Political elites in liberal democracies are showing heightened concern about threats to national security from the overseas political activities of the PRC and its supporters. Various concerns are well founded, for covert and overt political activities are in its ruling party’s Leninist DNA, pro-Beijing patriots are advancing their views with increasing vigour, and many economic actors share overlapping interests with its party-state. This paper argues, however, that an effective liberal democratic policy response requires carefully distinguishing between risks to national security, to civil liberties, and to academic freedom. Aggregating varied issues into a singular national security threat – especially under sweeping, imprecise labels such as ‘Chinese influence’ – is counterproductive to the goal of defending liberal democracy. Although it is widely hailed as a model to follow in countering PRC foreign interference, close scrutiny of Australia’s aggregation-based approach illustrates key drawbacks: alarmist public policy discourse that fans xenophobia; legislative overreach that unnecessarily encroaches on civil liberties; and institutional mismatches that hamper efforts to protect diaspora communities from foreign interference. Drawing on conversations with government officials, activists, researchers, university administrators, lawyers and journalists, the paper defines and disaggregates a broad array of issues arising from the PRC’s overseas political activities; identifies important risks of responding; and suggests a set of measures for liberal democracies to manage their domestic responses to China's powerful and increasingly authoritarian party-state. It demonstrates that there exists no contradiction between tackling PRC foreign interference and taking seriously the associated risks to liberal democracy from within.