This is the correct strategy. One cannot fight from a position of weakness. So this is the time to gain strength and wait.
While you are concentrating on home ground and improving living standard of your own people, I would also recommend selecting a group of nations as your strategic allies and potential allies and help them do the same (improve their living standard).
The US by itself is powerful, but together with its allied nations such as NATO and non-NATO allies, it becomes the preeminent global power. One reason the US gains allies and keeps them loyal is through market access and shared defense technology. While it provides a shield of security for these allied countries, the market access helps them gain high living standard.
Chinese market is not as big as the US yet, but it is getting bigger every year. Chinese industry is increasingly moving towards higher value addition items, while Chinese entrepreneurs could set up lower value addition more labor intensive industries in these allied countries. So in my opinion China should follow the US example of building up a strong array of allied nations.
The biggest advantage of China is that it is slightly in the East, but still extending to almost the middle of Eurasian land mass (middle Kingdom). All the nations around China, except for a few with delusional shortsighted leadership, are allies or potential allies. India due to its size, will always have a dream to compete with China, so they should be counted out from the list of potential allies, but will remain an important trading partner for all nations in the region.
And if China builds a strong alliance with Muslim nations (Shia and Sunni), then the reach of these nations go from Indonesia to African heartland. These nations will then work with China to increase the influence of this alliance to rest of the nations in South East Asia and Sub-saharan Africa. Central Asian Muslim nations can also work to keep Russia anchored with this Sino-Muslim alliance. Japan and South Korea will eventually switch allegiance once they see the local Asian+African market is bigger and hence more lucrative than the combined Western-Indian market.
I think we need strong coordination between Chinese polit buro and GCC govts. who are the defacto leaders of Sunni Muslim world. Possibilities are endless. Chinese polit buro did an excellent job in improving the lot of 1.3 billion Chinese, now we need to see how things can be done for the allied nations. GCC govts. can be investors and China can provide skills and technology. It will be an uphill battle, as you will be stepping on the toes of competitors, but I believe for China to achieve preeminence, this is a must do step and a failure proof vision and formula.