Their military build-up could be to some extent a bluff to make China appear to be able to defeat the US Navy and Taiwan's military. If spineless left-wing presidents then are elected in both Taiwan and the US (Kerry, Hillary, etc.), then China might be able to bluff the US into staying out of a war over Taiwan and bluff Taiwan into surrender by threatening to nuke them. That may be their strategy regarding Taiwan. They certainly have been acquiring a lot of high-quality military hardware over the last ten years.
The key to peace and stability is our maintaining a conventional force second to none which the Chinese would not dare test. I fear we are lacking this or heading in that direction. I've seen nothing from Bush similar to Reagan's expansion of the navy.