Scott Morrison has poured cold water on speculation a Chinese company could soon build a megacity just kilometres from Australia.
The Beijing-backed company has developed ambitious plans to build a $39 billion city in Papua New Guinea.
The "New Daru City" would house a major seaport, industrial area and free trade zone less than 200 kilometres from the Australian mainland.
Mr Morrison said there was "lots of noise" around the proposal, but it was pure speculation.
"I couldn't see Papua New Guinea being terribly hasty on anything like that," the prime minister told 2SM radio on Monday.
"I honestly think it is just speculative, it is just people flying some kites, and I'm not going to overreact to some speculative noise being floated around out there.
"There is nothing substantial that is before anybody on that."
A spokesman for PNG Prime Minister James Marape said last week he was unaware of the project, but the country would not turn away foreign investment so long as it complied with laws and benefited locals.
Opposition foreign affairs spokeswoman Penny Wong said the Chinese proposal was evidence of a regional leadership vacuum created by the Morrison government.
Senator Wong said the plans represented a security and strategic threat, given China is intent on growing its power and influence in the region.
