Reports this week that Vanuatu was to be the site of a Chinese military base caught most in Vanuatu by surprise.

Officials with detailed knowledge of relevant matters swore hand on heart they’d never even heard hints of such talk.

The minister for foreign affairs, Ralph Regenvanu, questioned the report’s sourcing, telling the Radio Australia’s Pacific Beat radio programme: “I’m not very happy about the standard of reporting in the Australia media.”

Chinese embassy officials in Vanuatu declined an interview request, saying: “The report is groundless and not worth any comment at all.”

The topic quickly became the loudest non-conversation in Port Vila.

Tacitly at least, officials from all interested nations recognise Vanuatu’s strategic importance. Luganville, on the island of Espiritu Santo, was the site of one of the largest military bases in the entire Pacific theatre during the second world war.

Home to about 100,000 personnel at its peak, it saw nearly one million service personnel pass through before it was decommissioned in 1946.

What was true in the 1940s remains true today – whoever controls Vanuatu controls air and sea traffic between the US and Australia. Right now, that’s the government of Vanuatu.

For more than a decade, this tiny island nation has leveraged regional rivalries to drive infrastructure development.

Its dalliance with China, for example, resulted in a US$20 million investment by the telecom giant Huawei in an island-hopping communications network.

That development is said by some to have motivated a multi-million dollar commitment from Australia to fund telecom regulation and management.

For years, western countries were simply not interested in big-ticket, high-risk projects. Infrastructure projects worldwide face budget overruns, scope creep and delays. Risk-averse donors shied away.

But not China.

Largely on the back of questionably “concessional” loans from the China EXIM Bank, contractors secured a mixed bag of infrastructure projects, ranging from roads to wharves to buildings. They include sport facilities, a convention centre and a school.

The most noticeable scheme was a US$90 million wharf project in Luganville. Almost from the outset, ni-Vanuatu raised the spectre of the old US base there.

Many Pacific watchers think there’s no coincidence that the Asian Development Bank, the World Bank and other funding bodies have revived interest in Pacific Islands infrastructure.

At the same time as the Luganville wharf was being constructed, Japan was also demonstrating its friendship by building a major wharf in the capital, Port Vila. The US$70 million project came with much more favourable terms.

Australia, meanwhile, signed on to fund a US$30 million urban infrastructure development project in the capital.

The World Bank has already committed US$60 million to the nation’s airports, and is reportedly considering upping the ante to US$150 million.

Despite the fact that Australia remains the largest donor in Vanuatu and the Pacific, analysts suggest that China has stolen a march on it by ingratiating itself with politicians who see infrastructure projects as vote getters.

It is widely felt that Chinese engagement lacks coherence, and that the quality of its work is variable – to be generous.

Locally, engagement between Australian development workers and their government counterparts is excellent.

But communication between Pacific capitals and Canberra is sadly lacking.

Ill-considered comments, such as Senator Concetta Fierravanti-Wells’ January diatribe about Chinese “roads going nowhere”, play poorly in the Pacific.

They only offer China an opportunity to commiserate with local officials and to go on quietly building roads and wharves.

- Guardian