John Key says Labour leader David Cunliffe "set himself up" over a letter linking him to Chinese donor Donghua Liu.
The Prime Minister's office was alerted to the letter under its no surprises policy, he said.
Key today rejected Labour's claim that releasing the letter was part of a smear campaign after it contradicted Cunliffe's previous assurances that he had never met Liu or advocated on his behalf.
The letter showed Cunliffe had advocated for Liu on his immigration status a decade ago.
Labour had previously attacked National over its links to the Chinese businessman and National Party donor.
But it has now emerged that he gave money to Labour as well.
"We've spent all of 2014 with Labour going through, in forensic detail that's hard to believe, National's involvement with a variety of Chinese investors in New Zealand," Key said this morning from Washington DC.
"That's included them having a GPS tracking machine out working out how far it was from [export company] Oravida's offices to the airport in Shanghai. So give me a break. If people are basically saying what is Labour's involvement with Donghua Liu in the end it's a pretty legitimate question."
His office was briefed on the existence of the Cunliffe letter by the Minister of Immigration after the file was searched in preparation for questions in Parliament.
Key and his deputy Bill English appeared to contradict each other yesterday on when the Government first knew about the letter, but Key said that was because he had not passed on the information.
"My office was told on a no surprises [basis]; I didn't actually tell anyone about it. There'S no particular reason for me to go and tell Bill. I knew it was there but it wasn't overly significant at the time."
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