The islands of Vanuatu may appear as relative specks in the South Pacific Ocean, but for China's military strategists, they could provide a significant boost in Beijing's ability to project naval power.

The prospect of a Chinese military base in the heart of the South Pacific, reported by Australia's Fairfax Media yesterday, will also complicate the strategic dominance of Western powers in an ocean area they have long effectively controlled since the end of the Second World War.

Fairfax Media reported China has approached Vanuatu about establishing a permanent military presence there; saying the possibility of such a facility has already alarmed high level officials in Canberra and Washington.

Vanuatu's foreign minister denied there had been any such discussion of a Chinese military base in the country. 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".

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 U.S. and its allies.

While they help project power and influence during peace time, such facilities could also be vital in a conflict, they say.

Even a localized conflict close to the Chinese mainland over the disputed East or South China Seas could involve maneuvers far from its shores, whether to protect command vessels or break blockades of commercial shipping, for example.

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 U.S. ally, and give it a presence nearer the U.S. base of Guam beyond the Asian island chains that hem in Beijing.

Graeme Smith, a Pacific Affairs expert at the Australian National University, said a Chinese base on Vanuatu would send a strong message to Australia, the United States and their allies.

"It would be an incredibly aggressive signal to both the U.S. and Australia that 'We're here, get used to it'," he told Reuters in a telephone interview.

If China were to build a base in the South Pacific, it would be only the second after the recent establishment of a logistics facility in the international Indian Ocean port of Djibouti.

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.

It was forced to seek replenishment in Australia's western Albany Port to keep the rest of the deployment operational - not an option it could rely on in wartime.