China wants to dominate the source of supply chain and become the factory to the world. China wants to make sure no one else makes anything.
China serve only as contractor factory to western brands - the brands design and sell their goods. They only use China labor for assembly. Focus on labor cost.
1. Chinese are willing to accept really small profit margin when they make things. In exchange, they get a lot of orders (if not all the orders).
2. Chinese work really hard and live a rather “cheaper” life. Everything else in China is cheaper - meals are cheaper, train tickets are cheaper, colleges are cheaper. The cost is just low there (except for home prices).
A new perspective: Things are also artificially too expensive in the USA.
The currency of China allows Chinese to live “American life” on Chinese price, and they allow Americans enjoy the benefits of low source cost. Most Chinese factories work on Saturdays and most shops open until midnight.
Think of both USA and China as the same car, and one runs on 93 gas and one runs on 65 gas - they both run, and the results are not much different, but the cost is not the same while the result is the same.
You can also think that cost in USA is “artificially high”, you can also think cost in China is “artificially low” - everyone eventually stay alive and don’t die of hunger
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