China's embassy in Australia said politicians there had "misread" a tweet showing a digitally-altered image of an Australian soldier holding a bloodied knife to the throat of an Afghan child, and were trying to stoke nationalism.
Australia's Prime Minister Scott Morrison on Monday called the tweet posted by China's foreign ministry spokesman, Zhao Lijian, "truly repugnant", and called for an apology.
On Tuesday the tweet was pinned to the top of Zhao's social media account, and China's Global Times newspaper, known for nationalistic views, interviewed the Chinese artist who created the image.
"The rage and roar of some Australian politicians and media is nothing but misreading of and overreaction to Mr Zhao's tweet," the Chinese embassy in Canberra said in a statement on Tuesday.
Australia's Foreign Affairs and Trade secretary had called ambassador Cheng Jingye on Monday to complain about the social media post, it confirmed, adding that Cheng had "refuted the unwarranted accusations as absolutely unacceptable".
Australia was seeking to "stoke domestic nationalism", and "deflect public attention from the horrible atrocities by certain Australian soldiers", it said.
New Zealand's Prime Minister Jacinda Ardern said earlier on Tuesday that New Zealand has registered its concern with Chinese authorities over the use of the "unfactual" image of the soldier.
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. (L1N2I5012)
Morrison apologised to Afghan president Ashraf Ghani before the public release of the investigation report a fortnight ago.
The inflammatory tweet came just days after China effectively blocked an A$1.2 billion ($883.44 million) wine export industry by imposing dumping tariffs of up to 200% on Australian wine.
Australia has said there looks to be a pattern of Chinese trade sanctions against Australian products this year, linked to Beijing's diplomatic grievances over Australia's national security, human rights and foreign policy decisions.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)