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Say what you will about the Chinese, but they are not historically an ignorant or uninventive people.

No, but they were very slow at innovation compared to last millenium Europe, and they have never been rapid innovators. A good portion of the power of the West and particularly the US has been its ability to innovate at blinding speed. Things just don't move that fast in Chinese culture.

Gunpowder is a good example. The Chinese had it for the better part of a millenium before the Europeans imported it. Even though the Chinese knew how to make it, after all that time they still hadn't even come close to mastering practical applications of it and it served mostly as curiosity. When the English got their hands on it, they mastered the technology in a couple generations. Remember, one of the first exports of England to China was well-engineered and functional gunpowder weaponry, less than a hundred years after bringing gunpowder to Europe. For all the time they spent at it, the Chinese never came close to producing anything like what the Europeans figured how to make in a matter of decades.

The Chinese had a huge head start on the Europeans technologically, but innovated at a very slow rate. When the Europeans finally wandered out of their primitive dark ages, they brought with them a culture that could innovate and adopt technology at a startling rate. This ability allowed them to catch up to and surpass all the advanced cultures in the world very quickly technology-wise, despite their late start.

The lack of technological innovation in Chinese civilization was the result of a tremendous luxury Imperial China enjoyed. No civilized enemies. The constant arms race since the invention of the crossbow that triggered Western technological progress was the result of Europe having three or so major powers (England, France, the Hapsburgs/Holy Roman Empire) and occasionally dangerous ambitious wannabees to balance things (Holland, Prussia, Venice, Sweden, Saxony, etc). A major military innovation could turn a wannabee into major player and a major player into an empire.

Also, Northern Sung China came within an inch of an industrial revolution. The key to firearms isn't gunpowder. It's making good, cheap metal. The development of the coking process for making purer, stronger, cheaper iron made the mass conscript armies and plentiful artillery of the Napoleonic Wars possible. Chinese entrepreneurs were beginning to create large scale iron production enterprises. But the imperial bureaucracy, fearing a rival bourgeous class, had them shut down. So China never had a chance to develop the firearms that might have stopped the Mongols. To them technological innovation was suspect and potentially dangerous.

Modern China had a tremendous advantage that Russia did not. It had that enormous pool of talent and wealth to draw from; the overseas Chinese. Their role cannot be understated. Chinese wherever they go practice the higher return Jewish model (high education, the professions, retail business ownership) instead of the lower return Irish-Italian-Black model (sports, entertainment, organized crime, machine politics, civil service). As such China will be vastly more formidable than the Soviet Union ever was. Try as they might the Russians just can't seem to get past a Mafia model of capitalism. They have yet to produce world quality export goods.

China will always have a strong state capitalist sector of the economy. That is their culture. Chinese civilization is built around organized water control on a massive scale from the rice paddy to two enormous rivers that do great damage with great loss of life when dikes or canals are neglected. Libertarianism is only for people or societies that think the world is a safe place and China is none such.

I think it incredibly significant when people like Kissinger are flatly saying that if the level of offshoring continues America will not be a great power a generation from now. People who can see past the next quarter are scared.