Why is China making good games all of a sudden?

Two reasons.

1. Opening up of the internet and import a couple decades ago led to a lot of western and Japanese games to percolate throughout he culture, which now has led to a LOT of people who grew up playing those implementing what they learned
2. Letting go of their butthurt about America & Japan meant they were no longer trying to make their games dIfFeReNt and instead copied what worked while adding their own spin. I used to try some of the older Chinese games like Chinese Paladin. They SUCKED in trying to copy while not making it obvious they were trying to copy and slapping on a billion stupid subsystems trying to distinguish themselves. They've largely gotten over that now.

Turns out that when you allow yourself to learn, let go of weird preconceptions and seek to understand why something works you 'suddenly' gain the ability to create good or even excellent product.

This also involves things like artstyle. Both classic western and classic Japanese digital art styles were previously avoided HARDCORE before being finally embraced and adapted in the 2010s, which subsequently allowed their culture to penetrate where it was previously denied.

Mihoyo's motto is literally "Tech Otakus Save The World". That would've been a no-go previously, but they ended up getting over it and admitting there was something worthwhile learning outside their own borders.

TL;DR: Stop seething, learn, win. That easy.

(Conversely, Japanese stuff has reclined somewhat because they didn't want to evolve. Kantai Collection's outfits vs Azure Lanes outfits are night and day because AL goes beyond the need to give 90% of the cast the same 3 uniforms and body types).