Chinese defense spending for this year is expected to be close to $60 billion. China spent $45 billion on defense in 2007 (for a force of two million troops), and over $50 billion in 2008. Even with the increase, the U.S. is still spending about ten times what China. American defense spending accounts for about half the world total.
Unlike Russia and the U.S., which try to maintain modern, high tech forces, across the board, about 80 percent of Chinese forces are pretty, well, cheap and low tech. That means aircraft, tanks and ships that are either old, or built using old technology. Still, that's a lot of guys with guns, plus several hundred thousand of them armed with the latest implements of destruction. Long term, China strives to build a huge, world class, industrial base, that will provide the tax income, and technology, that will make it the premier military power on the planet. In a century or less. The Chinese like to think long term, and believe history is on their side. As long as they are patient and persistent.