Wedging is an important strategy for China to disrupt potential countervailing response in its quest for regional hegemony. Yet, little has been known about how China pursues this strategy and the conditions for its success. This article contends that China has employed a combined statist and trans-state approach to wedge the U.S.-Australia alliance. Beijing has two main aims: promote an alignment of interest with Canberra at Washington's expense and prevent Canberra from siding with Washington. It relies on three modes of influence (coercion, inducement and persuasion) to alter the costs and benefits of Canberra remaining aligned to Washington. The success of China's wedge strategy is contingent on the use of policy compartmentalisation, the target's regime type and the nature of its trans-state influence. China has achieved partial success in three issue areas: the South China Sea dispute, the U.S.-China 5G competition and the international isolation of Taiwan.