This is a question asked by many. In general, socializing at louder volumes usually means the more lively and exciting the conversation is, and at times determines the amount of effort a host has made to entertain guests. For the Chinese, it is no different.
However, I have rarely been to social gatherings with Chinese where we talked quietly. Even in smaller upscale places where the atmosphere is meant to provide a quiet setting I have heard Chinese talking loud at volumes that don’t seem appropriate. I think there are some reasons for this, however.
Chinese tend to talk loud in general but when it comes to social settings such as restaurants where there are a lot of people they are almost forced to talk loud. For example, in restaurants people need to track down waiters/waitresses. In China, you don’t wait for a waiter to come to you; you yell one down from across the room. The Chinese are very practical in this sense as well as they don’t believe that service people should be wondering around aimlessly unless called up. However, what you end up hearing is constant yelling and everyone else trying to talk over one another as a result of the environment being too loud. This behavior often sticks and therefore even comes out in smaller settings. This is one small and simple example but I think it says a lot about how certain behaviors are developed in China.
Another example is the density, i.e. the amount of people there are all over China. If you are walking around outside you are bound to be surrounded by traffic everywhere, which means that it is noisy. To hear and communicate with someone effectively, even if they are right next to you, you need to raise your voice otherwise you will be constantly repeating yourself. After discovering I was doing this while living in Beijing I noticed the volume at which I was talking was much higher than before. Even when I answered the phone and could turn the volume up on it instead of talking louder, I still chose to talk loud. It felt like that had become the norm to me. Traffic is also environmental and I believe also plays a role in understanding why Chinese are known for being “loud talkers.”
Additionally, it is somewhat strange to talk quietly in China. Chinese seem to get really bored in conversation if you talk in a quiet and chilled out manner. It also seems somewhat depressing to them. Even if you are feeling relaxed or even if you are bummed out it is best to maintain at least a standard in the way you talk (which should be more lively) as to avoid people thinking there is something wrong with you. This is also a way to save face.
Lastly, the more crowded places are on earth the more people tend to talk louder, faster and more direct, so Chinese are no different in that regard. There are also very few small cities in China, with the average city population being well into the millions. However, for the above-mentioned reasons they tend not to tone down their way of speaking while at other locations so therefore many regard them as the loudmouths of the world.