Let me start with an apology: using loaded terms is not a good way to have a good faith conversation, and that wasn't appropriate.
But you have to admit there's something about our folks being a bit too comfortable with the notion that the Chinese people won't catch up with us because we innovate and they don't. I see people justifying their beliefs in one of these two ways:
1. Focusing on barriers that supposedly exist in China today and will continue to exist forever. Something like: "their government will always force them to do things in a certain way", or "the lack of regulatory framework invites bad behavior and doesn't instill the discipline required to be creative," etc.
2. Focusing on the idea of American Exceptionalism - essentially, it doesn't matter what China does now or in the future, we're always going to be a few steps ahead because of the most unusual events that have led to the formation of our country, our political system, our culture and values, and our inherent will to be the global leaders and ambassadors.
I would be curious to hear what your thoughts are. In my mind, as I laid out above, innovation is not a privilege bestowed upon any one location or nationality, but instead a byproduct of regulatory, educational, and financial ingredients all coming together and unblocking barriers to creativity. All of those elements are changing in China very rapidly, and all of them are moving in the "right" direction.
So for your statement "Maybe in the short term they'll see some growth, but in the long-term innovation will always prevail" to ring true to me, I would have to be convinced that we somehow have a defensible advantage in one of those three elements, and that this barrier will stand the test of time. Because I think we're both agreeing on the notion that there's nothing fundamentally special about us and our raw capabilities compared to theirs.