28nm is the nominal resolution of the scanner. The chips that can be made with a single exposure. In that measure no ASML DUV scanner is 7nm either. The physics of 193nm light makes it impossible for any DUV scanner to have a nominal resolution of 7nm. 7nm chips are made using DUV by exposing 4 times at a 28nm resolution. The same quad patterning techniques allows 22nm chips to be made with a 90nm machine.

The name is also misleading 7nm chips aren't sub 9nm. TSMC's 7nm chips are physically 10nm. The marketing names haven't matched for years. It all started when TSMC sold 20nm FinFET under 16nm branding as they believed the addition of FinFET gave it 16nm performance. Then the entire industry adjusted their naming conventions to match with TSMC.

SMIC, Huawei didn't get to where they are by compromising. They never would've bought the Chinese domestic alternatives if not for sanctions. Price doesn't matter in this industry, what they're looking for is the best in the market. This is not the type of capital equipment that subsidies can sell. Which is why when US scanner manufacturers couldn't compete with ASML, they completely failed as economically viable businesses and their assets were sold off.