I think China is definitely steeling for a fight. All the signs are there. They are whipping up hostility among the population toward foreigners. The Japanese did that prior to WWII. The PRC are losing their contacts with the outside world and that trend is not good for reasoning through conflict and crisis. They are a little intimidated by the US and its allies and that will have some sway over their generals but maybe not their leaders.
For all our sins and flaws we are still a very powerful country. Whatever Tucker MF Carlson thinks about our armed forces being too woke to fight, he's both silly and wrong.