Reaction comes as Key says he's prepared to fly to China to reassure authorities.
Sri Lanka is reportedly the latest country to suspend New Zealand milk powder imports because of botulism fears from contaminated Fonterra products.
Sri Lanka's Health Ministry spokesman Dharma Wanninayake told Reuters the director-general of health services had instructed Customs to temporarily halt the clearance of milk powder from New Zealand.
"The concern is the change in the whey protein concentration due to clostridium bacteria and the other concern is China completely banning the importation. So we followed them and temporarily suspended [imports]," he said.
The office of Trade Minister Tim Groser was last night unable to confirm the Sri Lanka development.
It came as Prime Minister John Key said he was prepared to fly to China if necessary as concern grows about the effect of Fonterra's whey contamination on the trading and political relationship with China.
China has banned the import of Fonterra whey powder and products which use it.
However, products from other companies and all other dairy products, including whole and skim milk powder, are not affected by the ban.
Sri Lanka is New Zealand's fifth-largest market for milk powder.
Fonterra's head of NZ milk products Gary Romano yesterday said customers affected by the health scare had accounted for "all but a small amount" of potentially contaminated goods. He was not aware of consumers becoming sick. He was unable to say how much of the 38 tonnes of suspect whey protein might have been consumed.
The Chinese Embassy in New Zealand made it clear the strength of the future relationship between the two countries would depend largely on Fonterra's ability to clean up its act and the Government's willingness to hold it to account.
The embassy's economic and commercial counsellor, Zhang Fan, said there was a great deal of anxiety among parents in China.
"Fonterra is your largest company, so a lot of Chinese consumers are consuming their products. This kind of incident, one after another, certainly has shaken their belief in Fonterra. Previously, in a lot of Chinese consumers' minds, New Zealand was a clean, pure place in terms of food safety record. But now, bad things just happen again, again and again."
A comment piece by China's state owned news agency Xinhua questioned New Zealand's "100 per cent pure" slogan, saying it had become a "festering sore".
Finance Minister Bill English said the value of exports blocked by other countries was small and he did not expect it to affect GDP.
"But how it is handled in the long run will make a difference. New Zealand's reputation is important to our GDP and we must recover that as quickly as possible."