That's factually incorrect. Majority of resources are being imported into US at the moment and major manufacturing has been moved. You can't even begin to compare US manufacturing capabilities with those of China.
Regarding standards, they have been dropped and will be dropped further due to low passing numbers for women and minorities. There was an article regarding ACFT posted on here just a few days ago.
The war in Iraq was never finished, the war in Vietnam was lost. China has 20 times the population, does not suffer from tribal wars, has highly nationalistic population and access to newest technology.
Outside of nuking them into oblivion, US stands no chance in open conflict with them, and they know it. Watch USs answer to these open threats.