In 1856 Melbourne Punch carried an article entitled 'The Mongolian in Victoria (from the Argus of June 18th, A.D. 2000)' about the celebration of the 'centenary anniversary of the establishment of a Mongolian dynasty in Victoria' (qtd Alomes et al., 126). More than a hundred years later, in 1981, nearly a decade after Australia established its diplomatic relations with China, Australia is again taken over by China when a new China is established throughout Australia on Australia Day, 26 January 1988, in a work of fiction (Lyons, The China Tape). Why does work after work of fiction depicting Chinese invading Australia litter Australian literary history, throwing long, ominous shadows from the earliest days up to the present? If it is an inevitable outcome, why does the so feared Chinese invasion never eventuate? Why do Australians go to such great lengths to invent Chinese invasions? What makes them think that Australia is such a favourite place with the Chinese that they should want it for their own? Is this 'invasion literature' pure fiction based on a projection of paranoia or is it a political instrument fashioned for the benefit of Australia as a nation? To address those questions, this paper intends to examine the historical contexts in which the invasion literature has been written and has flourished, the relevance or irrelevance of the literature to reality and its basic social psychology. Although important recent studies such as Eric Rolls's Sojourners and Alison Broinowski's The Yellow Lady have offered new perspectives on the history of Chinese in Australia and Australian impressions of Asia, little sustained attention has been given to the discussion of this topic of Chinese invasion. Previous studies such as those conducted by Nan Bowman Albinski and Van Ikin tend to categorise 'invasion literature' as belonging either to 'dystopia' (Albinski 18) or to 'science fiction' (Ikin xxii). I would, on the contrary, argue that Australian invasion literature is shaped by a particular kind of ideology. It fits into the structure of Orientalism which holds China as an undesirable 'ultimate Other' (Zhang 110), and it expresses a xenophobia or Sinophobia, deeply embedded in Australian social structure and national discourse. It perpetuates itself by the mechanism of projection and stereotyping. Paradoxically, it increases as Sino-Australian official relations improve.