China says reports it wants to build a military base in Vanuatu are "sheer fiction" from Australians stirring up trouble.
Malcolm Turnbull admits there is tension between the two countries, after Fairfax Media this week reported China asked Vanuatu about building a permanent military base, while Australian ministers have been refused visas to China.
Vanuatu says China has never approached the island nation about a base, which was confirmed by China on Thursday.
"Such allegation of the Australian side is sheer fiction, and Vanuatu has clarified on this matter," Chinese Foreign Ministry spokesman Geng Shuang told reporters.
"The South Pacific island countries should not be the sphere of influence of any country.
"Enough with certain Australian individuals' interference in others' internal affairs.
"It would be better if they can make concrete contributions to those countries' development rather than stir up troubles."
Mr Turnbull was asked about reports the country has been put in a deep diplomatic chill with China, which is refusing visas to Australian ministers.
Repeatedly asked if that was the case, Mr Turnbull said: "I wouldn't say they've been declined."
But he did admit there had been concerns aired in Chinese media about the federal government's new foreign interference laws.
"There's clearly been some tension in the relationship," he told 3AW radio on Thursday.
"I'm very confident that any misunderstandings will be resolved."
Mr Turnbull insisted he is in regular contact with Chinese leaders and the relationship is "very deep and extensive".
"But from time to time there are differences of perception," he acknowledged.
It is expected Mr Turnbull will go to China later in the year.
Opposition leader Bill Shorten said he wants Australia and China to work constructively.
"In the past the relationship with China has had more turbulence than you might want to see, but China is a very important part of Australia's future," he said.
The Australian Financial Review reports the annual Australia Week in China expo was scheduled for May, but that's now not the case.
Treasurer Scott Morrison said the dates had not been settled.
"There will be further discussions about those," he told ABC radio.
He confirmed Trade Minister Steven Ciobo will be in China at the end of the year leading a trade delegation.
Last month, DFAT chief Frances Adamson conceded her plans to visit China had been deferred several times.
She denied there was a diplomatic freeze, but said there were some complex and difficult issues to overcome.