Check out The Powerless Dragon for a short summary of why:
He offers a fine rehearsal of various problems China faces and/or is causing: it copies Western products rather than innovating; it then mass produces goods by paying exploitative wages; the quality of the goods is horrendous and often deadly; it lacks the natural resources to sustain the sort of growth it would require to become a developed nation; it pollutes at nearly suicidal levels, like Eastern Europe used to; it's running out of water as well as oil and metals and has built shoddy dams that imperil its own people; it has internal ethnic tensions, worker unrest, population imbalances that make a welfare system untenable; it exploits African and other workers abroad as it seeks to extract the raw materials it needs back home, making it the ugliest sort of imperialist power; the Communist Party has to ruthlessly repress free speech, the press, the Internet, religion, etc.; and so on and so forth.
And this list is from someone who believes in the Chinese military threat. I am not convinced: the USSR, too, was bellicose beyond its capacity, counting on its ability to cow others into acting well toward it.