I think it's as simple as looking at the incentive structure. The Chinese gov't has incentive to kneecap US monopoly on frontier models. It makes sense for them to continue down this course if it strengthens their position.
The Chinese govt has a strong incentive to break dependence on the US for AI needs and build domestic models, but not to spend trillions to subsidize these models for the rest of the world.
The Chinese gov't and also the rest of humanity...
I'm not sure how everyone in the US forgot that monopolies are bad
Chinese gov is not even needed. Deepseek was already profitable before this whole thing started. They even had the GPUs.