New Zealand has been included in a list of embassies in Shanghai that have allegedly been "infiltrated" by the Chinese Communist Party because staff members have been appointed via a government-run agency.
An investigation by The Australian newspaper, citing a leak of official membership records of 1.95 million CCP members, found that at least 10 consulates in Shanghai have or used to have CCP members employed - including New Zealand.
The leaked database shows one CCP member worked for the New Zealand Consulate-General in Shanghai for four years as policy adviser for trade and economics, according to The Australian investigation.
It found that foreign affairs departments directly hire local staff through a Chinese government agency, the Shanghai Foreign Agency Service Department, which has led to concerns about embassies being "infiltrated".
An unnamed intelligence officer told The Australian that CCP members working in consulates, even in junior positions, posed a serious security risk.
"Even at a low level they would have access to information on visas, or be able to grant visas to people who might otherwise not get into the country," he said.
"At a higher level, they may have access to information such as the identities of intelligence officers operating in the country, or even cipher traffic."
A spokesperson for the New Zealand Ministry of Foreign Affairs and Trade said it is required to use service bureaus such as the Shanghai Foreign Agency Service Department to employ local staff.
"The ministry operates security and risk management procedures at our overseas posts based on the context of each country we operate in," the MFAT spokesperson told Newshub.
"In accordance with privacy obligations, the ministry does not comment on employment matters concerning its staff."
MFAT did not respond to Newshub's request to explain why it has to use service bureaus such as the Shanghai Foreign Agency Service Department.
A spokesperson for the Chinese Embassy in New Zealand said they would look over the article in The Australian but did not provide an immediate response.
A spokesperson for Australia's Department of Foreign Affairs and Trade gave a similar response to The Australian, insisting that hires of local Chinese nationals all need to go through the Shanghai Foreign Agency Service Department.
"DFAT is used to operating within different overseas contexts," the spokesperson is quoted saying. "Our recruitment, security and risk-management processes are robust."
Waikato University international law expert Al Gillespie said the fact there are CCP members working in China is not news given there are about 92 million members and people often join to get ahead in their careers.
Gillespie said it would be interesting if confirmation arose that any of these people had access to sensitive material and whether they wrongfully tried to obtain it.
Gillespie said there are very strong controls over all embassies in international law, giving each government very large degrees of discretion in the way they manage their business.
"I am guessing that what the story is trying to suggest is that there is a large degree of spying on western embassies," he said.
"I expect this is true - but this has always been the way and it works in a contra direction as well. Embassies, everywhere, expect to get spied on and should be taking counter-measures to prevent any potential breaches."
Gillespie said what he finds interesting is the continual build-up of accusation and smear between Australia and China at the moment.
"None of this is good. Each step builds mistrust. This is especially so as their trade dispute continues to escalate. With this latest tit, wait a few days, and we will probably see a tat, from China."
Last month 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.
It came after the Inspector-General of the Australian Defence Force released the findings of a report that disclosed allegations of 39 unlawful killings by or involving soldiers in Afghanistan.
Prime Minister Jacinda Ardern and Foreign Minister Nanaia Mahuta spoke out against China for spreading misinformation, prompting a sharp response from China questioning why New Zealand was taking sides.
"Does this matter have anything to do with New Zealand? Can it be that New Zealand agrees with or even supports Australia's deeds?" Chinese foreign ministry spokesperson Hua Chunying said.
Australia's relationship with China has been eroding ever since Morrison led an international call to investigate the origins of the coronavirus.
China recently imposed tariffs on Australian wine, which Australia responded to by urging its allies to purchase its wine to get around China's "bullying".
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 US, 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".