The New Zealand Security Intelligence Service report said there was almost certainly undetected espionage activity harming the country's interests and that foreign states continue to target critical organisations, infrastructure and technology to steal sensitive information.
"Some states, including China, Russia and Iran, are willing to engage in covert or deceptive activity in order to influence discussions and decisions, or gain access to technology and information that can help them meet these goals ... New Zealand has been targeted by some of these activities," the report said.
China was a particularly "assertive and powerful" actor in the region and had demonstrated both a willingness and capability to undertake intelligence activity that targets New Zealand's national interests, it added.
The Chinese Embassy in New Zealand did not immediately respond to a request for comment.
The report, titled New Zealand's Security Threat Environment, is released annually as part of a government shift to better inform New Zealanders about risks the country is facing.
The country, part of the Five Eyes intelligence and security alliance, has increasingly amped up its rhetoric over the growing influence of China in the region and a rise in geopolitical tensions, committing earlier this year to spend more on defence.
Director-General of Security Andrew Hampton said the threats need to be taken much more seriously than they are currently.
"Our threat environment is deteriorating and that has a direct impact on our safety and security," he said in a statement released alongside the report.
The report also pointed to the growing threat of violent extremism and said the most plausible attack scenario remains a lone actor who has been radicalised online.
"Grievances and polarising issues in the online information space are almost certainly driving support for a range of violent extremist ideologies within New Zealand," the report noted.
