Of course, with the benefit of perfect 20-20 hindsight, we can easily look back and say, "you fools, didn't you know X, Y and Z..?"
Just about every history I've ever seen of WWII comes from that sort of perspective:
1). The war might have been prevented, if the Brits & French had been more aggressive with Hitler, if they had made a serious effort to bring Stalin on board, and if the US had not been such isolationists (if, if, if...)
2). The war for France in 1940 did not have to be lost, if the Brits & French had not been so confused about what they were trying to do (more ifs). After all, the forces in 1940 were much more evenly matched than the outcome would suggest.
One thing is for certain: the Germans did not actually INVENT the idea of Blitzkrieg. And who do you supposed they learned it from?
That's right, the Brits, who seemingly then forgot it themselves.
The rest of your post is correct, I'm blessed with perfect 20 - 20 hindsight. And I also believe building China into a industrial powerhouse is pure insanity.
Come on over to a free trade thread sometime. Some of the folks there would offshore 100% of every needful item if they could.