Kim Phyong-hwa converted an easy chance in the 46th minute after the hosts had allowed Ri Hyang-sim to nick possession deep in their own six-yard box.
The victory moved DPR Korea on to nine points from four games and made a top-three spot which would seal their place at next year’s FIFA U-17 Women’s World Cup all but secure.
China’s chances of winning the championship are over though, with their hopes of a top-three finish resting on their final match against Korea Republic.
DPR Korea started the brighter, but they could not find the right final pass as China struggled to get out of their own half
Coach Hwang Yong-bong admitted his side lacked composure up front against Australia and they were rushed again when in promising positions.
The hosts threatened for the first time when Song Duan’s pace and a neat one-two allowed her to escape her marker down the right.
She swung in a decent cross but it just evaded Dong Jiabao at the far post.
China goalkeeper Lu Feifei then completely missed a right-wing cross under pressure from Ri Un-sim, but, with Kim Phyong-hwa stooping to head what looked a certain opener, Lu recovered brilliantly to scramble the ball around the post.
Kim Phyong-hwa had another sight of goal, but failed to get a clean connection on her far-post volley and her weak shot was easy for Lu.
But she put her side ahead in the first minute of the second-half as China shot themselves in the foot.
The defence tried to shepherd the ball out of play only to allow Ri Hyang-sim to nick possession and, although she was crowded out, the ball fell to Kim Phyong-hwa to slot home a low shot from eight yards.
Kim Un-hwa then had a powerful shot from outside the area tipped over the top by Lu.
China tried push for an equaliser but never looked like finding a way through.
Instead, Jo Ryon-hwa should have doubled DPR Korea’s lead in stoppage time, but blasted her shot against the underside of the bar when clean through.