China has halted the import of all New Zealand milk powder after bacteria that can cause botulism was found in some dairy products, New Zealand's trade minister said on Sunday.

Global dairy trade giant Fonterra said on Saturday it had sold contaminated New Zealand-made whey protein concentrate to eight customers in Australia, China, Malaysia, Vietnam, Thailand and Saudi Arabia for use in a range of products, including infant milk powder.

"The authorities in China, in my opinion absolutely appropriately, have stopped all imports of New Zealand milk powders from Australia and New Zealand," New Zealand Trade Minister Tim Groser told Television New Zealand on Sunday.

"It's better to do blanket protection for your people and then wind it back when we, our authorities, are in a position to give them the confidence and advice that they need before doing that," he said.

Most of China's dairy imports come from New Zealand, which relies on dairy for 25 percent of its exports.