The Australian Defence Force is monitoring three Chinese navy ships which were spotted about 280km east of Sydney on Thursday, moving down the coast.
The vessels, which have been operating in Australia's exclusive economic zone over the past week, are acting within international law.
Despite that, Defence Minister Judith Collins told Radio NZ the sailing was "an unusual show" worthy of attention.
"They are the most significant and sophisticated (ships) we have seen this far south," she said.
"New Zealanders have been told for years ... that we can just rest easy, do nothing on defence and expect that our distance from much of the world will protect us.
"Well this, along with the intercontinental ballistic missile that China shot out in October, is real evidence that our distance means nothing now."
It follows another run-in with the Chinese military last week, when a fighter jet fired flares in front of a RAAF surveillance aircraft over the South China Sea during a patrol.
In the case of last year's missile, China provided a warning to Australia and New Zealand that it planned to carry out the test.
Beijing did not give a similar heads-up that it was sailing the warships along the Australian coast, Ms Collins said, but NZ had been aware for "a few days".
The New Zealand defence force is assisting Australian efforts to surveil the task group, sending a navy vessel and a P8A Poseidon reconnaissance aircraft.
"It's a highly intelligent aircraft ... it's amazing what you can monitor from these assets, we're not just looking at them," Ms Collins said.
She said as the Chinese ships were complying with international law, there wasn't much to be done.
"This is the Chinese PLA (military) showing us that they can do this and they're showing the Australians as well," she said.
Analysts believe the sailing is an attempt by Beijing to project power and send a message to Canberra about China's capability.
The Albanese government lodged a complaint with Beijing over last week's mid-air incident, fearing for the lives of the Australian personnel.
Cabinet Minister Jason Clare said a similar incident with the Chinese military had happened in 2021 under the former coalition government.
"The key thing ... is that all of this has got to be done in a safe and professional way, not in the way that the Chinese pilot acted last week," he told Seven's Sunrise.
"So are there any concerns here? Well, we want to make sure that we're keeping an eye on what the Chinese vessel is doing."
