Iran's Mehdi Taremi dealt China's World Cup hopes a major blow on Tuesday, as Australia grabbed a crucial win over UAE to stay in the hunt for an automatic spot at Russia 2018.
Australia, however, can take nothing for granted as they lie in third spot with 13 points after Japan and Saudi Arabia also won to jointly go three points clear in Group B with 16.
Japan ended Thailand's campaign with a 4-0 victory in Saitama, and South Korea squeezed past Syria 1-0 to get back on track after last week's upset to China.
Saudi Arabia grabbed three points in Jeddah with Yahya al-Shehri scoring the winner in the 53rd minute for a 1-0 victory over Iraq, who languish in fifth place with just four points.
Marcello Lippi's team had raised Chinese hopes with their 1-0 win over the Koreans, but Taremi's goal straight after half-time consigned them to defeat by the same scoreline.
While Iran, Asia's top-ranked team, maintain their four-point cushion from South Korea at the top of Group A, China are second from bottom with only three games to go.
China are pumping huge resources into football in an effort to lift themselves among the sport's elite, starting with qualifying for only the second World Cup in their history.
But they may now have to win all of their remaining games against Syria, Uzbekistan and Qatar to reach next year's tournament in Russia.
In Sydney, Australia badly needed a win against UAE and after a game featuring 42 fouls they ran out 2-0 victors thanks to goals from Jackson Irvine and Mathew Leckie.
It allowed the Socceroos to keep pace with Japan and Saudi Arabia in Group B as they hunt for the top-two finish which will give them an automatic berth in Russia.
But the result spelled doom for UAE's under-fire coach Mahdi Ali, who announced his resignation from the 2019 Asian Cup hosts following five years at the helm.
- 'Incredibly happy' -
Japan had little trouble in their four-goal stroll in Saitama, which featured a 50th international strike for Leicester City forward Shinji Okazaki.
Shinji Kagawa gave the hosts the lead in their Asian Group B qualifier with a sharp finish after eight minutes, before Okazaki thundered home a diving header to bring up his half-century in swashbuckling style.
Okazaki's landmark goal, on his 108th Japan appearance, came on 19 minutes in Saitama and effectively killed the contest.
Yuya Kubo and Maya Yoshida added further goals for the Blue Samurai after the break and Eiji Kawashima saved a late penalty from Adisak Kraisorn to deny Thailand a consolation.
"I'm incredibly happy to get that goal," Okazaki told reporters. "I hadn't scored for a while so it was a relief. Hopefully I can keep on scoring goals for Japan."
"We're not at the World Cup yet," he added. "We have to make sure we keep taking our chances and win our remaining games."
Elsewhere, China-based Hong Jeong-Ho struck in the fourth minute as Uli Stielike's South Korea beat Syria 1-0 to remain second in Group A.
Qatar's already slim hopes of qualifying for the tournament also vanished as they went down to Uzbekistan 1-0 in Tashkent.
After their acrimonious 1-0 loss to Iran last week in Doha, Qatar were desperately looking for a miracle but a cracking 65th minute free-kick from Odil Akhmedov put paid to their hopes at the Bunyodkor Stadium.
Qatar continue to languish at the bottom of Group A with just four points after losing five of their seven games.
The Uzbeks, who also have never qualified for the World Cup finals before, are in third spot with 12 points, just one point behind South Korea with three games left.