The construction of a vast wharf in the key strategic outpost of Luganville, funded by Beijing’s development budget, has Australian security analyst Dr Malcolm Davis increasingly concerned.

“Since 1942, we have not had to worry about any sort of military threat against our east coast and the potential (now) exists,” Dr Davis told 60 Minutes.

“If we don't counter-balance China, then we could be forced into a situation whereby we end up in a more major power conflict.”

“We need to take that prospect seriously.”

During the World War II, Luganville was the second largest American naval base in the South Pacific but, as Dr Davis warns, the latest development could soon see China’s navy having a safe harbour in the Pacific. 

“(The wharf) is large enough to accommodate large Chinese naval service combatants, guided missile destroyers and cruisers,” Dr Davis told reporter Tom Steinfort.

“We could talk an aircraft carrier as well.”

While the Chinese government insists the Luganville wharf was built to support Vanuatu’s emerging tourism trade, Dr Davis says the immense, half-kilometre long wharf is overkill for the cruise industry.

“The Chinese wouldn’t be building this just to cash in on a very limited tourist market,” Dr Davis said.

“There’s got to be more to it. They're thinking commercial influence, political influence and ultimately a military presence.”

According to Dr Davis, China is notorious for ‘debt trap diplomacy’, lending to penniless nations under the guise of aid.

“What the Chinese tend to do is that they put heavy investment into countries that simply don’t have the means to pay back the debt,” Dr Davis tells Steinfort.

“If China can get a country so deep in debt that it can’t pay back that debt, then they will take something else in return ... (like a) port.”

Last year China took control of the major Sri Lankan port of Hambantota built using Beijing’s development budget, when the subcontinental country failed to repay their debt.

Dr Davis believes the China’s one-party government is looking to practice the same kind of debt trap diplomacy with the Luganville wharf.

“The Chinese would be hoping Vanuatu couldn't keep up with the debt repayments,” Dr Davis said.

Vanuatu’s Foreign Minister Ralph Regenvanu denies that the Luganville wharf has been built with any military objective in mind, insisting its sole purpose is to bring an economic boost to his struggling nation.

“We have built the wharf for our economic development,” Mr Regenvanu told Steinfort.

“We want Luganville to become a major commercial hub not only for Vanuatu but for the region.”

Mr Regenvanu assured Steinfort that China would never take the wharf, but acknowledged the subtler price expected by China from all Pacific nations it invests in – voting support for the superpower on critical issues at the United Nations.

When asked by Steinfort if he considered that to be bribery, Mr Regevanu replied: “Maybe, that’s diplomacy.”

While insisting the Luganville wharf would never be used by China as a military base,  Mr Regevanu did concede that his country has made previous errors in its dealings with China.

Last year, Chinese aid funded a huge athletic stadium in for a regional sporting meet but Vanuatu’s government hasn’t found much use for it since.

Even more controversially, a gigantic convention centre recently completed in the nation capital, Port Vila, is so large and expensive the government can’t afford to pay the power and cleaning bills let alone host events there.

The plethora of useless, Chinese-built landmarks have locals like taxi driver, William Taback, confused and concerned.

“The projects (China) are investing in are too big for our country,” Mr Taback told Steinfort.

“Already we know that we borrow a lot of money from China. It’s too much, it’s too much.”

Mr Taback’s sentiments are echoed in Fiji, where a similar situation sees China investing in expensive and futile building projects.  

Fiji’s former prime minister - and now opposition leader - General Sitiveni Rabuka is angered by growing Chinese influence in his country.

“If they become so powerful and we become impotent as far as that repayment is concerned,” General Rabuka told Steinfort.

“There is a fear that they will take over some of the public facilities we have, our ports and airports.”

“It’s happening around the world.”

One 28-story construction site in Fiji’s capital Suva employs close to 100 percent Chinese labour, for Dr Davis, it’s proof that China’s motivation for investing in the South Pacific is not to help the locals.

“They're bringing in their own labourers to work on projects that they directly benefit from that really gives nothing back to society or the people,” Dr Davis told Steinfort.

Yet, Dr Davis believes the Chinafication of South Pacific nations like Fiji and Vanuatu could have been avoided.

Australia was once the main diplomatic player in South Pacific but has lost its influence in the region in recent years.

When asked by Steinfort if Australia had dropped the diplomatic football over the last decade, Mr Davis replied:

“I think in terms of aid and investment into the South Pacific, absolutely we have,” Dr Davis said.

“Vanuatu is only about 1500 nautical miles from Sydney.

“If the Chinese establish a military base at Vanuatu, or indeed any other South Pacific state, then suddenly we have the prospect of Chinese military forces very close to the Australian Eastern seaboard.

“The prospect of major power conflict is once again on the agenda.”

To watch the full story, The China Syndrome and to see more on 60 Minutes head to 9Now.