Recruiting drivers is also fairly expensive. I've seen a ton of "Get $500 to start driving for <service>" all over the place. I'm sure similar campaigns are being run in China as well.

It costs a lot of money to give away rides to millions of people. They're trying to keep the market unprofitable in the hopes that competitors like Uber think the price of subsidization is too high. They want to buy liquidity and make it too expensive to compete.

Once they have liquidity and no competitors it will be almost impossible for a competitor to come in. Customers want the quickest ride. At scale, didi could provide a car in less than 5 minutes for most places. Competitors would have trouble gaining traction (even if they gave away free rides) if they can't get a car to riders in less than 20 minutes. So their strategy is to buy market share now to get to liquidity and to keep the burn going long enough that they're the only ones left standing. Then they dial back the incentives and have a large and hopefully profitable business without any competitors.