"Lets show those dastardly Chinese why we don't have healthcare. Also the rest of the world that not having healthcare is better than having infrastructure!"

what else were they meant to spend it on, improving their country's economy?

On one hand, I think it perfectly acceptable and reasonable to oppose the enemy's employment of some measure on the grounds of them being your enemy and you wanting to defend yourself while simultaneously employing the same measure for your own policy goals. That's usually how war works, whether cold or hot: weapons are employed if they're effective, regardless of whether they're fair for the other side, because you can't really trust the opponent to also refrain from using an effective weapon.

Mutually Assured Destruction works as a nuclear deterrent because its sheer destructive power risks killing your own people too, and most countries' grand strategy prioritises their own preservation over the enemies' destruction. Chemical weapons were "banned" because they were of little value to the major powers' military system, which has less people hiding in foxholes and trenches, generally making conventional munitions blowing up moving targets more effective than denying an area to your own mobile forces in the hopes of dislodging a dug-in enemy that might have protective equipment anyway.

On the other hand, I resent the damage warfare does to civilians, whether in the form of actual destruction or just sowing division and strife between their factions. Arguably, it might be defensible if you're simply exposing the truth and hoping to convince a sufficient majority to act on those revelations, but who would be the judge? Who could vouch for that? How could propaganda even account for the nuances and complexities of the issue they'd hypothetically expose without neutering its own effect?

So yes, I'd prefer to see money spent on fixing issues, education in critical thinking, communicating nuances the enemy's propaganada glosses over or misrepresents. Making your opponent's situation worse doesn't help your people. Even if it might "defeat" the enemy in some sense - render them unable or unwilling to oppose you - it creates misery.

The only winners are those that profit from the issues and/or the conflict and don't care about the individual peasant: Corporate executives, large shareholders, politicians campaigning on them...

(I don't think I needed to spell that one out, but given the topic, it felt appropriate to be clear)

Cheaper than hot war