needed to correct its actions to restore the bilateral.