Alicia,
China is making the solar panel, because they sell well in the US. It's about money, not climate, that they do this. They are trying to get the trade imbalance way out in their advantage...they are setting us up.
To the topic at hand, Can the US compete with China?
We are severely disadvantaged by the regulations imposed on businesses, and the highest business tax in the world. China has the distinct advantage of holding a huge amount of US Treasury bonds, should they have a massive sell off of these bonds all at once they can defeat us without a shot. They won't do that right now, as they have a trump card holding our debt. But, once the Renminbi becomes a Global Reserve Currency (which is where it is headed) they will dominate us on the world markets.
Right now one of the only things keeping the US Dollar holding on is that it is the currency of the commodities markets (mainly oil).
That's why we had to attack Iraq, Saddam was selling oil in Euros and had to be slapped back into place. Libya began selling their oil in gold, which is why Gadhafi had to go.
What's next?
Venezuela is now selling their oil in gold. What will be their fate? If we allow it, more countries will follow and the US dollar (aka Petrodollar) will begin to collapse under our huge debt.
But, our fall will be our own doing by amassing such a huge debt.
17 trillion in debt, add with 125 trillion in Unfunded liabilities equals 142 trillion as the REAL Debt. The right now liability per taxpayer is over a million dollars
(per tax payer). There is no economic model that shows us recovering from this. We have already gone over the fiscal cliff, it's smooth sailing until we hit the bottom.
http://usdebtclock.org/Look across that bottom row...that is unsustainable.