I find this funny as crap. This entire war is because Trump says that China "cheats". This is what cheating is. This is why cheating by currency manipulation , which they haven't done in over a decade, doesn't work. This is why if they do, the American consumer wins through prices literally subsidized by the Chinese people. This is what Trump is accusing them of, lowering our prices at the expense of their domestic economy. This is literally why trade deficits don't matter.
But to the question can the compete, hell yes. They have an arsenal of weapons they haven't even called upon yet. They just stopped buying Us ag. They can halt all exports of strategic metals and cement. They can raise their own tariffs on us and import from Asia and South America. They can even dump US Treasuries. Yeah, they can compete.
One additional note. They have an internal and an international Yuan. This allows them some odd flexibilities that aren't present in normal currency valuations. Things catch up, but this extends their time frame between external variations and domestic inflation or deflation. They are right now experiencing good growth, growth we would wish for. So a 3% GDP loss would cut their growth about in half while sending us into a depression. They can compete for sure.
