"My team is progressing in two aspects: mentally and organisationally," the Italian World Cup winner told Titan Sports.
"We play to win, no matter if we're at home or away. But we have one serious problem and it's very, very serious: I have no forward, I have no centre forward at all.
"I have to move players from other positions to be a centre forward. The reason is simple too: clubs can play three foreign players and they like buying forwards.
"We have good choices in other positions but it is a big problem with the forwards."
China are bottom of their qualifying group for the World Cup finals in Russia next year, but retain a slim chance of advancing to the playoffs should they defeat both Uzbekistan and Qatar and other results go their way.
The national team's lowly status runs contrary to the growing profile and status of China's burgeoning professional league, where clubs have spent tens of millions of dollars to lure some of the game's leading talent.
Shanghai SIPG spent 60 million euros (55.50 million pounds) in January to sign Oscar from Chelsea while former Manchester United striker Carlos Tevez joined Shanghai Shenhua from Boca Juniors.
Other foreign forwards in the league include ex-Southampton striker Graziano Pelle, who plays for Shandong Luneng, Shanghai SIPG's Hulk and Ricardo Goulart at league leaders Guangzhou Evergrande.
Only one Chinese player - Shanghai SIPG's Wu Lei - has scored more than 10 league goals this season and Lippi has been forced to experiment with the inexperienced Zhang Yuning, who recently joined Werder Bremen on loan from West Bromwich Albion.
Despite the situation, Lippi remains upbeat about the progress made by the team since he took over from Gao Hongbo in October last year.
"They have responded well to me in the games," he said of his players.
"We have been improving all the time. Sometimes impossible things happen. If the results could more accurately show our true quality, we would have four more points now."
(Reporting by Michael Church in Seoul, Editing by Peter Rutherford)
