Australia was Tuesday investigating whether Pacific microstate Nauru breached a security treaty by inking a lucrative business deal with a Chinese company.

Nauru last week announced it had signed a US$650 million economic development agreement with the China Rural Revitilisation and Development Corporation.

Australian Minister for Pacific Island Affairs Pat Conroy said officials were looking into whether that deal complied with a recent security pact between Canberra and Nauru.

"(Australia) is engaging with the government of Nauru about whether it activates parts of our treaty," Conroy told reporters.

"That is a really important treaty for us -- that helps position us as a security partner of choice with Nauru."

Australia and Nauru announced a landmark security treaty in December last

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