I can't see how China getting to the moon in 2020 would be embarrassing for the US. America got there in 1969. The space race is over, America won.
Obama's decision to cancel Constellation was a good one. According to an independent review board, Constellation was both over budget and behind schedule. There had been a consistent lack of development of new technology, and the entire endeavour was diverting time and resources from other projects.
As I understand it, Constellation as planned was inadequate for the task of establishing a permanent manned base on the moon. Essentially it was an attempt to recreate the Apollo project. Now there is no denying that great scientific discoveries were made by Apollo. But there is little more that can be learnt by such short visits that cannot be achieved using unmanned probes, at a much lower cost.
By cancelling Constellation, and increasing the NASA budget by $6bn over the next five years, Obama has opened the door to a great number of scientific projects.