While the United States is often accused of ignoring the cultural differences with its allies and opponents, and making bad decisions based on misperceptions, other countries often do the same. While the United States has made many mistakes because American leaders thought foreigners thought like Americans (but in a different language) at least the U.S. has come to acknowledge that this problem exists. Not so in China where this lack of empathy for other cultures is rampant in the government and especially in the military. This includes that part of the military that prepares plans for dealing with foreigners in crises situations that could lead to war.
While Chinese leaders are very conscious of their own history and the many lessons they can still learn from all that the one lesson that makes their neighbors nervous is that the Chinese believe Chinese expansion is a natural and justified policy for China. The neighbors are very uncomfortable with China's reemerging (and quite ancient) attitude that China is the center of the universe (the "Middle Kingdom") and that everyone should show more respect and pay tribute. The Chinese government encourages these nationalistic attitudes, and many Chinese are eager to see China become more powerful and "get more respect." This is dangerous stuff and a common precursor for war. But China is run by a communist police state that sees nationalism as a useful tool to keep the communists in power. This is the sort of atmosphere that triggered the two World Wars. In 1914 Germany, long the disunited and picked apart mess in Central Europe was again united (in 1870) and wanted respect to go along with its newfound economic and military power.
In 2014 China an actual war would likely destroy the communists, who are unpopular already because of corruption and abuse of power. A major component of any future war would be economic, as China is now dependent on imports of raw materials. That is something new in Chinese history, as the Chinese have, for thousands of years, prided themselves on self-sufficiency. That is gone and can't be regained without some drastic economic and cultural changes. Thus the Chinese communists are playing a game of bluster and bluff. This is especially true when you consider that the Chinese armed forces are also crippled by massive corruption and mismanagement. For that reason alone the Chinese government would avoid actual war. But short of large scale fighting, there's a lot the Chinese can do to push their neighbors around.
American planners have become aware of the lack of realistic planning by the Chinese military. Chinese wargames tend to ignore the reality of how their neighbors make military and diplomatic decisions. The Chinese military planners are particularly blind to the intricacies of politics in democracies and the influence of media (especially the Internet). While the Chinese appreciate the Internet as a tool for propaganda and espionage they have a blind spot when it comes to how the mass media influence political and military decision making in the powerful democracies (like the United States, Japan, Taiwan and South Korea) they might face in a future war. The U.S. is trying to develop ways to deal with this blind spot and so far can only conclude that China has now become a more irrational and dangerous adversary because the Middle Kingdom leaders are too busy staring at themselves in a mirror rather than paying attention to what is happening outside their border.