Glenn Reynolds almost certainly knows more about America's and China's space programs than I do, but I think his characterization of Chinese progress vs. American stagnation ignores at least one important consideration.
Space experts differ on whether China wants to compete directly with the U.S.—perhaps, given our slow and fumbling efforts, beating us back to the Moon—or simply displace Japan as the prime technological power in Asia. On the one hand, the U.S. retains a huge lead, while China is still building up spacecraft, like lunar probes and orbital docking equipment, that we mastered back in the 1960s. On the other hand, like America in the 60s, China is forging ahead, while the U.S. in the 21st century is, at best, standing still.
What would America be doing if we weren't standing still? Sending people to Mars? Establishing a permanent base on the moon? Lowering the cost of lifting mass into earth orbit? Those are all great ideas that I'm very much in favor of... but they're also much harder than what we did in the 1960s and what China is doing now. It seems that the cost and difficulty of progress in space isn't linear, and America has hit a steep part of the curve. China may be catching up to us, but that doesn't mean that they'll be able to bound past us... they're likely to run smack into the same mountains we have.
America's space program has stagnated, but not only because of stifling bureaucracy, lack of vision, and national distraction. The next steps, as most people envision them, are going to be harder, more expensive, and more dangerous than what we've done in the past, by more than an order of magnitude. I'm sure Reynolds knows all this, and perhaps he'd even care to elaborate on what I've said.