China has a two tier energy system.

Consumer get the cheaper energy, while industry normally get the twice as expensive energy.

But for AI/Datacenters, there is a exception and they get the cheaper consumer level energy.

You need to take in account that the way China taxes is not the same as here in the West. And a lot more is put on the local governments regarding generating their own revenue (why there was so much building in China because those projects funded local government). A bit of a side topic lol. Its not so simple as they are making a loss on something because how its structured.

AI gets the cheaper tariffs then the rest of the industry, that is a fact. They simply have less energy profits on the AI energy. Now if you consider that subsidized or not, ... in both cases China is still making a profit.

What is overlooked is the massive amount of energy generation that China has and still keeps expanding. And that is a direct reflection upon why the prices for industry and consumers are so cheap. This buildout ironically had nothing to do with AI but was more about lower energy = cheaper industry production ... and a lot of buildout was also to build more independence from energy imports. They are not just throwing solar and wind turbines around like candy, the amount of reactors constructed and still under construction, ...

> China currently has 36 to 38 nuclear reactors under construction, maintaining the largest nuclear buildout in the world and accounting for roughly half of all global nuclear plant construction

So yea ... The AI in the west have a issue because it really does not matter if you cut China from Nvidia GPUs or advanced nodes, they compensate on the power level.

Edit: And a little extra, the irony is here in the West building nuclear is expensive as hell because we barely do one or two at the time. With a lot of lost expertise. China doing tons of them non-stop cuts down on the costs a lot.