Government must walk 'careful path' standing up against China, Nicola Willis says

The government has to walk a "careful path", standing up against China trampling on the Pacific's anti-nuclear values while recognising it's our biggest trading partner, Finance Minister Nicola Willis says.

China on Monday, test-launched a long-range ballistic missile with a dummy warhead into the South Pacific.

Prime Minister Christopher Luxon said that was unacceptable, unwelcome and concerning, and the government had made that clear to China.

Willis told Morning Report China had challenged the Pacific's staunch anti-nuclear values.

"We as Pacific countries, need to stand together and say uh-uh, not in our backyard, not okay."

But she acknowledged China being New Zealand's biggest trading partner added complexity.

"We have to walk a careful path of our own, where we do speak up for our values, speak up for our interests, but also recognise that those interests are multiple.

"We do have economic interests, we do have trade interests, we do have interests in a nuclear-free Pacific."

Willis said the activity highlighted the need to work closely with Pacific partners including Australia to have interoperable defence forces that can look after the region.

Luxon said the two countries' militaries would be more aligned in future and that process had already started.

Labour's deputy leader Carmel Sepuloni said there was cross-party consensus about the government's response to China.

"The comments that I've seen come from the government on this action from China are certainly comments that we agree with," she said.

"Our priority is the protection of our Pacific region, and I think that we're on the same page."