China on Tuesday was forced to deny it wants to establish a military base on the tiny Pacific island of Vanuatu, after reports piqued concern about Beijing's increasing influence in the region.
The facility, which would be China's second overseas base, would not only signal a new stage in Beijing's growing military ambition, but also alter the delicate balance of power in the South Pacific. Vanuatu is located about 1,200 miles from Australia.
However officials in Vanuatu angrily rejected they had spoken to Chinese officials about the facility, which was first reported in the Sydney Morning Herald. China's defence ministry later said the report "completely did not accord with the facts", while a foreign ministry spokesman described it as "fake news".
Australia and New Zealand both said they were monitoring developments.
The Herald said the base would be established over a number of years after Chinese ships had already used the island as a base for refuelling and servicing.
A Chinese military base in Vanuatu? If true, this would be a troubling turning point in Indo-Pacific security, with an emphasis on the Pacific. I will publish my own follow-up commentary soon https://t.co/xPAgmbQS6t— Rory Medcalf (@Rory_Medcalf) April 9, 2018
The report said: "The prospect of a Chinese military outpost so close to Australia has been discussed at the highest levels in Canberra and Washington."
Professor Rory Medcalf, the head of the national security college at the Australian National University, said the most "troubling implication" with a base in Vanuatu is that it "would give China a foothold for operations to coerce Australia, outflank the US and its base on US territory at Guam, and collect intelligence in a regional security crisis".
The base "would mark an accumulative and long-term failure of bipartisan Australian policy", he added.
Australian Foreign Minister Julie Bishop, who visited the island last weekend with Prince Charles, said: "I remain confident that Australia is Vanuatu's strategic partner of choice".
New Zealand's Prime Minister, Jacinda Ardern, said: "We of course keep a watching eye on activity within the Pacific."
China established its first naval base in the East African nation of Djibouti last year. Officials called the new facility a 'support base' and said it would have mainly logistical functions.
However observers see it as a key part of Beijing’s plans to expand its global reach through military might. Regional powers - particularly India - are suspicious of China's intentions with the base.
China's base in Djibouti was established after Beijing nurtured deep investment links with the tiny nation.
China has also been investing heavily in Vanuatu, a country of 270,000 people, and across the South Pacific region.
But Vanuatu Foreign Minister, Ralph Regenvanu, said: "No one in the Vanuatu government has ever talked about a Chinese military base in Vanuatu of any sort.
"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," he told ABC radio.
Chinese experts also believe Beijing has no interest in setting up a military base in the remote location.
Wei Dongxu, an independent Beijing-based military expert, told The Telegraph: "I think China is seeking to improve local living standards and set up tourist possibilities with its construction work in Vanuatu. It is not trying to risk war with other countries."
Additional reporting by Christine Wei