Given thats the obvious and rational choice for any gov anywhere to make. Considering the sensitivity of data flows as well as potential leaks/sabotage.
This however goes beyonnd that as its been written to be as vaguely worded and anbigously as to spread the maximum amount of FUD, catching in its net even a locally running DS llm or any 'derivatives' i take that to mean any quantized/distilled models even touching on DS.
This is basically the same play that was done in regards to Huawei , next step as was in that case would be the US gov going around the planet and intimidating other govs to drop DS. THen tack the same allegations to the rest of the Chinese OS models , rinse and repeat.
With OSS locally hosted models the anology is more akin to the Hallowee Documents by Microsoft from the 90-20's in regard to linux and attempts to kneecap its spread.