We had our 1st baby in HK, got his Australian passport through me and HK passport from his dad (dad is Chinese national)
now planning to go back Australia for a short holiday. How does the passport thingworks for our baby.
we are thinking:
exit HK on HK passport,
enter AUS on Aus passport
when come back,
exit AUS on Aus passport
enter HK on HK passport
what does everyone think? will it work?

Yes it will work. Legal for everyone except Mainland Chinese, Iranians and North Koreans.

what if we leave HK with Australia passport, will they ask for a exit visa?
Have seen lots of pots saying when leave China with a newly issued foreign passport,
peole will need to apply for the exit visa.

anyone knows? thanks

Aussies don't need visas for HK, do they? The exit visa for newborn, I think, is for nationals that need visa. Say a US couple just gave birth to a baby in Shanghai and received his/her US passport. That baby will need an exit visa to leave China in order to process all the required paperwork for a proper visa.

Best ask immigrations at HKIA to be sure. Or avoid any potential issues and just leave using the HK passport. Question is, will the Aussie immigrations ask where had the child been when they see an Aussie passport with no entry-exit stamp.