Their fundamental problem is cultural. Cheating is rampant from grade school through adulthood. Capitalism thrives on a culture of trust and fails on a culture of distrust.
Look what politics and crony capitalism are doing to America.
As a college professor (computer science), I’ve actually found the Chinese to be very good students. They are almost all hardworking and smart, but perhaps not that imaginative.
Wish more American students had their work ethic.
Your description is more indicative of Indians, who turn cheating into an art form. I think the Indian elite are good, but then you have a big drop off. Another thing is that many of them are very (very) arrogant. Americans often do not pick up on this because they act polite & speak with an accent. But underneath, they have an arrogant streak. Many of them who study in this country have rich parents and look down harshly on those they feel superior to or are in their way. They really feel that they are entitled to graduate because they have paid their fee, regardless of whether they do the work or not.