I'll just say you are partly correct and leave the heavy lifting...
to anyone more inclined to argue the full scope of your comments. Obviously our economy is fueled, to some degree, by government spending.
I completely agree that China's government is pragmatic. I also believe that in spite of their ability to field more cannon fodder, they prefer to do it without waging war, They believe, (and they might be right), that they can win by out producing us.
As an optimist, I think it will be a stalemate. We will come to a meeting of the minds and we and they will be happy with the respective hegemonies, mutual profits from trade and little to fight over philosophically.