I've never heard of this quote and would consider it highly improbable that this was said the way you just quoted. If you have any proof of this besides a link to certain American right-wing neocon websites, it would make this sound more legitimate.
The closest reference I've heard of resembling what you just quoted is something from Newsmax (an American right-wing website) that CLAIMS Chi Haotian said China should invade America. Nothing to do with neighboring countries or for living space, and probably total BS news to begin with.
I got it from multiple news sources, and a few Chinese ones as well.

Their F-16 Block 52s seem to contradict your theory. 
