Western companies outsource much of their production to countries with cheaper labor, so the really important things here are cheap raw materials and state subsidies. Since the Chinese state owns many of the large companies there, they can reduce profits throughout the supply chain or move them to other companies in the form of these subsidies. As well as use that money to build transport and green energy infrastructure, further lowering manufacturing costs.

Investors always seek short-term profit, so playing the long game is something you need aggressive policies for.