https://www.quora.com/Given-that-china- ... -needs-one
I'll paste the top answer but the comments are also interesting.
China isn't fine without a blue water navy. They have one; it's called the US Navy. The failure in many people's belief is that it makes sense to compare the United States to any other nation in the world. It doesn't.
Where many people fail in their understanding of US government spending on military expenditures is that they don't understand the purpose of the United States Navy. It doesn't exist simply so that we can beat all other potential combatants in a one-on-one exchange of fisticuffs. It can, but if that were its only mission, it could afford to play the game the same way all the others do.
In this case, the faulty assumption is that if we only focus on beating the Chinese, we'll still be ahead. The most logical way to do that then must be to eliminate the "useless" elements where we don't directly compete. China doesn't need it; why should we? This, however, ignores that the US isn't playing the same game as the Chinese. In fact, the military mission of the Chinese Navy isn't even in the same league as the Americans.
This logic fails because of the most crucial reason why the US Navy exists. It isn't just to beat the other guys. It's to provide economic security over global commons.
The United States is the only world power which has taken responsibility over all international trade lanes. Others are active participants, but absent a single global leader, their influence would be negligible. All other powers are regional and only enforce their strength locally, with the exception of only a few like the United Kingdom. The rest, nations like China, are focused on the creation and maintenance of green water fleets. They use their fleets not to secure global trade lane access for all nations, and the ability to take part in economic cooperation, but to enforce their own local agendas, pestering their neighbors and securing their own trade routes. They have no ability to benefit anyone elsewhere and little incentive to try."The mission of the Navy is to maintain, train and equip combat-ready naval forces capable of winning wars, deterring aggression and maintaining freedom of the seas" - Official Mission Statement of the US Navy
This isn't important, however, because other nations have no reason to. That responsibility lies with the Americans because the rest of the world knows that if the trade lanes stop, the Americans would suffer from it, as well. They, therefore, have an interest in ignoring blue water operations so that they can pursue local goals, saving the money on an expensive global fleet while still making foreign trade and still gaining political leverage in their local spheres. The system has nothing but benefits for places like China, but it puts the burden of securing that prosperity on the United States.
What makes this situation even more complicated is that the United States can't leave this arrangement. If they did, the global economic house of cards comes crumbling down, not just for them, but for everyone else, as well. It's also certain that whoever takes their place would put the United States in a worse position than if they just stayed in control in the first place.
So your original premise is wrong. China doesn't do fine because they don't waste money on a blue water fleet. They do fine because America's blue water navy secures their access to global commons and the world trade market.