A little known story about a group of Australian soldiers who fought alongside Chinese guerrillas against the Japanese in World War II has come to the forefront of China-Australia relations.

Members of Gull Force were captured in Indonesia and hundreds of them were taken by Japan to China's Hainan Island to work as slave labourers with Dutch soldiers and Chinese civilians.

They had been captured in Ambon, where they had been sent after the Japanese attack on Pearl Harbour in late 1941 to protect what was then known as the Dutch East Indies.

A third of them died in captivity from malnutrition or sickness but a group of 10 reportedly got away when Chinese farmers attacked their Japanese guards.

Some reports indicate the Australians joined Chinese guerillas and fought alongside them for the rest of the war.

Australian investigators who travelled to Hainan just after the war heard stories from villagers about these events but could never confirm them adequately.

Farmers in the village of Lao'ou said their forbears buried two Australian soldiers just outside the village after they died of illness.

They had apparently been living amongst the villagers after getting away from their Japanese captors.

A large mound of dirt sits just outside Lao'ou, and it is this site that is believed to be the soldiers' grave

It is now marked with a plaque commemorating the Australians, saying "Lest We Forget".

Most of the soldiers who survived as prisoners of war returned severely malnourished. Captain L Woods of the US Office of Strategic Services is pictured here with three Australian POWs at Bakli Bay, Hainan. ( Australian War Memorial )

A monument has been built next to it to honour the hundreds of Australian POWs held on Hainan and the hardships of the Chinese people who tried to help them.

It was funded by a local government and Darwin City Council, which has a sister city on Hainan.

The sight of it had not meant that much to many locals until a motorcade of ambassadors and generals came up the dirt road to visit it and lay wreaths.

Curious villagers poured in from around the area to see what all the fuss was about.

Australia's Governor-General Peter Cosgrove was among the dignitaries visiting the site.

Governor-General Peter Cosgrove visited the memorial as part of a state visit. ( ABC News )

"It's one of those great, sad mysteries of World War II, the battalion was isolated on the island of Ambon with no real hope of defending itself," the Governor-General said at the war graves on Friday, as part of a state visit.

"They fought for a few days then they were captured and spent the rest of the war in captivity — lots in Ambon, and they were in poor shape, but the ones who came to Hainan were part of a labour force.

"The conditions were atrocious and, as we know, lots died.

"The ones who escaped, well, we're sure that they also perished."

The fate of the Australians who escaped is still unknown.

Near the end of the war those who survived were rescued when American soldiers parachuted in to liberate the camp.

Whether the story of the Australians fighting alongside guerrillas can be confirmed or not, the place has become important in China-Australia relations.

The great-grandparents of the poor farmers who wandered in to the memorial park with bare feet and big smiles had faced the same extreme hardships as the Australians at the hands of the Japanese army, or even worse.

"Today the Governor-General came here as a sign of China-Austalia friendship," local Chinese army commander Major General Liu Xin said.

"But 70 years ago our two countries, our two armies were united in fighting against a foreign invasion."