Australia lacked the determination to win the 50/50 contests which gave Germany the scoring opportunities to lead 2-0 at the break through a field goal by Anke Kuhn and a penalty corner conversion by Anneke Bohmert.
"They were all over us in the first half. We lacked composure and we didn't play well and allowed Germany to control the ball through the middle of the pitch," said Australia coach Frank Murray.
Megan Rivers scrambled a goal five minutes before the end for Australia who earned a penalty corner in the last minute, but the hit from the top of the circle was penalized for being too high.
Fanny Rinne, Germany's captain for the day, felt the pressure in the last five minutes.
"We played well in the first half but Australia put us under a lot of pressure after they scored and I am happy that in the end we had one goal more," Rinne said.
Netherlands' decisive 3-1 over China was crafted by Marilyn Agliotti deflecting in two short corners and Minke Smabers converting a penalty stroke following China's early goal by Yudiao Zhao.
"These are surprising results for my team and our way of playing is also a surprise for me, so I am happy with the result and the way we played," said Dutch coach Marc Lammers.
Kim Changback, China's coach, focussed on the deficiencies of China's forwards in the loss.
"Three of our forwards did not play well which is why we played so negatively," said a furious Kim. "We did not play our style of very fast hockey."
Argentina, the world number two, were fortunate to win 2-1 over Japan in a low quality match marred by numerous midfield turnovers by both teams and poor penetration into the circle at both ends.
"Argentina didn't play well with the ball as the players lacked confidence and lost possession much more than they usually do," said coach Gabriel Minadeo.
"We won the match, but we were lucky to do so."
Seung Jin Yoo, Japan's coach, believes his team are improving against the South Americans.
"In the previous Champions Trophy (January 2007) we lost 3-1 to Argentina, so a 2-1 loss is an improvement," Yoo said.
Argentina scored through Agustina Bouza in the middle of the first half with a looping shot that deflected off a defender's stick over the head of Japan's goalkeeper Ikuko Okamura.
Claudia Burkart slammed in Argentina's second penalty corner past the feet of Okamura.
Japan attacked relentlessly in the last five minutes, and Kaori Chiba scored a field goal in the dying moments of the game.
Monday is a rest day in the tournament, while Tuesday sees China meet Australia and Japan play Germany.