"Why should a nation that is capable of annihilating the world with it's nuclear arsenal be afraid of China? Why should it be afraid?"
Um... actually, you may have the power to kill everybody on the planet with your powerful nuclear weapons... and then what would you have?
A perfect utopia filled with corpses.
Seriously, let's be realistic guys. There's no point in being the richest and most powerful country in the world if everyone's dead. Killing everybody else to get on top if going to help nobody in the long run. The US Government doesn't understand that yet. (Note, I said the US Government. The government and the people simply cannot be defined as one.) The Chinese government doesn't understand that.
Does it take a bloody and tearful war, with the bodies of your friends and family lying around to happen for everyone to understand that aggression simply isn't the way to go?
I have no problems with getting a strong military for defense. After all, you don't know who might attack you for reasons unknown. But getting a VERY strong military to go and meddle with the affairs of other countries like the US has been doing for quite some time isn't the way to go other. It's too extreme, but China is following quite closely in the US's footsteps. If things keep going on like this, there are a few possible outcomes. China becomes the next US, hated all over the world for being the bully. The US and China face off.
Nothing looks that positive... I'm just trying to say that killing everybody else who doesn't agree with you is one way to do something but is that the way you want to do it? Living in a world filled with dead bodies?
(When I say "you" I'm not meaning anyone personally.)