Vanuatu and China both insisted Tuesday there were no plans for Beijing to open a military base in the Pacific nation after a report suggesting the Asian giant was pushing the proposal sparked concern in Australia and New Zealand.
The Sydney Morning Herald said China had approached Vanuatu about the possibility, potentially upsetting the delicate strategic balance in the region.
China has been aggressively growing its military and expanding its footprint deeper into the Pacific, forging closer links by showering nations with development money.
The Herald, citing multiple sources, said Beijing's military ambition in Vanuatu would likely be realised incrementally, possibly beginning with an access agreement allowing Chinese naval ships to dock routinely for refuelling.
This arrangement could then be built on, it added, with intelligence and security figures in Australia, New Zealand and the United States becoming increasingly worried about China's growing influence.
But Vanuatu Foreign Minister Ralph Regenvanu angrily rebuffed the claim.
"No one in the Vanuatu government has ever talked about a Chinese military base in Vanuatu of any sort," he told ABC radio.
"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."
Chinese foreign ministry spokesman Geng Shuang also shot down the speculation at a regular press briefing in Beijing on Tuesday, calling it "fake news".
Australian Foreign Minister Julie Bishop, who travelled to Vanuatu last weekend with Britain's Prince Charles, earlier said she was confident of Canberra's strong relationship with Port Vila.
"We have very good relations with Vanuatu and I remain confident that Australia is Vanuatu's strategic partner of choice," she said.
- 'Keeping a watching eye' -
While China has been investing in infrastructure around the world, to date it has only established one overseas military base -- in Djibouti on the Horn of Africa.
New Zealand Prime Minister Jacinda Ardern said she could not comment on the validity of the Herald report.
"But what I can say is that we of course keep a watching eye on activity within the Pacific and that New Zealand is opposed to the militarisation of the Pacific generally," she said.
Australia's Lowy Institute estimates China provided US$1.78 billion in aid, including concessional loans, to Pacific nations between 2006-16.
Earlier this year, Beijing lodged a formal diplomatic protest after a senior Australian minister called Chinese infrastructure projects in the region "white elephants".
During the spat, Australia's International Development Minister Concetta Fierravanti-Wells said the Pacific was "full of these useless buildings which nobody maintains".
Beijing responded that it "fully respects the will of the Pacific islands' governments and their people" and that development aid "has brought real benefits to local people".
China has diplomatic relationships with eight Pacific island nations -- the Cook Islands, the Federated States of Micronesia, Fiji, Niue, Papua New Guinea, Samoa, Tonga, and Vanuatu.
Six other Pacific countries recognise self-ruled Taiwan, which China sees as part of its territory.