Unless they're going to swim or row, those 700 million humans who could fight if needed don't do much in a naval war.

The risk is, if the Chinese pick a naval fight and their navy gets pummeled, it's a PR disaster. That's a risk for the leadership, not so much for the country.

That's 700 million potential factory workers, military support staff, and soldiers, and the factories are already built, US companies paid for many of them.

so what does that have to do with naval warfare? You going to build thousand islands on sand during wartime?

They can't be invaded, but they can easily be blockaded. Now that China is an economic power, it is also vulnerable to disruption.

China's leaders are smart and they see that issue. I think that is one of the reasons they want to increase land trade through central asia.

Logistics. I don't think people realize that to move around army of even 10% of that 2.3 million, you require significant logistic support (sort of like upkeep in Warcraft 3). You then have to question which country has the access to most of the world's ports and bases outside of their own. Most importantly, you need to be on good terms and friends with these host countries. This is what China is going up against. A huge military resting at home means jack all if you can't mobilize it and upkeep it.