WASHINGTON (Reuters) - China will be able to place armed forces at a Cambodian naval base under a secret pact between the two nations, the Wall Street Journal said on Sunday, although Cambodian officials denied such a deal had been struck.

The agreement, reached this spring but not made public, gives China exclusive access to part of Cambodia’s Ream Naval Base on the Gulf of Thailand, the Journal said, citing U.S. and allied officials familiar with the matter.

Such an arrangement would boost China’s ability to assert contested territorial claims and economic interests in the South China Sea, challenging U.S. allies in Southeast Asia.

Chinese and Cambodian officials denied such a pact existed, the Journal said.

“This is the worst-ever made up news against Cambodia,” Cambodian Prime Minister Hun Sen told the pro-government news site Fresh News on Monday.

“No such thing could happen because hosting foreign military bases is against the Cambodian constitution.”

Cambodian defense ministry spokesman Chhum Socheat told Reuters the report was “made up and baseless”.

In Beijing, foreign ministry spokesman Geng Shuang said, “As I understand it, the Cambodia side denied this.”

But he declined to respond to repeated questions whether China also denied the report.

“China and Cambodia are traditionally friendly neighbors,” Geng told a news briefing.

“We have cooperated in various areas. Our cooperation is open, transparent, and mutually beneficial and equal. I hope the relevant parties do not overinterpret it.”

Hun Sen’s strongest regional ally, China has poured billions of dollars in development assistance and loans into Cambodia through two-way frameworks and its Belt and Road initiative.

The initiative, unveiled by Chinese President Xi Jinping in 2013, aims to bolster a sprawling network of land and sea links throughout Asia, the Middle East, Europe and Africa.

It has attracted a flood of Chinese commercial ventures in Cambodia, including casinos and special economic zones.

This month the U.S. Defense Department suggested China may be attempting to gain a military foothold in Cambodia, in a letter to Cambodia asking why the nation had turned down an offer to repair a naval base.

In a statement, the State Department urged Cambodia to reject such an arrangement, saying the nation had a “constitutional commitment to its people to pursue an independent foreign policy”.

It added, “We are concerned that any steps by the Cambodian government to invite a foreign military presence in Cambodia would threaten the coherence and centrality of the Association of Southeast Asian Nations in coordinating regional developments, and disturb peace and stability in Southeast Asia.”

Cambodia denied reports last November that China had been lobbying it since 2017 for a naval base that could host frigates, destroyers and other vessels of the People’s Liberation Army Navy.