I am flying from Kathmandu into China and spending 3 weeks there. I am then staying with a friend (who will be living in HK) for another 3 weeks. We may take some short trips into China together from HK.

In any event, what visa should I get? Would I best off to get a multiple entry visa into China to cover the whole time? Or should I just get my visa for the initial 3 weeks (single entry) and THEN once in HK just get another visa?

Single, double, multiple all cost US$130 for US citizens. Definitely apply for the multiple.

I am Australian...
If I get a multiple entry visa, it is valid for six months. Does this mean that I can enter China as many times as I like within six months? (i.e. it would cover me for my trip + any trips I might take when staying in HK)?

Yes.

Otherwise, every border crossing from Hong Kong into China will consider one entry.

As of the end of September, the PRC was still not issuing multiple-entry visas (unless you have a Hong Kong Permanent ID), so you should check to make sure that they have re-instituted mutlple-entry visas. The PRC suspended this during the Olynmpics and the Special Olympics, and I am not sure that they have re-instuted this category of visa.

If you hold an Australian passport, are employed in Australia, and plan to travel in SE Asia over the next 3 years or so, rather than getting a PRC visa, you might want to consider getting the APAC Business Travel Card, which will let you into the PRC an unlimited number of times <i>without needing or paying for a visa</i>. The APAC card is a visa-waiver program for a large number of countries in Asia-Pacific. It costs AUS$200, see http://www.immi.gov.au/skilled/business/apec/index.htm for information on obtaining the card in Australia; it takes some time to apply and obtain it, but would be quite valuable to you if you can get it.

With an APAC card, in addition to not needing a visa for many countries, you will also be able to go into the shorter immigration lines in the countries which participate in the program (including Hong Kong, for which you don’t need a visa but you can use the faster APAC card line at immigration). This card is very helpful if you plan to make multiple trips from Hong Kong into the PRC by train or boat, as you can avoid the longer immigration lines there.

Don't know what the Chinese embassy and consulates in Australia are doing, but reports here in the US is that the embassy and consulates here are restored to policies prior to the Olympics, and are issuing multiple-entry visas again.