As Canberra finds itself increasingly at pains to strike a balance in its foreign policy vis-a-vis Beijing on the one hand and Washington on the other，a fierce public debate has been raging in Australia over whether the country needs to make a choice between its largest trading partner（China）and its most important strategic partner（the US）. Faced with this conundrum，key decision makers and foreign policy practitioners in Canberra，as distinct from the academic community and the mass media，seem to have opted for an operational strategy that can be characterised，for want of a better term，as “muddling through”. In contrast to the classic notion of “muddling through” in the study of decision making in political science，we argue that the policy makers in Canberra have adopted this approach more by design than by default. Our investigation of Australia’s response to China’s initiative to establish the Asian Infrastructure Investment Bank（AIIB）has uncovered evidence of conscious and conscientious “muddling” on the part of the Abbott government in order to get itself “through” an intricate and difficult situation. This approach has allowed Canberra not only to avoid making a painful choice between the two great powers，but also to exercise its own flexibility and influence as a middle power to maximise its national interests in circumstances beyond its control. By sifting through the shifting sands of Australian attitudes and reactions to the AIIB initiative，our article is both a test case and an illustration of Canberra’s strategy of “muddling through” in action.