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China's actions here are imperialism, of a kind. They're claiming "land" they have no right to, and controlling it at the expense of the smaller nations. They've rammed into fishermen boats even.
This is a land grab of international waters and subjugating the nations that use it.
Yes, but there is a rational to their concern around the three island chain. China is heavily import dependent, and a naval blockade would cripple them relatively quickly. They're a net importer of energy, and raw materials, both of which are vital inputs for a peacetime economy, much less a wartime economy. I believe they are also a net food importer as well.
But to your point, yes, instead of trying to bring their neighbors into a regional economic and military alliance, they've opted for the bullying and claiming others territory and territorial waters as their own, which has only pushed their neighbors to seek better ties with America and military armament from the West.
Although, I should add that Japan, South Korea, and Australia are also significant regional military powers and are also strengthening their own bi-laterial ties. Each are also being sought out for greater relations by the smaller Pacific counties as well. Which, again, is all a direct result of Chinese policy.
The irony in all of this, is that China has been the signal greatest benefactor of the post-WW2 globalization, which has been entirely underpinned by US Naval power projection.
Arguably they would be in a safer position if they didn't try to control those waters. A blockade would've stopped Chinese imports, yes, but it also would've stopped Chinese exports. And their exports play a significant role in the global economy and international trade. They really didn't need to secure the area militarily because they had economically guaranteed a blockade would be broken.
This is pure speculation, but I think their belligerence may be what prevents them from rising to a superpower.