Foreign Minister Nanaia Mahuta has scolded China for spreading "disinformation" and stressed the importance of "respect for rules" as she marked the beginning of APEC 2021.
Mahuta's comments on China came after Australian Prime Minister Scott Morrison lashed out over a fake image posted on Twitter by a Chinese official depicting an Australian soldier holding a knife to the throat of an Afghan child.
Morrison described the image posted on Monday by China's foreign ministry spokesman Zhao Lijian as "truly repugnant". He has the support of Prime Minister Jacinda Ardern who confirmed on New Zealand has expressed concern with Chinese authorities.
"New Zealand doesn't support disinformation that has the potential to be inflammatory. In fact, what we'd like to promote is dialogue and that stands both domestically and internationally," Mahuta told reporters on Tuesday.
"We're happy to message that out to whomever," Mahuta added, but confirmed she had not raised the issue with Chinese Ambassador to New Zealand Wu Xi.
It came as Mahuta joined officials in Wellington on Tuesday to mark the beginning of New Zealand hosting APEC 2021, a group of 21 Asia-Pacific nations who meet each year to discuss the promotion of trade and economic growth.
Representatives from the other 20 APEC economies were welcomed with a pōwhiri on Wellington's waterfront with local iwi Te Atiawa. The last time New Zealand hosted APEC was in 1999 when Jenny Shipley was Prime Minister.
"I'm not here to answer on behalf of any other country except to say our intention for APEC21 is to ensure that we have some engaging conversations across economies, and with each other, as we seek to develop some common interests," Mahuta said.
"I think there's been some sense over the past few years that there's been a move to greater protectionism and we would like to continue to promote what we've always promoted which is a multilateral, rules-based system with some common architecture that can support greater diversity across our economies in the APEC region.
"New Zealand's a small country in the Pacific. We've always promoted a multilateral system that can actually be at its core respect for rules and respect for those institutions that help us uphold the rules as we engage with each other."
The Chinese official's controversial tweet came after 13 special forces soldiers in Australia were told they face dismissal in relation to an independent report on alleged unlawful killings in Afghanistan.
Zhao wrote on Twitter: "Shocked by murder of Afghan civilians & prisoners by Australian soldiers. We strongly condemn such acts, & call for holding them accountable."
China is refusing to apologise to Australia for the inflammatory image posted along with Zhao's tweet.
Tensions between China and the West have been increasing over China exercising more control over Hong Kong which was promised semi-autonomy when it was handed over from Britain in 1997.
Earlier this month New Zealand joined its Five Eyes intelligence partners - the United States, Britain, Canada and Australia - in expressing concern over China's interference in Hong Kong, which led China to lash out.
China's foreign spokesperson said members of the Five Eyes should be careful not to get "poked in the eye".
The China-New Zealand relationship had already being tested. In July, the Government suspended its extradition treaty with Hong Kong in light of China's decision to pass a controversial national security law for the city.
China responded by suspending Hong Kong's extradition treaty with New Zealand. The Chinese Embassy urged New Zealand to "stop interfering in Hong Kong affairs and China's internal affairs" and do more to promote the good aspects of the relationship.
Australia is in a more precarious position.
Earlier this month China issued a list of 14 complaints about Australia, including Hong Kong, its support for Taiwan entering the World Health Organization (WHO), and Chinese investments being blocked on national security grounds.
It came after China imposed a series of trade reprisals on Australia after it led calls for an international inquiry into the origins of the coronavirus.
Mahuta hopes that APEC 2021 - which will be held digitally thanks to COVID-19 - will provide an opportunity for countries to come together and focus on things areas they can work together.
Opposition leader Judith Collins says New Zealand needs to be cautious.
"We always have to be very careful how we deal with these things, particularly for a very small nation. It can sometimes be seen as easier for any country to put pressure on us, certainly financially or security ways," she told reporters.
"We've had a very proud history over the last 30-odd years of trying to steer a very independent way through, but understanding that one of the best things for New Zealand is to have multiple trading options."
Collins acknowledged the difficult situation the Government is in, trying to balance its commitment to the Five Eyes with its relationship with China - our largest trading partner with two-way trade representing more than $30 billion.
But Collins said the Government was right to express concern with China over the tweet.
"I think so."