Having used Alibaba Cloud for the past few years, and having been in China for the past month, I would say:
> If I host in Europe or US would the speed of traffic going into China be very slow? ... Will I be able to serve 1Gbps to China from that EU server?
Not sure about 1Gbps, but I've seen my 200Mbps band basically saturated. It's rather spotty though -- definitely not 200Mbps all the time. Latency is a very big problem here, so make sure you do TCP tuning right; without TCP tuning you might see awful speeds.
> That is insanely expensive. How can startups in China handle that kind of hosting cost? Where do they host their websites?
The insanely expensive part is bandwidth. For instance with Alibaba Cloud, a 1 vCPU, 1G RAM, 20G SSD instance with pay-as-you-go network billing is like $6/mo so it's not that bad, and there are promotions year round so if you're committed for say one year at a time you can usually get it for maybe half the list price, but outbound bandwidth is a whopping $0.123/GB (which is actually not that different from AWS/GCP's Asia pricing).
I don't know about startups but I suppose it's fine if you host static assets through a CDN and only use the expensive bandwidth from compute for truly dynamic content.
> Any suggestions on how to tune TCP for this situation?
Roughly speaking, TCP throughput is window size / latency, and the default window size on Linux is usually pretty small, so for high latency connections (US to CN roundtrip is usually several hundred ms) the throughput would be bad. Increasing TCP buffer sizes goes a long way. In addition to buffer sizes, finer tuning is possible via other options/parameters; just find a guide online, there are plenty.
> Wouldn't the bandwidth cost of CDN be even higher than that of Alibaba Cloud?
Hmm, shouldn't CDNs for static assets be cheaper than bandwidth associated with compute instances in general? For instance, Alibaba Cloud's CDN offering starts at $0.04/GB (in Mainland China) for the first 50TB, and gradually decreases from there.[1]
> If I host in Europe or US would the speed of traffic going into China be very slow?
I'm not sure, but I guess it should be nowhere near 1Gbps. You'll have to test it to find out.
> How can startups in China handle that kind of hosting cost?
It's mainly bandwidth that's expensive, but there is cheap cdn/cloud storage for static files, like videos. Then you can also pay by traffic, which is around $0.12/Gb.
If I host in Europe or US would the speed of traffic going into China be very slow?
If I get a 1Gbps server in EU most likely I can serve 1Gbps to USA. Will I be able to serve 1Gbps to China from that EU server?
> For 9$ a month you get 1 cpu, 1G ram and 1MBit bandwidth
That is insanely expensive. How can startups in China handle that kind of hosting cost? Where do they host their websites?
> Get a host with CN2
What's CN2? Where can I find their website?