The 68-year-old, who won the tournament with his own country in 2006, was named the national team's new boss by the Chinese Football Association (CFA) over the weekend.
He faces the difficult challenge of steering the hapless Asian giant to the tournament, a near impossible feat after recent losses to Uzbekistan and war-torn Syria.
"The qualifying table for the 2018 World Cup is worrying, not impossible but definitely worrying," Lippi told his first press conference in Beijing.
"I want to build the team, help the players improve, to have confidence in themselves. If we win three or four games and miss out on qualification by just one point, that will still represent progress."
Lippi boasts an impressive CV that includes nine successful years at Juventus, although his second turn in charge of Italy ended in an ignominious first-round exit at South Africa 2010.
He went on to coach Chinese club Guangzhou Evergrande to three consecutive Chinese Super League titles between 2012 and 2014, and the AFC Champions League crown in 2013, their first win in the Asian tournament.
Improving Chinese football at the club and national level has been a priority for President Xi Jinping. Even before taking office he underlined his ambitions for China to qualify for, host and one day win the World Cup.
But it is a Herculean task.
China is the most populous nation on earth but holds a lowly 84th place in the FIFA world rankings, between Guatemala and Kenya.
They have only ever qualified for one final tournament, in 2002, when they lost all three of their group games and did not score a single goal.
In the current campaign China have claimed just one point from four games in the latest World Cup Asian qualification phase and are bottom in Group A, which includes Iran, Uzbekistan, South Korea, Syria and Qatar.
Their previous coach Gao Hongbo announced his resignation after a 2-0 away defeat to Uzbekistan earlier this month.
At Friday's briefing, Chinese Football Association president Cai Zhenhua acknowledged that "the national team's level is pretty weak. We hope that under our new high-level coach we will be able to play well in the qualifiers."
According to state broadcaster CCTV, Lippi will earn a salary of 4.5 million euros ($4.9 million). He and his team will also be paid 15.5 million euros annually by Evergrande's football academy to act as its "advisers".
He declined to confirm the figure, saying it was confidential.
Lippi is the latest foreigner to receive a hefty salary for running the national side following in the footsteps of Spaniard Jose Antonio Camacho and France's Alain Perrin.
Some commentators have expressed doubts about his appointment -- and its cost.
Writing in the China Daily newspaper, which is published by the government, Huang Xiangyang said he "cannot understand the logic" of the move and Lippi's "jaw-dropping" salary.
"History shows monetary incentives are not a panacea for success for the national men's soccer team," he wrote.
"As far as I can recall, the players have rarely played like men, though their incomes have reached astronomical figures."
Chinese entrepreneurs have pumped vast sums of money into domestic clubs, even luring international stars away from European leagues.
There has also been a splurge of Chinese investment in some of Europe's top clubs, among them Inter Milan, Manchester City, Aston Villa, Espanyol and Atletico Madrid.
Officials and clubs were eager to "squander money on famous players and coaches", but much more needed to be done to cultivate young talent, with more players, more soccer schools, and more children playing "just for fun", Huang said.
Last year officials declared football a compulsory part of China's national curriculum, with pledges to open 20,000 football-themed schools by 2017 with the aim of producing more than 100,000 players.
"Without grassroots development we will never have our own Lionel Messi or Cristiano Ronaldo," he wrote.