There’s a simpler explanation, which is that this is how Chinese business operates.

When I was in China earlier this year the big topic of conversation was “overproduction”. The big example was electric cars, where there were too many companies making too many cars and making revenue but no profit.

It was explained to me that generally Chinese firms will compete hard and maximize revenue above all, whereas western firms tend to focus on profit.

(And of course this is clustered around industrial sectors that the government favors, so there is some high level strategy in going after AI, but maybe not the commoditization.)