It's not about China. It's about the military doing it's job, which is the enforcement of political policy by means of violence. There is a broad spectrum of possible responses to an attack ranging from "ignore it" to "nuke it". Computers don't change that.
A more direct answer might be this: What if an enemy hacker was attempting to compromise battle plans for an impending invasion? I suspect the military would try to stop that effort with violence if there were no easier way.
I don't know... Shooting hackers may actually be easier than getting people to pick and remember more complex passwords.
In all seriousness though, security is not that simple. Yeah, what you're suggesting would mitigate risk, but it wouldn't come remotely close to eliminating it. You can end/save lives through hacking, and if you're costing the opposition lives, you should be treated as anyone else would be.