Nobody is stupid enough to engage us in the open when our military power is the only real advantage that we have left as a nation. I think the point is to make the cost of US intervention so high that we would think twice before trying to cut off their Indian ocean supply lines.
This could also serve to goad the US in a costly arms race that would further bankrupt us. The Chinese economy is based on the production of real goods, while our economy is revolving into a series of currency manipulation schemes backed by our global military presence. So while China needs only military deterrence to keep their economy going. We need absolute military dominance to prevent our economy from collapsing.
Yeah but it’s only so long that we can maintain our current military strength. A good example was the Spanish Armada and we all know what happened. :-P