What started out as a racist slur turned into a life-threatening situation for a Chinese woman who was left covered in blood after a sickening assault in Canberra.

The 27-year-old, identified only as KK Zhang, was walking with a friend in the nation’s capital on Thursday when she was punched in the head by a another female on Macdermott Place in Belconnen, at 5.45pm.

Ms Zhang didn’t know the attacker who eventually threatened her with a knife before taking off in a dark grey Ford Falcon sedan.

‘I had always thought Canberra was safe, with not much violence, until I experienced this myself,’ she told 7News.

The bookkeeper claimed the incident started when a teenage girl and a young boy, possibly the attacker’s kids, hurled racist abuse at her and ridiculed her Chinese speech.

Ms Zhang said she confronted the children and recorded the slurs directed towards her before the woman came up from behind and took her phone, leading to a physical altercation.

The woman was armed with a large knife, about 30 to 40cm long, which she pointed at Ms Zhang while making threats.

Ms Zhang’s friend pulled her away but not before she was left covered in blood with non-life-threatening injuries. 

Ms Zhang was left bloodied by the incident in Canberra

Her wounds were cleaned up but she bled heavily from the ear and nose

The incident happened in the Canberra suburb of Belconnen on Thursday 

‘But even as they got into the car, they were still smirking at us and making rude gestures, including giving us the middle finger,’ she said.

‘She was punching me, and I think her nails scratched me. I ended up with a 5mm cut on my face and bruising on my arms.’

Ms Zhang’s left ear and nose were bleeding and she said the experience left her ‘terrified’ and shaken.

Police are still investigating the alleged assault and have appealed to anyone who witnessed the incident to call Crime Stoppers.