China’s relationship with Australia is arguably one of its most challenging. While not an obvious strategic threat to China, Australia’s very close military ties with the United States, its hosting of American military assets, and its role as a significant regional power mean that Australia cannot be ignored or bullied into changing its ways. On the contrary, the task for China is to try and change the nature of the debate within Australia about the latter’s foreign and security policies in particular, as well the roles of China and the US in the region more generally. This chapter argues that this remains a formidable challenge, and one China has often not handled well, despite the importance of the bilateral economic relationship for both countries. There are, however, unambiguous signs of improvement in the relationship, albeit from a low base. Whether this can be successfully built upon by both sides given their respective historical concerns remains uncertain.