State-Owned Enterprises and locally backed private conglomerates tend to help put downward price pressures on a lot of goods [0][1] plus there is a system of price ceilings depending on the commodity or product.
Local subsidies and tax breaks also help with minimizing the upfront cost allowing for smaller margins being sustainable over a longer term.
For a lot of commodity manufacturing stuffs (think screws, etc), it's actually true that china has a lot of internal competition which drives down costs.