A lot of the liberal commentary on the Pentagon's Quadrennial Defense Review has coalesced around the opinion that the Pentagon is hyping the "China Threat" while ignoring the "more important" issue of terrorism. Bizarrely, this is seen to be a bad thing. Frankly, if we've learned anything from the Bush administration, it's that the military is not particularly well-suited to fight terrorism. Afghanistan and Iraq are both becoming textbook examples of how large militaries can be totally ineffective against motivated cells of attackers. I think it's probably a positive sign that the military is backing away from being the sole force to fight terrorism.
More broadly, the Pentagon should absolutely be concentrating on defending the US from conventional threats, because they have the potential to cause the most damage. If you accept that part of the Pentagon's role is not just to fight wars, but to deter them, then we can see that even small wars can have far bigger effects than even the most effective terror attacks. For example, the net cost to the US economy from the Iraq war is estimated at somewhere between $1-2 trillion dollars. The proportional cost on Iraq is of course much higher, and may in fact be incalculable. Bin Laden, on his best day, couldn't hurt the US the way the Iraq War has.
(Here I'm just using Iraq as an example of the cost of war. Obviously, I don't think the Pentagon did a great job deterring this conflict. If anything, it incurred it.)
The costs of a major-power war with any other nation would be much, much higher. I certainly agree that there is, as yet, no real Yellow Peril. But most liberal Americans accept the notion that the Pentagon isn't just there to fight wars, it's there to prevent them. If you believe this, then it follows naturally that China needs to be deterred now, before a ruinously costly war (whether Hot or Cold) breaks out.
Borrowing a notion from Gwynne Dyer, complaining that the Pentagon is focusing on major-power threats while ignoring "the larger threat" of terrorism is like saying that your doctor is focusing on your impending heart attack while ignoring the "larger threat" of severe acne.