China, the defending champions, needed extra time to beat world No.40 Taiwan 2-0 in Saturday's quarter-final clash in Perth.
Australia booked their spot in the final four a day earlier with a nervy 2-1 win over North Korea.
Milicic coached the Matildas at the 2019 Women's World Cup, but the Australian will be the enemy on Tuesday night, given he is now in charge of China.
The visitors will start as rank underdogs against Australia in front of a hostile crowd of almost 60,000 fans at Optus Stadium on Tuesday night.
But rather than be daunted by the challenge, Milicic reckons his players will thrive.
"The one thing I know about these girls is playing in front of opposing big crowds doesn't faze them," Milicic said.
"As a nation, they're not afraid of anyone and certainly not 60,000 or whatever the stadium holds."
China were raging-hot favourites to defeat Taiwan, but they lacked polish in front of goal and didn't score until extra-time.
The odds are heavily stacked against China to defeat Australia given they will have one less day to rest, had to play extra-time against Taiwan, and will be without star attacker Wang Shuang due to an accumulation of yellow cards.
Milicic feels China can use their underdog status against Australia as an advantage.
"Being the favourite (against Taiwan), expected to win, breaking down a block - maybe that played a little bit on the girls' minds," Milicic said.
"Maybe it's OK to go into the game on Tuesday with everyone thinking, 'they've played 120 minutes, Wang Shuang's not playing'.
"So be it. We're fine with that, we're comfortable with that."
The Matildas had to survive a barrage of attacks against North Korea to come out victorious.
Milicic is familiar with that Australian grit and determination, and sees similar traits in his China squad.
"One of my best nights in coaching was in Montpellier against Brazil, when we (the Matildas) were 2-0 down and came back to win 3-2," Milicic said, in reference to that 2019 World Cup group-stage encounter.
"The feeling that I got that night was they were never going to lose that game, even at 2-0 down.
"So I've seen it, but I look at my own team and these girls, they are just so resilient.
"They love their country. They're so patriotic. I'll back my girls against any opponent."