They got trillions worth of defense for free by hacking the US also.

You can't blame them at all for doing that though, if someone or another country has some technology or information that the US wants and can't access then I'm sure we would employ similar (or much more devastating) techniques to acquire it.

What Xixi says is that when China's GDP per capita matches that of Japan, it's economy will be 3.5x as big as US's. A similar percentage in budget for defence as that of US would then mean 3.5 x 600B. Nothing to do with China's current GDP or her current defence budget.

I didn't explain myself clearly: if China had a comparable GDP per capita as Japan, its GDP would be 3.5x bigger than that of US. But currently China GDP per capita is 10x smaller than that of Japan ($3600 vs $37500). $130B times ten would bring China defense budget to a staggering $1300B.

$1300B is quite a bit more than $600B, but indeed not 3.5x more. Two factors are at play: US defense budget is larger in scope than that of China (for instance, if I remember correctly, most rocketry stuff fall under defense budget in US, but not in China), and China just doesn't spend as much (as a percentage of GDP) as US for its defense.

Again, China has a very very long way to go.

China's security concerns are also focused inwards (protecting the party from rebellion, unhappy minorities in the west, semi-hostile neighbors), preventing it from projecting much power outside of China.