China is called as the world's oldest continuous civilization because of the strength of lineage one can trace from the pre-imperial Zhou Dynasty in the 10th cen. B.C., all the way to the end of the Qing in 1911. There are still strong cultural elements that persist in China today. That's why it is called the "oldest".
On the topic of modern power... the grass is almost never greener on the other side (of the Pacific, in this case). China has enormous problems of its own, including "demographics problems" that many in this thread have labeled as the reason for Europe's "decline". Democracy is still a long time coming, and the fight will continue. Corruption akin to what Russia experiences is not unknown. And combine all that with the fact that over half of China's 1.3 billion people are still illiterate peasants with no skills other than farming.
China has an enormous, willing, strong workforce, yes - almost too large of one. The disproportionately large numbers of young Chinese men seeking work has created an overflow. That overflow throws themselves into jobs that are far below the level of what the U.N. would call "humane", and as long as that lack of respect for workers exists, the middle and lower portions of Chinese society will remain a burden to its overall economic development. Plus, you still have a large number of young, single men wandering between jobs with little else to do - that's a dangerous demographic for a government to handle, if history is any indicator.
To put it bluntly, China is not a superpower. It is rising, yes, but it has a ways to go before it comes close to anything like Western-style superiority.
Some of your arguments seem to be alright until you actually check the facts. Things like "...combine all that with the fact that over half of China's 1.3 billion people are still illiterate peasants with no skills other than farming..." are completely baseless. China's literacy rate in 2002 was actually about 90% which means there were roughly 10% or 0.13 billion "illiterate peasants" overthere, far from half of 1.3 billion. You probably confused India with China.