One advantage China has that you haven't mentioned is higher degrees of mandatory surveillance over a larger population [0]. Even if they never reach/surpass the west in AI compute power, there is greater potential for China to have more training data in long term to produce higher quality models. Chinese laws require data types and algorithms to be reported to the CCP government, which combined with authoritarian policies, gives the CCP far greater leverage in AI development strategy compared to any other entity[2]. From this perspective, growth in Chinese AI capability is not only a threat to US national interests, but also to the Chinese public itself.

Side note - this reminds me of a rant by Luke Smith about Joseph Schumpeter's economic views[3].

[0] https://theconversation.com/digital-surveillance-is-omnipres...

[1] https://carnegieendowment.org/posts/2022/12/what-chinas-algo...

[2] https://www.youtube.com/watch?v=SYUgTzT79ww