While China is already said to be in talks with Pakistan to acquire the latter's military base near the Chabahar port in Iran, it looks like Beijing also wants to spread its wings in the Pacific island nation of Vanuatu.
Australian intelligence and security figures, along with their partners in the United States and New Zealand, have been watching with concern as Beijing deepens its influence with Pacific island governments through infrastructure building and loans.
The Australian media report had claimed that informal discussions were underway between China and Vanuatu regarding a military build-up in the island nation, which would put Australian interests at risk.
Both Western and Asian military attaches say a broad network of bases and friendly ports will be vital if China is to meet its ambitions of becoming a blue water navy, mirroring the kind of established reach long enjoyed by the US and its allies.
He told the Australian Broadcasting Corp: "No one in the Vanuatu Government has ever talked about a Chinese military base in Vanuatu of any sort".
A Chinese foreign ministry spokesman dismissed the report as "fake news" and referred reporters to Vanuatu's denial.
China has also become increasingly active in the South Pacific, undertaking infrastructure projects and providing aid and funding to small, developing island nations.
"We'd like to know what we're dealing with before we start hypothesising how we would react".
Peters said there was little tangible evidence to back up the report, and he noted that Vanuatu officials had denied any knowledge of the potential deal in Australian news reports.
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"There are no such discussions regarding a military base in Vanuatu", Bule 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", he said.
"That will be between those two sovereign nations and I can't comment on the validity of that".
"The maintenance of peace and stability in the Pacific is of utmost importance to us", Mr Turnbull told reporters in Brisbane on Tuesday.
China's lack of bases was exposed in 2014 when China's navy stretched its supply lines and logistics to deploy 18 ships to search for a missing Malaysian airliner across the southern reaches of the Indian Ocean.
One of the most substantial projects funded by Chinese money is a major new wharf on the north island of Espiritu Santo.
Australian Foreign Minister Julie Bishop visited Vanuatu with Prince Charles on Saturday in a diplomatic tour that it's understood was aimed at demonstrating the merits of the Commonwealth's commitment to a free and open system of global rules.
Vanuatu's high commissioner in Canberra, Kalfau Kaloris, said his country's Foreign Ministry was "not aware of any such proposal".
She didn't have more say, as she had only seen media reports, she said.