The Aussies were once again wasteful from the free-throw line, hitting just 15-29 while their defence allowed China to shoot at 55% overall and 64% from two-point range.
Also in a similar fashion to their first game, Australia were slow out of the blocks and trailed 12-3 early.
They found their composure on the back of captain Tom Fullarton who hit a three-pointer from the corner to swing the momentum in Australia's favour before a three-point play early in the second quarter gave them their first lead of the game.
China's physical interior defence made it difficult to maintain that momentum though as Australia fell behind by 16 points at the main break behind some defensive lapses.
From there, it was always an uphill battle and China were relentless in their attack on the ball, not allowing Australia back into the contest.
Fullarton's 25 points was a game-high while Samson Froling also impressed, adding to his perfect shooting night against Canada with another 15 points on 5-5 shooting, eight rebounds and two blocks.
Patrick Bines also proved to be an influence in the paint with seven points and seven boards and Lachlan Dent showcased his talents with a quick five points off the bench.
The full box score can be viewed here while a replay of the match can be found below.
The good news for Australia is that every team advances to the Round of 16 at the end of these group games which keeps their Championship hopes alive.
Australia's final game of the group stage will be against Finland early Monday morning at 2:45am AEST. Stay tuned to Basketball Australia's social media accounts for links to the live-stream.