The current relationship between China and Australia is “the worst in living memory,” which is due to fault from both sides, says the Australia Institute’s Executive Director Ben Oquist.

“We need to do something about it,” Mr Oquist told Sky News.

“Now there’s obviously fault on both sides,” he said.

Diplomatic tensions have been escalating between Australia and China, culminating in the recent occurrence of a Chinese official posting a doctored image to Twitter of an Australian soldier holding a knife to the throat of a child.

Mr Oquist said China is a “brutal regime with a terrible human rights record”.

“And they also play their foreign affairs in (an) aggressive and assertive manner.

“They’re a growing, big power, that’s going to assert its might and Australia has to learn how to deal with that.”

Mr Oquist also said, “diplomacy is not always about whose right”.

“It’s about being diplomatic and getting the right response to getting you the right outcome over time”.

“Australia needs a long-term diplomatic strategy to deal with China and (it) doesn’t look like we’ve got one at the moment”.