National security experts in Canberra and Washington are alarmed that China could be in the box seat to beat private equity firms to acquire telecommunications assets in the Pacific that would enable Beijing to spy on Australia's closest geographical neighbours.

The Morrison government is under pressure to provide financial support to Western private bidders, after debt-laden Digicel said it had received unsolicited approaches for its Pacific operations that include Papua New Guinea, Fiji, Tonga, Vanuatu and Samoa.