Translation:He has lived in China, he can speak fluent Chinese.
A quick lesson on 的，得，and 地. Many learners get confused on when to use them.
Use 得 when the adverb comes after the verb, use 地 when the adverb comes before the verb, and use 的 when describing nouns.
So this sentence could have also been written the following two ways while meaning the same thing:
- is an adverbial construction ("can fluently speak" i.e. modifies "speak").
The sentence here, "能说流利的中文," is an adjectival construction ("can speak fluent Chinese" i.e. modifies "Chinese")
As for 1., it is a resultative complement construction, and is not so easy to render directly into English. But it is used in lots of very common Chinese phrases e.g. "聽得懂 / 聽不懂" (can/cannot understand--literally "listen, the result being understanding" / "listen, the result being not understanding"); "對得起 / 對不起" (can/cannot face something--more commonly heard in the negative, meaning "sorry")
能 can also be used here as much as 会 and the meaning does not hence change. 能 is usually related to abilities that one is borne with or mainly physiological, as well as abilities quantified with a standard. This s where both words overlap but there are cases that you can only use one of them.
Note grammatically 能 cannot be followed directly by a noun (or eqv.) So 我会中文 is right but 我能中文 is wrong.