The strident denials by both China and Vanuatu that there are any plans for the former to develop a major military base in the small island nation only 2000km from Australia's shores must be taken with a large grain of salt.
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The ancient adage, dating back to the Trojan War, to beware of Greeks bearing gifts, applies to modern China in spades.
The rising power's eagerness to provide easy credit to small nations, often mainly for the benefit of ruling cliques, bears some similarity to the ancient Greek tale.
Beijing understands the value of "soft power" and dollar diplomacy as tools with which to expand its sphere of influence.
Djibouti, the less than happy host for China's first foreign naval base, has already learnt this lesson the hard way.
When that country found itself unable to pay back almost $10 billion in Chinese loans it was pressured into granting its debtor the right to develop a major military base that has given it a foothold in Africa on the shores of the Indian Ocean.
By November last year People's Liberation Army forces were already well entrenched and conducting live fire drills. The new base had been built, equipped and manned in the record time of 18 months.
This is why, despite the denials issued on Tuesday by the Chinese Embassy and Vanuatu's high commissioner, Kalfau Kaloris, Australian leaders are taking this matter very seriously.
The Prime Minister was quick to warn China against building a Djibouti-style base within Australia's immediate sphere of influence after Fairfax Media broke the news on Tuesday.
"We would view with great concern the establishment of any foreign military bases in those Pacific Island countries and neighbours of ours," he said.
Labor's foreign affairs spokeswoman, Penny Wong, described the report as "a wake-up call".
"This is a potential game-changer for the region and for Australia," she said.
Coming as it does when the U.S. and China are locked in an escalating trade war, the news is further evidence Australia needs to manage its relationships with both super powers very carefully.
The trade war is itself a reflection of the growing tensions that drove the recent Obama-led U.S. "pivot to the Pacific".
Our quandary is that China is a major trading partner whose demand for Australian raw materials protected us from the worst effects of the GFC and has driven much of the economic growth we have seen since.
America is also a major trading partner and the ally who came to our aid during World War Two when the waters that would be dominated by China in the event a Vanuatu base proceeds, almost became a Japanese lake.
China takes great umbrage at other powers projecting military force into the South China Sea where it claims special influence.
The South Pacific is just as important to Australia's security as that body of water is to Beijing.
While the Chinese have been quick to dismiss the reports as "fake news" their recently appointed leader for life, Xi Jinping, would be wise to respect the value this country places on sovereign integrity.
