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.