Kiribati requested China conduct a feasibility study to upgrade an airstrip on the island of Kanton.
The island is situated between Australia and the United States and housed a military aircraft base in World War II.
National security expert John Blaxland said China was "very good at developing facilities that have multiple purposes".
He pointed to facilities China helped construct in Sri Lanka and Cambodia that have the potential to be used by its navy.
Professor Blaxland said the facilities have "some sort of a security dimension" to them but not enough that China cannot deny any military involvement to deflect criticism from the West.
"It's deliberately and cleverly presented as falling short of the (military base) threshold," he told AAP.
"It's a way of getting what they want, operating below the threshold that will invoke a more muscular, substantial US and Australia angry reaction."
Prof Blaxland added it was Kiribati's prerogative to accept Chinese investment and Australia needed to keep an open mind.
But he said while locals can reap the benefits of any investment, "it's the potential strings attached that could be the problem".
China's embassy in Kiribati said an expert team from China conducted the study to renovate the airstrip on March 19 at the request of the Kiribati government.
The embassy said the upgrade was to enable commercial air travel between the capital Tarawa and other islands.
"China will work together with Kiribati government and other development partners to explore and carry out multilateral co-operation in developing Kanton Island," the embassy said in a statement.
Kanton has also been the focus of Australian diplomacy, with Foreign Minister Penny Wong signing a memorandum of understanding with President Taneti Maamau in February that included upgrades to the island's wharf.
Australia also pledged to support economic development and maritime security.
A recent diplomatic effort co-ordinated by Fiji's new prime minister brought Kiribati back into the Pacific Islands Forum.
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