Camp Lemonnier, home to some 4,000 US soldiers and contractors, is vital to US military operations in Somalia against militant groups like Al-Shabaab, and also provides support for US operations in Yemen, where special forces regularly carry out drone strikes against Al-Qaeda in the Arabian Peninsula.
China is also in the process of establishing its first overseas military base in the small port country just a few miles from the US camp, which has raised concern in Washington.
"For (the defence department) Camp Lemonnier and Chabelley are critical in terms of logistics. They support multiple US combat command", a senior defence official said, referring to an airfield close to the camp, from which the US military operates drones.
Another senior defence official, also speaking on condition of anonymity, also played down any concerns about China's base construction.
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"At this point I don't see why we should not be able to comfortably coexist with the Chinese presence, the way we do with the Japanese, the French..." the official told reporters last week.
With a population of 875,000 people, Djibouti lies on the Bab el-Mandeb Strait, a gateway to the Suez Canal, one of the world's busiest shipping routes.
The former French colony has launched major infrastructure projects aimed at turning it into a regional hub for trade and services, using money largely borrowed from China.
China has said it wants the base to support its UN peacekeepers in Africa, allow it to evacuate its nationals in a crisis, and to support its anti-piracy activities off Somalia.