"Purchasing power of 1+ trillion RMB isn't too bad when spend internally, nominal exchange rate is only meaningful cross-border." Well said!
Other than PPP factor, this is a major cause why China's defence budget is low in GDP percentage when compare with US and the rest of the World.
Western arms manufacturers are big money making machines, with high total cost plus high profit margins, their weapons per unit are certain more expensive, also their salaries, training costs, etc are also relative expensive per unit compare with China.
Chinese arms manufacturers are state owned, their profit margins can be as low as 6% to 10%, compare with 50% to 100% of the West. As state owned entreprises they do not make big fat profits from from their owner, which is the government of China.
Therefore China's 1.3% defense budget is equivalent to more than 2% of US, or even more.
Also, since arms manufacturing is money making machine in USA, these manufacturers are "hiring
" top generals, admirals and congress people to push for more defense budget every year, and looking for wars and conflicts around the World. You can see that the neocon hawks are very strong in the US congress.