Construction will start on an expanded airfield to carry heavier military aircraft, Australia says.
A remote Australian island close to an Indian Ocean chokepoint for Chinese oil shipments is on a list of possible locations for US military construction aimed at deterring China, with the US saying it "may or may not" support American forces.
Australia's Cocos Islands is listed along with the Philippines, Timor Leste and Papua New Guinea for anticipated construction projects under the Pacific Deterrence Initiative, designed to enhance US force posture and infrastructure to counter China.
The Cocos Islands, with a population of 600, sits 3,000 km west of the Australian mainland and is described by the Australian Defence Force as key to its maritime surveillance operations in the Indian Ocean, where China is increasing submarine activity.
A US Navy construction tender published in June for various base infrastructures in the Indo-Pacific lists Cocos Islands as a possible project location, an indication the US military is also seeking access to the Indian Ocean territory.
"These projects may or may not support the Darwin Marines Rotational Force," a spokesman for NAVFAC Pacific, the US Navy's Pacific Fleet engineering arm, said in an emailed response to Reuters.
Around 2,000 US Marines are hosted in the northern Australian city of Darwin for six months of the year.
There was no immediate response from the Chinese foreign ministry when asked for comment on the US Navy tender list and Cocos Islands as a possible project.
Cocos Islands is closer to the Strait of Malacca, a chokepoint for half of China's oil shipments than the US Navy base of Diego Garcia, a launch pad for US bombers in the Iraq and Afghanistan conflicts, but whose long-term future is under a cloud.
Darshana Baruah, director of security and geopolitics for the Australia India Institute, told a US Congressional hearing last year that Cocos Islands would be "critical geography" for the US to put pressure on China to deter an attack on Taiwan.
"Cocos is much closer to the theatre where Washington anticipates conflict scenarios," she told Reuters.
"The strategic location of Cocos Islands, close to both the Strait of Malacca as well as Australia's northern approaches, gives it immense geostrategic advantages," she added.
Australia has said it will start construction on an expanded airfield on the island this year, to carry heavier military aircraft, including the submarine-hunting P-8A Poseidon.
"There is currently no US investment at Cocos (Keeling) Island," an Australian Defence Force spokesman said in a statement.
"Australia and the US cooperate closely together to advance our force posture cooperation across various locations in Australia," the statement added.
The US military is constructing bomber runways and facilities at two key northern Australian air bases.
The US has said its Diego Garcia air base plays a vital role in regional security, and it was a matter for Britain and Mauritius to work out its future after the United Nations General Assembly voted in 2019 that it should be returned to Mauritius.
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