China coach says team on right track despite Asian Cup heartache
The defending champions crashed in Perth on Tuesday after a moment of magic from star Matildas striker Sam Kerr sealed a 2-1 win for the hosts.
"I thought we were brave. We tried to press the opposition at times, but in the end they have that individual quality and that was probably the difference," said Milicic.
Despite the defeat, it was a step forward for a team whose results have been disappointing since lifting the trophy in India four years ago.
They bowed out in the group stage of the 2023 Women's World Cup in Australia and New Zealand, failed to reach the Paris Olympics and were hammered 8-0 by England last November.
Australian Milicic, who has been in charge since May 2024, said they were on the right trajectory heading into the World Cup in Brazil next year.
"I think part of my job was to bring some new faces into the team. I really feel I have a good idea what this team needs, what it's lacking, and what's working well," he said.
"But at the same time you have to understand that the next step for this team is the World Cup, so that's another step up again.
"So you have got to keep evolving, picking the right players in the right training environment, getting the mix, the balance right."
Milicic, who coached Australia at the 2019 World Cup, leading them into the last 16, said he was "very proud" of the improvements he had seen during the Asian Cup "both on-and-off the field".
"I think the way that they've been open to a new way of playing, a new way of learning, a new way of training. That's what impressed me the most," he said.
"Their mentality is excellent. They are such a joy to work with."