We have always maintained that there is a significant faction within the Chinese elite convinced they can defeat the US in a war.
Aside from naval battles in the Pacific, the diplomatic ace against the US' might is China's strategy in South Asia.
If you ask anyone in Pakistan who has been and still is their main ally since the founding of the country, they will give you the same answer:
Chinese Bases in Pakistan and Burma
The Chinese have flanked India with major naval bases in both Gwadar, Pakistan, and in Wesern Burma, facing the Bay of Bengal.
China also gave two old submarines to the Bengali Navy, but Bangladesh is quite far from actually constructing a naval base, unlike what has already been achieved in both Pakistan and Burma.
Indian Navy Flanked
The Indian Navy is flanked on both ends by Chinese bases and forces. China could, with the initiative on her side, inflict catastrophic losses on the Indian Navy.
Pakistan: A Winnable, Limited War
Pakistan is a failed state. Under failed-state rules, foreign powers are more concerned about your country collapsing than conquering, and so they will allow you nominal concessions in territory in order to maintain coherence and stability.
Under normal circumstances, Pakistan lasts about two weeks before collapsing against an all-out Indian war.
However, China has changed the equation.
How Pakistan Can Win Under Chinese Security Guarantee and Nuclear Umbrella
With India's fleet crippled, Pakistan's Junta would have an excellent opportunity to launch an attack on a chaotic India. Of course, India may threaten a nuclear realiation if Pakistan were to launch a land invasion, but here's the problem: what happens if China guarantees Pakistan's security?
With Chinese Nuclear Umbrella, India Gets Taken Apart
While India possesses a large army, a first-strike coup by the Chinese against the Indian Navy would force India into defence, especially on her Eastern Flank, and divide the Indian Army. This gives the Pakistani Army decent odds on the Western Front.
With China's nuclear guarantee, India would not dare to use nuclear weapons against Pakistan, and so India would be forced into a losing battle against both Pakistan and China.
End-Game: China Forces American Recognition of Chinese Hegemony in Pacific for Peace
The Chinese end-game is for India to give an honourable concession to Pakistan and force the Americans to recognize Chinese hegemony over the Pacific in exchange for a withdrawal from the Indian theatre.