The Chinese Embassy says accusations a New Zealand government analyst provided information to the Chinese government are a “smear and attack”.

Stuff reported on Thursday that Yuan Zhao, who also goes by the name Jason, is accused of being an “insider threat risk” by the Security Intelligence Service (SIS) and has been suspended from a senior analyst job at the Public Service Commission.

Intelligence Agencies Minister Andrew Little said the risk of insider threats within government agencies is “very real” but, along with Prime Minister Chris Hipkins, he declined to comment on Zhao on Thursday afternoon.

A Chinese Embassy spokesperson said the “allegations and hype-up” about Zhao was “ill-founded, and with an ulterior motive to smear and attack China, which we firmly oppose”.

China opposes interference in other countries’ internal affairs,” the spokesperson said, in a statement.

”China has always encouraged overseas Chinese ... to strictly abide by local laws and regulations.”

China routinely denies it conducts foreign interference, despite its known attempts to influence Western democracies, attempts which are of increasing concern to spy agencies including New Zealand’s SIS.

Zhao, a China-born New Zealand citizen, has said he and his family were “detained” at Wellington Airport in October by the SIS as they were returning from a holiday in Australia.

He was accused of being an “insider threat risk” as he provided “privileged insights” and reported to the Chinese government, and held “close personal relationships” with officials of a foreign government in New Zealand – an accusation he has denied.

“I’m innocent. Someone framed me up,” he said.

Zhao has complained to the Inspector-General of Intelligence and Security, a government appointed watchdog for the SIS. Inspector-General Brendan Horsley confirmed on Thursday he was investigating Zhao’s complaint, and after conducting his enquiries in private he would make public an unclassified version of the outcome.

Hipkins said he would not comment on intelligence agencies’ investigations.

“Clearly, where an issue is identified, it gets treated very seriously by the Government.”

Both the SIS and Public Service Commission declined to comment.

Little said he would not comment on “intelligence agencies’ operations or claimed operations”, though he had seen media reports of “a person who is making claims about the conduct of one of the intelligence agencies.

“His recourse for that is to take it up to the Inspector General of Intelligence and Security, who has the power to investigate.”

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When asked if infiltration of the Public Service Commission was a concern, Little said “there's nothing I've seen that suggests to me that anybody else should be concerned about any risk in that respect.

“The risk of insider threat is very real across government agencies, and I'm satisfied that the SIS is across that threat.”

The SIS defines an “insider threat” as a person who uses their access to an organisation’s assets to “harm the security of their organisation or New Zealand”. An insider threat could do this “knowingly or unknowingly”, including through spying or the “unauthorised disclosure of information”.

National Party deputy leader Nicola Willis said she was sure foreign interference happened “from time to time.

”What I think is important is that we have agencies with the role to monitor that and to make sure that we are defending our country's sovereignty and that we’re making sure that the rights of New Zealanders are upheld.”

Green Party co-leader James Shaw said he was worried about foreign interference overall, and “given the trend” he did not think New Zealand was serious enough about the problem.

“There are particular tensions at the moment, but I certainly don't think China is the only country that we need to worry about.

“My sense is that we've got quite good vetting in place for senior public servants and so on, but no system is perfect.”

Former deputy prime minister Winston Peters said New Zealand needed to “stop the naivety; get a grip on what’s going on".

Peters has been critical of the National Party for its handling of MP Jian Yang, who was in 2017 revealed to have taught Chinese spies at an elite school, drawing the attention of the SIS.

Peters was similarly critical of Labour’s handling of similar concerns aired about China-born Labour MP Raymond Huo, who retired from Parliament just more than a week after Yang in 2020.

"We did not take the matter with the urgency that it requires at that time, and if that is so, what's to convince us that it's been dealt with that way now?”

ACT Party deputy leader Brooke van Velden said it was concerning that there could be foreign interference in the public service.

“I don't know enough details about this particular case. But I'd like to give the benefit of the doubt to the SIS who with a lot of constraints, with information that we don't as the public have access to.”