You have sketched the idea quite well. Here are a couple of points:
1. China does not want a direct confrontation with the West. Not yet!
What China is trying to do is establish itself as a hegemonic Asian power.
2. China has traded land, water, power, humans (labor) for FDI -
the idea was to create Singapore on steroids and they have succeeded.
Only two freedoms are available - food and fashion and of this there is plenty in urban China.
The larger rural poverty - one child, family breakdown due to migration, etc are weak links.
Lack of land ownership, real estate bubble, black money circulation etc. all weak links.
3. Tibet is alien to most mainland Chinese. Either there is awe of spiritualism or contempt.
Tend to agree with you somewhat that this is not their weakest link, even if it can be.
India and others if needed will need to do more for it to develop into a weak link.
It is an irritant to the Chinese a la stapled passports, etc. that India supports Dalai Lama.
4. Fascism or Oligarchy can succeed at reasonably efficient distribution of economic good.
However, it tends to be rather inefficient at distribution of political good. Now some would
say there is no difference between economics and politics
Most intellects from China
would talk to you about horizontal (economics) versus vertical (politics).
It is only partly correct to view the vertical as weak due to a single party.
5. The key weakness is ironically the horizontal. It remains to be seen how long the trade off
of currency manipulation can be maintained. Multiparty (even two party) democracies are
more optimal (perhaps even at Nash Equilibrium) with completing constraints of politics
and economics. Hence efficient at distribution of politico-economic good.
6. India would do well in such an environment to align with the US transactionally.
(If alignment could be categorized as follows: Allies, Transactional, Unaligned).
- support Taiwan, US bears most of the cost and obligations. India can get the
benefits and raise the heat on China for its incursions into POK, stapled visas, etc.
- around the world China enters into countries, tries coercion and leaves a bad taste.
India waits, engineers and uses the opportunity to take up cause of the local people.
- India entices other Asian powers with a growing market, opens manufacturing
and provides an engine for economic growth.
- India cooperates with China on climate, etc. but competes with it
Finally, most Chinese are offended when outsiders tell them about China.
This is even more so the case when it is India telling them about China
India could do well to fund or encourage Indian writers offering unsolicited advice on China
Just a few paisa to think about...