China has tons of domestic military R&D. For example, for decades the US dismissed hypersonic antiship missiles on the basis that the plasma would hinder terminal guidance.
A few years ago China demonstrated the first hit of a moving target by a ballistic missile, which works out to have been in hypersonic flight during terminal guidance.
A few years later, the Russians are now demonstrating routine strikes of moving targets using hypersonic cruise missiles, which demonstrates that they managed to fix the issue.
A few days ago, some data came out on how exactly they managed to do this - not only did the Chinese managed to get active radar working through hypersonic flight at lower altitudes, they also apparently managed to get optical/infrared sensors working by redirecting airflow and injecting chilled air in order to disrupt plasma formation.
Meanwhile, the US is still trying to figure out sustained hypersonic flight (and failing most tests), while the Chinese and Russians have long since moved on to making guidance more reliable.
If you read various publications from the US Navy, they claim that hypersonic missiles will be defeated by killchain disruption (ie, jamming and staying far enough away). This entire strategy is predicated on the assumption that optical guidance of a missile in hypersonic flight is impossible. Now that the Chinese seem to have demonstrated it, there is no feasible defence.
So while they're not better than the West at building jet engines, they clearly are ahead in multiple technologies, and they are clearly trying to use these novel technologies to seize an advantage without needing to catch up on everything that came before.
Another scenario where this has been done. If the US was indeed somehow able to get legions of 5th generation aircraft close enough to disrupt Chinese operations, conventional doctrine would be to make your own, better, fighter aircraft, and duke it out.
Now the Chinese don't want to do that. It would be expensive, and the US already has a lead. So instead of developing stealthier and better fighters with technology it would take years to achieve, they instead made a fighter that is moreso stealthy from the frontal aspect, but much more superior kinematically - the J-20 flies much higher and faster than the F-35. From this kinematic advantage, it is designed to impart an advantage to an already much better missile, which is then designed to strike EW/AWACS aircraft from afar (300+km) without being detected until it's much too late. And by all accounts this would work.
Once that is done, they are in a position where they have the most advanced air defences on the planet, and in mind-boggling numbers. From there on, the combined advantage from both air defences and competent air forces means that it will be very difficult for anyone else to operate. So by focusing on other technologies, where they have gained an advantage, they can exploit their unique situation (operating near their borders) to nullify US technological advantages in other fields.
Beyond that, the US does have an interest in trying to convey it's military strength. Their are US Generals on public record stating that they are trying to portray US military technology as scarily as possible to intimidate foreign actors and to boost sales.
All in all, this kind of reasoning is stupid, wrong, and is probably exactly what the Chinese would love to hear.