How would open-weight models benefit PRC better than their own closed-weight models, but still available at lower prices? If anything, open-weights can be distilled far easier.
Thinking like a business vs. thinking like a state.
If you see a given technology as fundamental[tm], you want to ensure that you will retain access to it AND its ongoing development. China may well foresee a possible future where US imposes export controls and global sanctions to block PRC from having access to the necessary equipment to either train or use the most advanced models - let alone its alternate parallel universe where US might go as far as prevent anyone else than US themselves having the most advanced forms of the technology at all.[ß]
To ward off such a scenario, China doesn't need to become the sole leading supplier. They only need to guarantee that nobody else can even try to block them off, and that the technology itself can never be yanked.
ß: What could possibly give them such ideas?
Because lower prices with closed weights would be severely compute constrained which would tightly cap the damage to american firms. As it is there's a plethora of providers (many of them american) serving up the cheap open weight models. Even tightly regulated industries with security concerns can use the latest deepseek.
It also enables further R&D using the open models as a starting point. That doesn't benefit china directly but it does serve to further undermine the lead that the american frontier labs have which limits their future ability to cut geopolitical adversaries off. In that sense it provides a long term hedge by minimizing the damage in the worst case scenario where china ends up suffering a crushing defeat in the AI race for whatever reason.