The growth of China's influence in our region is a significant issue, but there is a danger in making it the sole focus for relations with our neighbours.
Australia has for years been on the alert about China's ambitions in the Pacific, and those concerns were realised this year when the Solomon Islands concluded a security agreement with China.
But a new challenge has emerged on our northern boundary, where the tiny island nation of East Timor has hinted it could bring in Chinese investors to replace Australian firm Woodside Energy as its partner in the giant Greater Sunrise offshore gas field in the Timor Sea.
The two partners in the project are at loggerheads over East Timor's desire to pipe the gas to its shores for processing into transportable LNG rather than sending it to Darwin.
As President Jose Ramos-Horta told the National Press Club on Wednesday, there is a strong consensus in his country that an onshore gas processing facility is needed to promote economic development and bring jobs to his country.
Woodside, however, has rejected the idea, arguing it is uneconomic and would increase sovereign risk for the project compared to the alternative of shipping to Darwin.
East Timor fired back last month by warning that it could proceed without Woodside and bring in other investors, including from China.
The idea that East Timor is moving closer to China is a little galling given the close relations between our two countries since 1999, when Australian troops played a crucial role in the independence struggles against Indonesia.
But it is important not to overreact.
East Timor is a desperately poor country which has a gross domestic product per capita of just $2250 a year and whose economy depends on oil revenues and foreign aid. It is understandable that it would like to diversify and develop a major domestic manufacturing industry.
If Australia ignores East Timor's aspirations, it will only fuel more resentment. Australia's relations with East Timor are still recovering from the revelations that in 2004 Australian spies secretly bugged Timorese government offices during negotiations over the maritime border in the seabed above the oil fields.
Providing it abides by its contractual obligations to Woodside, East Timor should be able to choose other partners in its own national interest.
While Woodside may have an interest in developing the fields to maximise its profits, Australia should not jump to take sides in this dispute, which is about commercial interests rather than national security.
Ramos-Horta tried to reassure Australia by saying that, unlike Solomon Islands, East Timor is not considering allowing Chinese bases on its territory, and this is just a dispute about the location of a pipeline.
Ramos-Horta also stressed that, unlike the Solomon Islands, his country is committed to co-ordinating its actions with its neighbours.
East Timorese negotiators have raised the prospect of Chinese involvement to gain leverage in negotiations with Woodside and the Australian government but it is not clear that China is interested.
Even if China is serious, Australia cannot and should not try to exclude all Chinese investment from the region, which is desperately short of development finance.
Australia would do better to explain to East Timor the risks in undue reliance on China. It would also help its case by offering more bilateral aid to help lift East Timor's people out of poverty.