Vanuatu's Foreign Minister has denied the country is in talks with China about a possible military base in Vanuatu and said its Government was not interested in any militarisation of the country.
Australia and the US have been closely watching China's moves and have conducted high-level talks over the possibility of a Chinese military outpost in such close proximity to Australia, the report said. China's defence ministry said the Fairfax report "completely did not accord with the facts" while a foreign ministry spokesman said the report was "fake news".
Bateman said Chinese involvement in the South Pacific could upend the status quo, where Australia and New Zealand take a lead role in the Pacific Islands Forum.
The Fairfax Media report said the preliminary discussions involved an initial access agreement, under which Chinese naval ships would dock to be serviced, refuelled and restocked, and that would eventually lead to a full military base. Beijing describes it as a logistics facility. Vanuatu Foreign Minister Ralph Regenvanu said the report that his nation was in talks to create a Pacific facility was false.
Earlier this year, Beijing lodged a formal diplomatic protest after a senior Australian minister called Chinese infrastructure projects in the region "white elephants".
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"I remain confident that Australia is Vanuatu's strategic partner of choice", Bishop told the Australian Broadcasting Corporation (ABC) on Tuesday.
This arrangement could then be built on, it added, with intelligence and security figures in Australia, New Zealand and the United States becoming increasingly anxious about China's growing influence.
If the plan materializes, it will also be a threat to the USA as it would shake-up the country's dominance in the Pacific.
While far from key shipping lanes and not as important as Indian Ocean ports, Vanuatu would put China close to the coast of Australia, a major USA ally, and give it a presence nearer the US base of Guam beyond the Asian island chains that hem in Beijing.
Between 2000 and 2012, China offered about 30 major projects to Pacific island countries, including the construction of government official buildings and infrastructure such as highways, bridges and hydropower stations, according to a paper by Professor Yu Chang Sen, of the National Center of Oceania Studies, at Guangzhou's Sun Yat-sen University.
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"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".
China is also backing an upgrade to the Vanuatu airport.
"We would view with great concern the establishment of any foreign military bases in those Pacific island countries and neighbours of ours".
China now 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 prime minister added that she could not comment on the validity of the report, and her remarks were in response to media reports. As the reports of a possible Chinese military base in Vanuatu spread in global media, experts also weighed in on the impact of such a base.
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