China's ambassador to New Zealand says his country is closely watching the Government's next move over the AUKUS defence pact, one he says is "divisive".
Defence Minister Judith Collins has raised the prospect of potentially moving closer to AUKUS - a pact between Australia, the US and the UK.
The pact centres on the Indo-Pacific region, with experts saying it aims to combat China’s military expansion in the area.
The tension over foreign policy has been happening as Chinese New Year celebrations begin, with diaspora communities in New Zealand welcoming in the Year of the Dragon.
At a Chinese New Year event in Auckland yesterday, Prime Minister Christopher Luxon could be seen rubbing shoulders with ambassador Wang Xiaolong.
Speaking to 1News at the event, the ambassador said China views the pact as divisive.
"We don't support smaller, exclusive groups that target third parties, because instead of contributing to greater understanding, to greater stability," he said.
"It'll only increase divisiveness."
When asked about the prospect of the country moving closer to AUKUS, he responded: "New Zealand has yet to make a decision on what is to happen.
"And of course, we are watching that closely."
One observer said those comments are ultimately carrying a veiled warning about trade.
Robert Patman from Otago University explains the significance of the foreign affairs talks in Melbourne. (Source: Breakfast)
International relations expert Robert Patman said: "I think his words - signalling that there could be consequences - will certainly register for example, with the farming sector".
He added: "I think the ambassador is suggesting that things won't be business as normal if we join a grouping which China sees as detrimental to the security of the Indo-Pacific."
However, Luxon said the relationship between New Zealand and China is strong and can be managed: "Where we do have differences, we express those predictably and consistently, whether that's in public or whether that's in private."
China has also said that the relationship, right now, is in good shape.
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