Why do return flight costs vary depending on the country of origin?

I have experienced this before. You can actually check if it doesn't make sense to book the return flight as two single flights (that is what I ended up doing). You can also try to use different airlines for inbound and outbound flights to optimize the cost (I ended up doing it).

The reason is that the airlines are allowed to do it, and so they price the round trips originating from different countries according to local demand and competition. I guess when flying from the UK many potential customers are going for holidays and they consider many other countries in the region - which drives the prices down. Travelers from China might be less flexible.

There are many reasons why fares could be different but looking for LAX-AMS and AMS-LAX return flights in the coming month on ITA's Matrix, the fare for the cheapest flights seems roughly equivalent in both directions, around $850-$900 so I don't think that what you heard is true (if you want to reproduce this or fiddle with the parameters yourself, I was looking for return flights with a 7-day stay, with Los Angeles as “sales city”).

Taking one random flight, LAX-AMS with Delta and KLM on May 4, returning on May 12, I see that the fares themselves are indeed only $760 for a total price of $1373. But a big chunk of the difference is accounted for by something called “DL YR surcharge”, which is not a tax at all but a surcharge imposed by the airline itself.

Here is a full list of all taxes and government-imposed fees according to the website:

US International Departure Tax (US)                               US$17.70
US September 11th Security Fee (AY)                               US$5.60
US Passenger Facility Charge (XF)                                 US$9.00
USDA APHIS Fee (XA)                                               US$5.00
US Immigration Fee (XY)                                           US$7.00
US Customs Fee (YC)                                               US$5.50
The Netherlands Passenger Service Charge (RN)                     US$15.20
The Netherlands Domestic and International Noise Surcharge (VV)   US$0.50
Netherlands CJ (CJ)                                               US$12.90
US International Arrival Tax (US)                                 US$17.7

US taxes and fees are higher than Dutch taxes ($67.50 vs. $28.60) but very far from $700 (total of all taxes: $96.10). All or at least most of them (an in particular the $17.70 departure/arrival tax) apply equally to flights originating out of the country, foreign airlines and flights booked abroad.

Now, airlines often split the price of their tickets in “airfare” on the one hand and “taxes and fees” on the other hand. But that's merely a trick they use to make the fares look lower and go around system limitations or the rules of their own loyalty programs because the largest of these fees (like this “DL YR surcharge” and other “fuel surcharges”) are entirely under their control. That's probably the source of the confusion (which is certainly encouraged by the airlines themselves!).

You may simply be unlucky here.

Airlines sell tickets according to booking classes within broad categories of economy / business / first class. What may simply be the case here is that for A-B-A flights (UK to China return), tickets are still available in a cheaper booking class, while on the same dates for B-A-B the cheaper booking classes are all sold out. The price jump can sometimes be as significant as you mention. Just to give an example, I was searching for London to Hong Kong air fares with Air China; on the Monday of the week I checked prices, it was 470 GBP return but by Thursday all the cheaper classes had sold out and the price for the same day flights would cost be 850 GBP. (I obviously didn't take it, I found a better deal with another airline.)

My suggestion would be that you do a 'broad' search for flights to see what's the optimum time window to book your flight tickets for.

One of the primary reason is the brand awareness. A Chinese airline will have better brand recognition in China, thus it's possible to sell the same product at a higher price. On the other hand, when trying to sell the same to people from other countries, the customers may not recognize/respect the brand as good as the airlines in their home country. Therefore, the Chinese airline will need to lower their price in UK to make their flight more attractive to foreigners.

As other commenters pointed out, it's also possible that the demands are not the same: for example, most passengers traveling from China are business travelers (thus are less sensitive about the price), while the passengers originated from UK are leisure travelers. The airline will try to set the price so that they can maximize their profit.