The Djibouti base features a port, helicopter base, hangars and accommodation for up to 10,000 troops.
"We have very good relations with Vanuatu and I remain confident that Australia is Vanuatu's strategic partner of choice", she said.
CNN tried to contact both the Australian Defense Ministry and the Vanuatu Foreign Ministry, but did not get an immediate response.
However, a senior official of the Vanuatu government said that such discussions have never taken place and China isn't planning to build a military base in the island nation.
Several global nations have accused China in recent months of seeking to buy influence in the South Pacific through worldwide aid, stoking fears that Australia's long-time influence in the region is being eroded.
"We're not in a war situation or anything near it and yet we have a new aggressive hegemonic power in the region that wants to muscle in and we are in a hard situation because that would normally call on us having a much closer relationship with the United States but that's a nation that now going through the trauma of an erratic and risky president so we have to try and see beyond that and re-establish our links with democratic nations", Professor Hamilton said.
Initial talks have already begun with Vanuatu, which could result in China establishing a major military presence and upsetting the delicate strategic balance in the region, Fairfax Media reported on Tuesday.
Australia will give Vanuatu A$69.8 million ($54 million) in aid in 2017-18, and provides the nation "with the majority of its tourists, foreign direct investment and aid", according to the Australian government.
"Perhaps it's time for New Zealand to get more anxious about the implications of Chinese power in the South Pacific as well".
"But when you're talking military, and these sorts of things, you'd want to think it through pretty carefully", he said.
"[Vanuatu] would be useful for China if it got itself in a strategic confrontation with the United States ... to be able to outflank the U.S. and the Japanese".
"We'd like to know what we're dealing with before we start hypothesising how we would react".
"China has to right to seek bases as its expands its naval deployments, and it is has few options beyond smaller and poorer nations", he said.
Earlier today, Prime Minister Jacinda Ardern said the reports had not yet been confirmed, and she could not discuss the details of any official briefings.
"But in peacetime, it just sort of increases the Chinese shadow into that area". The US has a series of bases and training locations - running from Busan in Korea to Darwin in the Northern Territory - that many analysts believe is created to demonstrate an ability to isolate China and block shipping supply routes.
This has stoked fears that Australia's long-time influence in the region is being eroded. Vanuatu is one of the few countries that steadfastly support Beijing's controversial island-building programme. He said China's economic interest in the South Pacific was "really only fish".
Dr Edel, who is now at the US Studies Centre, said this would change Australia's external security environment in a way not seen "probably since the 1940s".