China's Balancing Act?

http://news.bbc.co.uk/2/hi/americas/7239829.stm

I found a recent article on the BBC website that reported that four alleged spies for the Chinese government (in two different cases) had been arrested for stealing US Defense Department confidential documents, which mainly concerned military technology and US sales of military technology to Taiwan. The Chinese government has reportedly denied these accusations of espionage, accusing the US government in turn of reverting to "Cold War" paranoia.
The US government maintains these accusations and cites these cases as a breach to US security, and that China is looking to advance its military capabilities using these unacceptable techniques.
These recent events fall into Prof. Nexon's discussion a few weeks ago about the various balancing theories and the actions of revisionist states. Assuming that these accusations are indeed true and that China is using espionage as a form of advancing interests and seeking to balance out the "US hegemon," then this links to the different Theories of Balancing. I've had a hard time determining, however, which theory (Walt or Schweller) this applies to, or if this applies to both theories at once. Maybe a few of you (if you read this blog) could offer up some suggestions towards this. My thought is that this situation is most suited to Walt's Balance of Threat Theory, which maintains that states balance according to degrees of threat -- maybe China sees the United States as a military threat and is attempting to up its military capabilities by whatever means possible. If this is the case, here then are echoes of the Cold War arms race (only echoes, though, since the US still has a huge lead on China militarily speaking). However, it could apply to Schweller in a different way, as his is the Balance of Interests theory pertaining to interests other than military.
That then leads me to think about China's intent (revisionist or status quo) and what possible conflict could come out of this sticky situation. I applied Organski's Power Transition Theory to this conflict, assuming that the US is a status quo state and China is a revisionist state seeking to expand its influence. If this is the case, then perhaps things between China and the US are starting to come to a head (not trying to ring any alarms here, but just a thought). Maybe this is one tiny "window of vulnerability" on the Power Transition graph. And the US, recognizing this, is trying to nip it in the bud. In any case, this does smell strongly of Cold War distrust and suspicion -- perhaps this will all blow over, and relations between China and the US will remain friendly, with some amount of distrust. I have a strong feeling, though, that things between the US and China will finally come to a head, in one way or another.