Prime Minister Jacinda Ardern believes New Zealand is ending 2020 with its relationship with China as strong as when the year began.

It entered the escalating row between China and Australia, formally expressing concern about "disinformation" issued by a senior Chinese foreign affairs official on social to highlight the damning war crimes report in Australia.

The doctored image of an Australian soldier holding a knife to the throat of an Afghan has plummeted the two countries' relationship into what commentators say is the "lowest point in 50 years".

'Kiwis bleat like Aussie sheep but don't condemn Afghan killings' ran the headline on China's state-run media Global Times website the day after New Zealand made its statement.

"Ardern has demonstrated that New Zealand will not stop playing double standard tricks the West uses so often," reads the article. "This is also part of the so-called Western values - the freedom to be hypocrites.

"As a member of the Five Eyes intelligence-sharing alliance, New Zealand has to stick to such values."

From its foreign affairs podium, the Chinese administration questions what business this is of New Zealand's, suggesting it shows it supports the actions of the Australian soldiers, accused of at least 39 unlawful killings.

Australian Prime Minister Scott Morrison said the tweet was repugnant and has demanded an apology.

In the latest statements, spokesperson Hua Chunying said: "Australia and its a few allies, instead of repenting on themselves, accused China of disinformation. I wonder if they can explain what disinformation is, who should be the one to define disinformation, and what they mean by human rights?

"Is it their shared value to pin the blame to others just to whitewash themselves? In this sense, the caricature is a mirror showing the hypocrisy and double standards of a few people in these few countries."

'For us, it was just a principle, we raised it' - Ardern

Was it an error of judgement for New Zealand to be seen to side with its closest ally, with so much at stake diplomatically and economically?

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"We are very clear these are not matters about taking sides," Jacinda Ardern told Focus on Politics adding that New Zealand would call out other countries for doing the same.

"For us, it was just a principle, we raised it, and now that we've done it, that's it for us and from our perspective."

It was important the relationship was seen as "just ours", Ardern said.

"It's very common in diplomacy for it always to be considered in amongst the relationships that other nations or the other dialogues other nations are in, but we've always taken a perspective - what are our values and what does that dictate we do in these situations?"

The ability to share concerns, through a variety of channels, should be "normalised" because that's how New Zealand has always conducted its diplomacy; an approach that's served this country well, she said.

While describing the tweet as "incendiary and inappropriate", the National Party warned the Government step carefully, as New Zealand had important relationships with both China and Australia.

While there was a "historically strong" trans-Tasman relationship, New Zealand had also developed "strong relationships with China over the years... and of course, they're an important trading partner", foreign affairs spokesperson Gerry Brownlee said.

China is New Zealand's largest, with $20 billion worth of exports there a year; two-way trade is more than $33b.

Leader Judith Collins said a careful approach was advisable "particularly for a very small nation... it can sometimes be seen as easier for any country to put pressure on us certainly financially, or in security ways".

When asked if China is becoming more "bullish" in its approach to Australia and New Zealand, Ardern said no country remained "entirely static in the either in the global positioning or in the approach to diplomacy".

But that was it when it came to commenting on China and Ardern went back to talking about her own country.

"New Zealand has a consistency in our diplomacy that I think is probably quite rare, many other countries will change and evolve over time… but that's one of the benefits of our relationship is that we are relatively predictable".

Given the tensions that's have ratcheted up significantly over the last week, does Ardern believe the relationship ends the year as well it began?

"Yes, I do actually," she says.

"There have been multiple times where there have been issues that we that we have been able to raise, and we do while continuing, I think, a mature relationship."