They are not stupid, and even though their political system.is draconian, nonetheless it posesses long term strategic strength unavailable to 4 year term western democracies.
So yeah, we need to start getting that part of the world to play ball.
This is correct. Individual liberty is not a high priority in China for its leaders or even its citizens.
China is has sort of its own version of Wilsonianism that has persisted throughout history. While many of us in the West dream of a world of free markets, free speech, and free elections, China has an equally idealistic dream of sharing the beauty and wisdom of Chinese civilization with other, lesser nations. China is not just a country, it's an idea and a symbol - even those who conquer it end up becoming part of it. To them, projecting power into the South China Sea is not an act of aggression, but a stepping stone towards their destiny as the greatest country in the world. I suppose you could even call it an "act of love". They have a fundamentally different understanding of the world than us, and it's not useful to think of them as something comparable to a modern Western nation-state.
If you care about individual liberty, democracy, and a modern Western understanding of human rights, you should want the West to resist China, and for other countries who aspire to the same values to join us.