The XPrize is the way to go....you have to crawl before you walk. And in this case you build up the technology and means to go further and farther into space over the years as you make money sending people to space.
The ultimate competition for a space race will be when its commercialized and you have tons of people competing, not just gov't agencies and countries...
"Congratulations China! Guess you don't need any more foreign aid."
The quote on the cover of the economist.
China is still a very poor country, and I don't think it should be wasting its time on these kind of projects. They only have 135m phone lines for gods sakes. (In a country of 1.2B people.) They really should be working on their infrastructure.
Not that I don't congratulate them on their achievement, I do, I just think they should have different ecnonomic development priorities.