For over 60 years, China has accused the West, particularly the United States, of surrounding China with a web of allies, united in a desire to keep China weak. Now China grows stronger, and China is, as they characterize it, pushing back. That is making the anti-Chinese alliance a reality, where it wasn't before.
American efforts to create a "Pacific NATO" never worked. American allies in East Asia were more concerned about not becoming the next communist police state, than of Chinese invasion. China was exporting revolution, not soldiers. But even the Chinese, by the 1980s, realized that this communism stuff was another bit of impressive looking, but ultimately useless, intellectual fluff from the West. So China returned to the market economy and imperial rule (an autocratic police state, an ancient tradition). This has really scared the neighbors, because Communist China preached exporting communism, while the current Old School China believes in exporting Chinese rule. Not to the world, just to the neighborhood, wherever it makes life easier for China, the "middle (of the universe) kingdom." That has frightened the neighbors into starting an arms race with China, and building real anti-Chinese military alliances. Thus we have the unthinkable; Japan and South Korea discussing a military alliance (against North Korea, but also against North Korea's sponsor, China). Japan has also reached out to Taiwan. All this would be coordinated with the United States. The American forces in the Pacific, plus those of South Korea, Taiwan and Japan, are one of the mightiest military powers on the planet.
To China's credit, they have not gone the way of Russia in the 1960s and 70s, when weapons production was greatly increased, triggering an arms race that ruined the Soviet Union financially and politically. But China is headed in that direction, and, more importantly, is acting more like the neighborhood bully China has been for thousands of years. Not recently, though. China has been humbled by Western and Japanese military power for most of the last two centuries, and that does not go down well with most Chinese. Nor does the lack of deference from neighbors. The Chinese do have a high opinion of themselves, and for thousands of years the neighbors have respected that. No more. The Chinese see this unnatural state of affairs as the result of outside interference, especially by the United States. In the past, all China had to worry about was civil war and northern barbarians (Huns, Mongols, Manchus, etc). Northern barbarians are still there, in the form of the Russians, but now there are Eastern Barbarians as well. As in the past, China is currently being friendly to the northern barbarians, but long term, China has tended to crush the northern barbarian du jour whenever there was an opportunity. It's less certain what will be done to the new (and novel in Chinese history), Eastern Barbarians (the U.S.).
Nevertheless, Chinese officials are openly talking about regaining "lost territories". These include parts of northwestern and northeastern India, most of Far Eastern Russia and lots of little islands off the coast (that control surrounding waters full of tasty fish and possibly oil and gas deposits). Chinese military leaders speak openly of preparing to deal with multiple opportunities (to regain "stolen land"), requiring several different military operations at once. That's pretty scary talk if you're a neighbor of China. But sometimes, the neighbors scare China. North Korea, one of China's few local allies, is run by an incompetent, paranoid crew that cannot keep people fed, much less employed. If North Korea were a Chinese province, the local leadership would have been replaced long ago. But North Korea isn't a Chinese province, and is proving frustrating and aggravating to Chinese leaders seeking some peace and quiet on the border. North Korea is a good example of "be careful what you wish for."
Just how real is Chinese military power? Technically, a lot of Chinese gear is well built. This we know by how China has absorbed Western (including Russian) technology over the last sixty years. They can build stuff (if you have an iPhone or iPod, you are using Chinese built tech). China is still learning how to invent, design and build many of the iPhone/iPod components. Chinese have the talent and persistence to acquire the needed management and technical skills. It takes time, but Chinese leaders like to take the long view. That means realizing that current Chinese armed forces are not so good. Peacetime soldiers in general, and Chinese ones in particular, develop a lot of bad habits, that translates into defeats early in a war. But in a world with nuclear weapons, the old Chinese strategy of fighting a long war and grinding down a superior (man-for-man) force, no longer works. If you use conventional forces, you strike first and fast, then call for peace talks before the nukes are employed. This situation does not work to China's advantage. Chinese generals are going through the motions of creating a well trained and led army, like many Western nations have. The Americans are particularly admired, with all their practical training methods and combat proven NCOs and officers. But China still has far too much corruption in their military establishment, and too little initiative and original thinking. Going through the motions may work in peace time, but not once the shooting starts.
Meanwhile, China has developed some less dangerous tactics. Its warplanes increasingly interfere with the movement of foreign reconnaissance aircraft near the Chinese coast (still in international airspace but, according to Chinese thinking, "too close.") No one is going to let loose the nukes over this, or open fire with anything. But it annoys, and for Chinese who have gone so long without any military victories, this counts for something. Same deal with encouraging (with promises of backup, legal aid and compensation for losses) fishing boats to encroach on coastal fishing grounds of neighbors. This is causing increasing tension with South Korea and Japan, much to the delight of the Chinese media and public. But using this tactic against the less predictable Americans, while encouraged, happens less often. This harassment program is, after all, largely voluntary.
Chinese Internet use grew about 20 percent last year. Now, about a third of the population use the Internet (either on PCs or smart phones). That's some 450 million Internet users. It's also a lot of angry Internet users, as China has over 40,000 Internet police looking for those saying the wrong thing (anything anti-government) on the web, and punishing the offenders (sometimes with a prison sentence). Then there are restrictions on services and access to foreign sites that discuss Chinese internal affairs. The latest annoyance is the banning of VOIP (telephone calls via the Internet), because it has reduced income for the state owned telephone company.