Australia has warned Vanuatu against any moves to allow a greater Chinese military presence in the Pacific nation.
Vanuatu has angrily denied it is in talks with Beijing about a Chinese military base being built in the Pacific country.
- Beijing has contributed billions in aid to Pacific
- Vanuatu opposition expresses concern over military base reports
- China's only overseas military base is in Djibouti
Foreign Minister Ralph Regenvanu said reports in Fairfax Media that the two countries were in preliminary discussions were false.
"No-one in the Vanuatu Government has ever talked about a Chinese military base in Vanuatu of any sort," he told the ABC's Pacific Beat program.
"We are a non-aligned country. We are not interested in militarisation, we are just not interested in any sort of military base in our country."
Prime Minister Malcolm Turnbull said that was crucial for maintaining peace in the region.
"We would view with great concern the establishment of any foreign military bases in those Pacific Island countries and neighbours of ours," Mr Turnbull said.
"What those countries are looking to us and other nations for is investment in economic infrastructure and social infrastructure".
Fairfax, citing unnamed sources, said no formal proposal had yet been made but the prospect of a Chinese military outpost so close to Australia had been discussed at the highest levels in Canberra and Washington.
"I'm not very happy about the standard of reporting in the Australia media," Mr Regenvanu said.
"I would hope the upsurge in the paranoia about China in Australia is not used to destroy or denigrate the good relationship Vanuatu has with Australia."
Opposition foreign affairs spokeswoman Penny Wong said if China was trying to establish a military presence on Vanuatu it could be a "game changer" for Australia.
"Militarisation and competition in the region is not something that is conducive to the sort of stable and prosperous region that we want," Senator Wong told the ABC.
Foreign Minister Julie Bishop said she was also unaware of any Chinese military plans in Vanuatu.
"I'm aware that China is more engaged in the Pacific, Chinese vessels visited Vanuatu last year as part of a broader visit to the region, but these sorts of visits are normal for many neighbours around the world," Ms Bishop told RN Breakfast.
"We have very good relationships with Vanuatu and I remain confident Australia is Vanuatu's strategic partner of choice."
Ms Bishop used a trip to Papua New Guinea and Tonga last month to remind Pacific nations that Australia's neighbours are its biggest beneficiaries of aid.
China currently has just one military base in a foreign country — in Djibouti on the Horn of Africa — but has been increasing its presence in the Pacific.
The Lowy Institute said China had contributed more than $2.3 billion in aid to the Pacific since 2006.
China's attempts to curb US influence
Analysts said any move by China to build a military base in Vanuatu, which is less than 2,000 kilometres from Australia, would be in line with its attempts to counter US power in the region.
"It's probably more psychological than it is strategic," Council for Security Cooperation in the Asia Pacific co-chair Ralph Cossa told Pacific Beat.
"If ever there was a conflict in the area, I would certainly not want to be living on a Chinese base in Vanuatu.
"But in peacetime, it just sort of increases the Chinese shadow into that area."
Vanuatu is one of few countries that has backed China's position on the disputed South China Sea.
The country's opposition leader, Ishmael Kalsakau, said the Government was not properly considering the implications of China's growing involvement in the region.
"Our economy is stagnant, we're just blindly accepting the intervention of countries like China who come in with their generosity but we've got to know what's in store for them at the end of all of this," Mr Kalsakau told Pacific Beat.
"When you start talking about the possibilities of military bases … this is not the stability this country needs."
The ABC contacted the Chinese embassy in Vanuatu but it refused to comment on the military base reports.
Recent diplomatic rows have broken out between Australia and China over Beijing's aid programs in the Pacific.
In January, China lodged a formal protest over criticism by International Development Minister Concetta Fierravanti-Wells that China was funding useless infrastructure projects.