He’s(they) actually aren’t.
Their dad was a Cryomancer from Outworld and their mom was a Chinese-American.
Long Post, sorry:
It depends what timeline you are talking about.
In the original timeline, it was told that both Sub-zero's dad was also a Lin Kuei assassin that was hinted at being a previous generation Sub-zero and was Chinese. He then went to America and had a Wife where he had 3 kids (Bi Han, Kuai Liang, and a daughter). Daddy Sub-zero wanted his sons to be trained in the Lin Kuei like him but the mother who could have been caucasian disagreed. Daddy Sub-zero then took his 2 sons (Bi Han and Kuai Liang) back to China with him to train in the Lin Kuai where eventually they would gain the mantle of Sub-zero. It was a generational thing for 5-6 generations so before that their paternal side could have been from Outworld as they are descended from Cryomancers. Source MK Mythologies Sub-Zero.
"Born in America, Sub-Zero was the oldest of three children, which included a brother and sister. Their mother wanted a normal life for her sons, who had already been chosen by the Lin Kuei to become warriors for the clan. She tried in vein to hide them from their father whose own life in America was only a cover for his true identity and purpose. Eventually they were found and their father returned with them to his homeland. Their mother and sister were never seen or heard from again.
Sub-Zero learned of his ability as a young adult. It was passed on to him by his father, a fourth generation Lin Kuei warrior himself. The ability to harness the element of cold is one that takes years of practice. It's full potential realized only by those who've mastered it at the latest stages of life. Sub-Zero's skills have the ability to develop much faster than those of the other Lin Kuei. This was realized by the Lin Kuei Grandmasters who picked the young warrior to take his deceased father's place as the next Sub-Zero." Taken from the old MK Mythologies website.
In the new timeline, Bi Han and Kuai Liang were both born in China and are Chinese that descended from the Outworld Cryomancers. They were kidnapped as small children by the Lin Kuai and forced to join the clan in which they will both receive the title Sub-zero at some point in their lives. Source MK9.
Hope this clears that.
Also worthy of noting that both Sub-zeros were fully Chinese in MK1 and MK2 and it was only changed later as the guy who played Subby in MK3 was caucasian. So they thought they could work around this by saying he was mixed race in later games like Mytholgies etc.
