This study investigates the links between the second-generation Chinese Australians' heritage language proficiency and perceptions of Chinese identity. Thirty 10--11-year-old children of Chinese immigrants took a Chinese proficiency test and participated in semi-structured interviews. The test revealed a wide range of performance levels in all the four skills except listening among the Chinese-Australian children. It was found that the high-achieving participants expressed aspirations for attaining high levels of Chinese literacy and identified themselves as being half Australian half Chinese. In contrast, the low-achieving participants showed an inclination to communicate in English only and perceived themselves as mainly Australian. The study suggests, to increase chances of heritage language maintenance and cultivation of a bicultural identity, children need substantial support and access to the various resources, avenues, and opportunities to learn Chinese both at family and community levels. This study is significant in providing empirical evidence for the debate of language and identity while awakening the Chinese diaspora to heritage language maintenance.