However, the real thing is that China just has way the fuck more people, so even if there were, by percentage, statistically less people pursuing higher level education, the actual amount of people doing this research in China is staggering.

Maybe it also has something to do with what the research labour goes into. The best and brightest in the west end up doing things like: Market research. Figure out how to sell more soda. Figure out how to make new variant of peanut butter. HR (protecting the company from any responsibility). Endless redundant work that is only done due to patents, copyright and IP laws. Figure out how to make iPhone thinner. Figure out how to bake more ads into the OS. Lawyerstuff most of which is also just handling bloat and redundancy.

When you look at what you can do with your degree (make money, be dissatisfied with your job) it's no wonder more and more people decide to look elsewhere. If all you can do is this, then you might as well choose a profession with a lower barrier of entry and (oftentimes) an equal or higher wage.

Like most anthropologists end up in marketing or HR. Same goes for sociologists. How many people aren't just spending their days making perfume? Make up? Paper work? There's exceedingly few options for doing things that "feel" like they matter, and if you get one, then the wage will probably be terrible.

Contrasted with China, which also has bloat and redundancy and pointless jobs, but it at least seems to also have avenues available for those that wish to use their education for something "important". That vibe will probably get more people into academia, which in turn will get more people into scientific research.
Not to mention that China actually invests in the infrastructure needed to have a robust foundation for research.