sure, but they are not gonna do it now, they will do it after the 2008 Beijing Olympics, in the meantime, look for rapid modernization and technologization of their armed forces.
With what money, is the problem. The Chinese defense budget is (literally) one-tenth that of the United States, and it's been cut by nearly 10% over the last few years, partly as a result of expanding Chinese budget deficits. If they were to embark on a crash militarization program, they'd have to do it sooner rather than later, because the longer they wait, the less likely their own people are to sit still for it.