> They simply have the power of numbers working in their favour right now.

Not anymore, their working-age population started declining in 2015 and overall population as early as 2020.

> They have the technological base because we gave it to them.

They still have to import all critical technologies.
Zhaoxin uses Via designs (which are based on Cyrix designs).
The Sunway chips are based on the DEC-Alpha.
Hygon licensed AMD's Xen architecture.
The recent "Chinese" GPUs use stolen IP from AMD and Nvidia.
HiSilicon used barely-modified ARM designs.
EspressIf uses Tensilica designs.
SMIC can't reliably build on modern process nodes.
HSMC failed.
Thousands of other Chinese chip companies have failed.

> They have the people to run all of it because they graduate engineers and other tech nerds by the boatload, and many of them are western educated.

Look at youth unemployment numbers in China, those who aren't burnt out are giving up.

> The only spark they're missing is a dysfunctional capital markets system that allows $$ to finance crazy stupid ideas.

Getting money for anything in tech in China has been trivial for the last 10 years, it's why you see a hundred copies of dumb ideas all over sites like Ali Express.