I agree with most all of what you have written. I think the chinese leadership understands this, but they also are using an almost fascist approach to their economy to sustain it much longer than the old Lenin, Stalin, or Mao models allowed for.
The problem with fascism is that it can develop to a point of not only being sustainable, but of being a powerhouse if its people get behind it. Reference the Germans, who put out in shear numbers and technology, as a relatively small nation, a wartime economy that it took the combined mass of the rest of the developed nations (outside of Italy and Japan) to put down.
If that ever happens with the 1.3 billion Chinese...well, the prospect is frightening. But I think something along those lines is exactly what the CCP is working towards.
So, how will they do it? The Nazis did it during very severe financial times by instilling pride in the people in being Germans. Old areas were reincorporated into the Reich (Sudetland, Austria, Czeck, etc.), major infrastructure building (highways, waterworks, etc.), etc.
Watch out for these in China...their nationalsim and cultural pride is something that can be exploited by their leaders, just like the Germans were exploited by their leaders.
In the mean time, the window is there...how long they will be able to keep it open, and how they will go about maintaining their position should it begin to close is anyone's guess...but it is not likely to be pretty IMHO.
Did you read the footnote about the biological weapons attack...? How seriously do you regard those threats?
Cheers!