East Timor is just north of yellow coffin shaped Zone of "Cooperation". China in 2007 was interested in placing a long range radar on the northeast coast of East Timor.
China supplied 2 patrol boats to East Timor in 2010 but Chinese air, naval or radar facilities would be a greater worry.
East Timor (Timor Leste) is a very country (independent since 2002) just to Australia's north.
A naval and air base at Baucau, a small town with an airport on East Timor's northeast coast could be built with South China Sea like rapidity and efficiency. Baucau Airport was used by the Indonesian Air Force (1975-1999) and can take aircraft larger than 737s.
China has a record of attempting to make East Timor more of a military asset for China. In December 2007 Chinese defence “firms” approached the East Timorese Government with a suggestion that the “firms” build and operate a surveillance radar facility on East Timor's north east coast (probably in the Baucau area). East Timorese officials consulted the US and Australia before rejecting the Chinese “firms” offer.
East Timor has long been dissatisfied with the Timor Gap undersea oil/gas border and revenue sharing dispute with Australia. East Timor is increasingly vocal about this. China may be able to exploit the discontent. China could offer not only more aid but political leverage and oil/gas undersea extraction expertise assets to obtain higher oil/gas revenues for East Timor.
An Independence Referendum in nickel rich New Caledonia is expected in 2018.
- There is concern about violent disruption 2018 onwards. A possible precedent is independence of the nearby New Hebrides (now Vanuatu) in 1980 which become quite violent - including French planters in New Hebrides' larger northern island of Espiritu Santo trying to organize a Francophile Separatist Rebellion.
For white residents and nickel interests in New Caledonia there is concern about policies of any "Kanak" dominated independence government after 2018.
Australia and New Zealand would be concerned about events in a post 2018 New Caledonia, particularly which outside powers would come to influence an independent New Caledonia.
The concern is China may see East Timor and New Caledonia as military assets with air, radar and naval base facilities in the same way it is treating such South China Sea islands as Fiery Cross, Subi Reef and Mischief Reef.