What happened?
On 30 November, the Chinese Foreign Ministry Spokesman tweeted with a doctored image of an Australian soldier holding a blood-stained knife to the throat of an Afghan child captioned "Don't be afraid, we are coming to bring you peace". He also posted, "Shocked by the murder of Afghan civilians & prisoners by Australian soldiers. We strongly condemn such acts & call for holding them accountable".

On the same day, Scott Morrison, Australian Prime Minister, condemned the image and demanded an apology for the "repugnant tweet". He said: "It is utterly outrageous and cannot be justified on any basis. The Chinese government should be utterly ashamed of this post. It diminishes them in the world's eyes."

On 1 December, New Zealand became the first country to voice its criticism over China's tweet. New Zealand's Prime Minister Jacinda Arden said, "It was an unfactual post, and of course it concerns us. We have raised it directly, the way New Zealand does when we have such concerns." Later the same day the Chinese Spokesperson said, "rather demanding an apology for the post, Australia should be "ashamed", as some of its soldiers on official duty in Afghanistan committed such cruelties".

What is the background?
First, the report on excesses committed by Australian troops in Afghanistan. In November, Australia had released a report on the alleged unlawful killings in Afghanistan. As per the report, 39 unarmed Afghan prisoners and civilians were killed by Australian special forces during the period 2009-13. Australia's Chief of Defence Forces has apologized to the people of Afghanistan. On 30 November, Morrison said that Australia had established a "transparent and honest" process for investigation against accused soldiers and that this "is what a free, democratic, liberal country does".

Second, the worsening bilateral relations between China and Australia with a series of political, social, and economic disengagement/dispute. 
Politically, in 2017, Australia banned China's foreign political donation in Canberra political process. Australia also became the first country to ban Chinese tech giant Huawei from its 5G network and called for an independent inquiry over the origin of COVID-19. Beijing has shown its rage over Australian response over Hong Kong, Xinjiang, Taiwan, and the South China Sea. Economically, in the last six months, Beijing has imposed tariffs on Australian beef, barley, and wine. The relationship between the two has come to the lowest point. On the other hand, Australia blocked 10 Chinese investment deals across infrastructure, agriculture, and animal husbandry. Socially, in June, Australia's intelligence and police authority raided four Chinese journalists over their alleged influence campaigns. On similar lines, in September, China had questioned two Australian journalists in a national security probe, prompting them to leave the country. 

Third, the US-China divide. China is unhappy with Australia's growing relationship with the US and its recent participation in the Malabar exercise that brought together navies of Quad members. Beijing has called the alliance, as an attempt by the US to recreate an "Asian version of NATO".

What does it mean?
Australia's export to China constitutes 35 per cent of its total export, whereas imports from Australia account for 4 per cent of China's total imports. This dispute would hurt Australia more than it would hurt China. However, with the rising tensions, as exemplified by the dispute over a tweet, Australia might not reverse its policy against China.