You're right in so ways with regard to driverless cars, but I disagree that strategic industries would be sufficient cause for China to invest in a job-destroyer like driverless vehicles. There are a few reasons that I seriously doubt the China option:
1. Building infrastructure is a big deal in China. The vested interests are not going to give up on road to nowhere projects. There is less than zero demand for efficiency here, because big infrastructure & roadway projects keep the party's constituents well fed and permanently dependent on the government's good will. Remember, even though the party is capable of making top-down decisions that apply across the entire marketplace fairly easily, those decisions are made by old-guard, change resistant individuals with financial interests 'more of the same' (similar to your argument about "car guys" in Detroit). If you didn't hear it even mentioned it in the recent 5 year plan, I doubt that you'll see it as a meaningful part of the next one. Further, driverless cars will be too expensive for the middle class and undesirable as an avenue to facilitate the movement away from an export economy, so the party is even less likely to encourage it.
2. As yet, and for the duration of the mass-migration from the countryside to the cities, money is spent in ways that others can see it. When the middle class spends significant money here, the perfect phrase is "conspicuous consumption". After houses, the next product purchased is a car. Owning a car here is still about 'freedom' in the sense that American 16 year olds would think of it. Once you have a car you have a place that is yours
and it may be the only place where you can have a moment of privacy from the over-bearing in-laws who live with you. It's not uncommon to see a person resting peacefully in their Audi, right outside their apartment. Driverless vehicles will not be 'fleet' vehicles here.
3. China hates Google. That can not be understated. Facebook, Twitter & Google are all blocked here for reasons related more to allowing for the unchallenged development of sino-equivalents like RenRen, QQ, Baidu. You're finally seeing products like WeChat released in the west, so it wouldn't be absolutely impossible to see a Chinese driverless car in China, but it's certainly not
going to be a Google product.
I stress that I fully support the development and implementation of these technologies, but I really think that China will resist them until after they are relatively mainstream in "the West". (edit: looking forward to Part 6!! )