Agreed...my gut feeling is that China aren't going to rock the boat as long as their pride is left undamaged and they have prestige and cash. The worst danger for starting a war is an economic downturn, Taiwan arbitrarily declaring independence or anything else destabilising.
Wars for territorial control are so twentieth century. Why resort to them when you reap more through peaceful means...that said, if you want peace, prepare for war.
As to their subs, their current vessels aren't the great factor - the fact that they're developing a set of experienced submariners and beginning to build and buy the better Kilos is. An average sub in the hands of an experienced professional crew is more dangerous than a top notch sub in the hands of a green crew chosen for political reliability. When you consider the abysmal state they were in under Mao, the professionalism blossoming again in one generation is amazing.
They are making great progress very quickly. I am watching their space program, they are doing very well.