Vanuatu says it is not in negotiations with China about a new military base.
Fairfax Media has reported that China approached Vanuatu to build a permanent military presence in the South Pacific.
The Foreign Minister of Foreign Affairs, Ralph Regenvanu, told ABC on Tuesday that there were no preliminary discussions.
"Nobody in the Vanuatu government has ever talked about a Chinese military base in Vanuatu of any kind," he said.
"We are a non-aligned country. We are not interested in militarization, we are just not interested in any kind of military base in our country."
Chinese money has already helped fund a new dock on the North Island Espiritu Santo along with an upgrade to international airport.
China's ability to dock warships and revive on what would be their first Pacific-based, has drove alarm clocks among Australian security chiefs, as well as New Zealand and US officials, said to monitor his situation, Fairfax said.
Australian Foreign Minister Julie Bishop said while China invested in infrastructure around the world, it had only established a military base in Djibouti in North Africa.
"I do not know of a military offer made by China to Vanuatu," she said.
"We have very good relations with Vanuatu and I'm still sure that Australia is Vanuatus's strategic partner of choice."
China had been more engaged in the Pacific recently and its naval vessels visited Vanuatu in 2017, but These kinds of visits were normal for all nations to perform, said Bishop.
Lowy Institute of Pacific Ocean Jonathan Pryke says the new Luganville Wharf development had "raised eyebrows in defense, intelligence and diplomatic circles" in Australia.
The Institute estimates that China has committed more than $ 300 million to aid Vanuatu during the last decade, but Australia is by far the best donor. 659003] Ms Bishop said there was a need for more infrastructure spending in the Pacific, but the key issue was how it was invested and the conditions for this investment.
Foreign Minister spokeswoman Penny Wong said that if the report was correct, the base would be a "potential game changer for the region and for Australia" with security and financial consequences.
She said greater militarization and competition between major forces were not in the region's best interests.
Australia needed to work closer to its Pacific neighbors and stop cutting the budget, she said.
"This is a wake-up call," she told ABC TV.