Actually quite the opposite - I think your views are popular, probably honest, but they're wrong. The idea that just because something is built somewhere else therefore destroys jobs locally is a silly one given that the money saved is just reallocated to more useful tasks.
Of course, I have a vested interest here based on what we do, but the real money isn't in the commodities, and the production, it's in the innovation, development and ideas. Despite it's growing economic clout, on a per capita basis, China remains one of the poorest countries in the world. It's also useful to note that the fact that India and China are so far behind economically is actually what's unusual given that they were the ones persistently ahead in the past. It's also useful to note that the US remains the largest manufacturer in the world - and is likely to remain so for quite some time while China has many challenges ahead.
So lets imagine that 400 million really was saved and can now be "invested elsewhere." You assume that California will invest that $400 million somewhere (considering the state of finances I would say they will just bank that money rather than invest it somewhere else.) It also means that 7.1 billion left the country (alright- a billion or two likely stayed to pay the workers who will pave it and erect it.) The engineers who are likely being paid $100 a day will be overseeing the project on American soil and the laborers made around $20 a day in China. Yes- there was probably a "savings" but all of those jobs and that money will never see California again (save for when China buys government bonds and lends California their money back with interest payable...) The overseer of the project states that American companies do not have the facilities to make such a bridge. That statement should raise red flags. If they do not presently have them, and they would sooner give the money to China than to build them you may as well just give all major future bridge and infrastructure projects to China and concede defeat in the area of civil engineering.
When you say "Where the war will be won however is not on labor optimization but technology innovation" you are 100% correct. The problem is that according to a 2009 report by the Information Technology & Innovation Foundation America ranked dead last
when it came to change in "global innovation-based competitiveness" over the previous decade out of 40 countries. That does not bode well for Americans.
Even though they were historically ahead economically in the past is no reason to hand them superiority in the present. As you say- China is only doing what is in it's best interests. The problem is that Western countries are not following suit. Allowing Chinese companies to start building industrial complexes in your country allows them to slap a "made in the USA" sticker on the product while all of the profits return to China, save for the minimal wages they pay and the "special negotiated" (read as minimal) taxes they will pay. In Canada, provided the last step of production has occurred here, you get to slap a "made in Canada sticker on the product. I can see a "special economic zone" where they import their junk and package it here. Suddenly, there will be thousands of cheap, plastic consumer goods that are "made in Canada."
You say that China MAY become the worlds biggest economy as though there is a question when you and I both know that the IMF predicts that in 4 1/2 short years (2016) China will have beaten out America for top spot. Ed Lazear, a Stanford University economics professor has stated that if nothing changes the AVERAGE Chinese citizen will be wealthier than the average American citizen in 30 years. These are not things that America should embrace- but rather fight against.
The unemployment rate in America is atrocious. Yet most Americans are unaware that around 46 000 factories have moved to China since 2001 costing around 2.4 million jobs (most of which were "good" jobs.) Quite frankly, I doubt that those millions of people (probably unemployed or employed by Walmart now) are happy to give China the majority of manufacturing jobs. They were the middle class and now must settle for lower living standards as America has refused to protect them; opting to allow corporations larger profits instead.
I suppose that I am done ranting now. The one thing that we both agree on is that China faces many challenges in the years ahead. Did you catch the release of the debt numbers faced by local governments in China? (I believe they were released for the first time last week.) Kind of interesting stuff.