Police confirmed the elderly driver of the other vehicle sustained moderate injuries.
"The Nissan has then allegedly left the crash site, and our staff have successfully located it on Rickit St at which time we came to learn the ages of those in the vehicle, and the fact the young child had travelled a significant distance and been in a crash - all while unrestrained," Inspector Chris Summerville said.
"This is certainly a situation where there could have been a more serious outcome.
"We are alarmed at both the dangerous nature of the driving, and the fact a very young child was in the car and not secured in a car seat."
A 17-year-old driver has been charged with a number of offences including reckless driving, failing to stop to ascertain injury, failing to stop when followed by red/blue flashing lights and possession of an offensive weapon.
He is set to appear in the Rotorua Youth Court next week.
The four-year-old was driven by police to Rotorua and reunited with his family.