You are indeed giving way too much credit to our 700+ billion dollar a year budget. Lol. There's a whooole lot to get into in that front, but the PLA's military expenditure is essentially on par with ours in real terms. A lot of people like to look at the numbers on the tin and compare from there, but if you want to get an idea of what it actually means, you're better off looking at how the money is spent, what it's spent on, and what it yields.
Firstly, the US's procurement system is an abject, straight up disaster. This isn't just my opinion either. You're free to ask almost anyone - active duty, reserve, contractor, IC, etc. - and they'll tell you the same. There's a pretty funny quote by (iirc) the Commandant of the Marine Corps that goes something like, "If you want China to start losing, just convince them to adopt our procurement system."
We're practically allergic to on-budget and on-time post-cold-war, with only a handful of notable successes (VA, San Antonio, JASSM sorta, and a couple more). An enormous amount of money goes down the drain, every single year, due to absolutely asinine project management. I've given the example in another comment, but while the PLA is currently set to launch 20+ DDGs and 20+ FFGs in the next 5 years, we've recently reduced our planned procurement of Constellation-class Frigates from 17 in the same time period, to 7 vessels by 2027. We're also only building 1 Burke Flt3 this fiscal year, but are super promising we'll build more next year (we probably will, but the point is that we are consistently and systematically unable to meat our planned goals). We've got an enormous amount of old vessels currently in need of decommission which we were sinking vast amounts of money into in order to maintain them (we're going to lose about half our Ticos by the end of FY23 iirc, and all of them within 5 years, not to mention DDG decomms). As a result of all this, we quite simply aren't going to be able to keep up with PLA hull, VLS, and tonnage metrics until we seriously get our shipbuilding game in order. The problem is, we can't. Practically all of the Navy yards are at capacity sustaining our Burkes, and public yards are a pretty rough option to try and squeeze some extra capacity in. Our shipbuilding has also been positively gutted, which is depressing.
Meanwhile, the PLA is currently building 5 DDGs in a single drydock at Dalian. They are doing so at an exorbitantly lower cost as well - due to their enormous shipbuilding industry (and thus highly efficient, skilled, and extensive infrastructure and personnel-pool), the lack of anywhere near the same degree of military-industrial "graft" (most of the companies involved are state-owned and dual-use. They are thus able to secure profit from their civilian-sector work, and just have to break even on military work, while being able to leverage the R&D, experience, etc.), and are able to leverage their advantageous currency properties to create the situation we find ourselves in, where a Type 055A DDG costs ~800 Million USD, whereas a Constellation Class FFG costs ~1.2 Billion USD. Again, it's depressing. Luckily the story is better for the cutting-edge Aerospace sector, and we have parity there (PLAAF is currently accepting anywhere between 32 and 48 new J-20s per year with the expansion at CAC by our metrics, and Plant 42 delivers ~48 - though that number has shrunk due to Blk4 problems - F-35As to the Air Force per year). Things get a little less rosy when we consider the non-SOTA aerospace sector, in which the PLA gets to pick J-10Cs from the flowerbed at a cool $35-55 Million USD a pop by our metrics.
I'm sure you see what I'm getting at.
This isn't counting the fairly sizable overseas commitments we have, the difference in soldier pay, the other various overpricings the DOD finds itself subject to, or the myriad of other sources of increased relative price we experience.
This is certainly not to say the PLA is getting more out of their budget than we are, but I want to hammer home just how bad things have gotten, and to illustrate that they most certainly are getting close to doing so.
