How are they able to do this?

One reason is energy. AI is energy intensive. He who has cheaper energy can offer similar service for less money.

And the cheapest energy is renewable --- not carbon based.

China leads the world is renewable energy --- by a wide margin. They understand that this gives them an inherent advantage in AI and in manufacturing.

In the USA, catering to oiligarchs is more important than being competitive.

We're planning to spend trillions to build out new carbon based generation capacity just to accommodate AI. And once the capacity is built, trillions more will be spent on the fuel to run it.

Much of this expense could be easily avoided --- as China has proven.

I see this also being a natural psychological thing too. Chinas population is so much greater and there is pride involved in using "Chinese" made just as there is "American Made" here in America. Obviously the user base is throughout the world, but Im sure nationalistic pride plays a large role here. Any time some subject comes up as China overpassed the U.S. in this or that, it's just like okay they have many times greater the population. Now, if they surpass 200 fold in any venue, then that's some other worrisome problem.