Australia 'misread' offending tweet: Chinese embassy

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China's government is playing down the controversial tweet from a Chinese official that features a doctored photo of an Australian soldier -- holding a bloody knife to an Afghan child's neck.

The Chinese embassy in Australia says politicians there have "misread" the tweet -- and overreacted in one of the latest diplomatic incidents between the two countries.

Earlier this week Australian Prime Minister Scott Morrison called the tweet posted by China's foreign ministry spokesman Zhao Lijian "truly repugnant", and called for an apology.

The digitally altered photo was pinned to the top of Zhao's account Tuesday.

The Chinese embassy also says that Australia's Foreign Affairs and Trade secretary had called their ambassador to complain about the social media post, but that the ambassador had, quote "refuted the unwarranted accusations as absolutely unacceptable."

And, that Australia was seeking to "stoke domestic nationalism", and "deflect public attention from the horrible atrocities by certain Australian soldiers".

Meanwhile, New Zealand's Prime Minister Jacinda Ardern has said her country has registered its own concern with Chinese authorities over the use of the image.

An independent investigation into allegations of war crimes by Australian special forces in Afghanistan found 39 unarmed prisoners and civilians were killed, and Australia has said 19 soldiers will be referred for potential criminal prosecution.

The tweet also came just days after China slapped dumping tariffs of up to 200% on Australian wine.