China's labor costs are low for most labor-intensive manufactured goods that higher-income countries import from them. They're high for most labor-intensive manufactured goods that China imports from lower-income countries. It's all relative. Not all manufacturing is super polluting (nor is all manufacturing labor-intensive), but if you tried to replicate a non-polluting labor-intensive Chinese factory's cost structure in a high-income country, you'd still run into the problem that the workers you'd need to hire have better options available.