This Newsweek article is a fine piece of work which makes several good points regarding China's military spending which are often not found in many other articles and news stories. Primarily that China's military spending, as large as it may seem, is nothing significant at all compared to the US as well as in the context of its geostrategic position. The writer notes accurately, that the majority of China's fighters, submarines and army vehicles are old. Regarding the geostrategic position, here's a short paragraph from the article:

"The Middle Kingdom, moreover, sits in the middle of a tough neighborhood. It's not only the U.S. fleet off its shores Beijing must contend with. Of China's four nuclear neighbors—Russia, India, Pakistan and North Korea—two (Russia and India) spend almost as much on defense as China does (so does nonnuclear Japan), and at least two (Pakistan and North Korea) are potentially unstable. Just a generation ago, China was defeated in war by tiny Vietnam."