Thinking about this question, here are five potential answers.
1/ For the older generations, shortages are deeply rooted in their memory, so they dislike the idea that anything might be in short supply.
2/ The required return is too low. Many experienced poverty in their youth, therefore lots of effort for little money is still attractive.
3/ The local governments want to create local jobs and boast about industrial upgrades, with banks being the main enablers. When every local government invest in a similar direction at the same time, it’s hard to control and estimate the entire capacity.
4/ For top party members, abundance of all sorts of goods is a sign of victory for socialism and communism.
5/ China is preparing for war. Many capacity will shut down if at war.