I don't think China has any incentive to arm the rest of the world with highly capable models that can be used against them. Undoubtedly they will continue with the arms race, but they will preserve the best stuff for their own use.
I think the stronger incentive is undermining/undercutting the Western AI companies. Given what we have seen, any model can be used/convinced to do harm so that is just part of the game
I agree, depending on how much of this is marketing and how much is actual capability. It's one thing to undercut models that finish writing assignments for lazy students. If this actually identifies vulns and writes exploits, or if it designs bioweapons, those are pretty different. Those are actual weapons, and I don't think they're going to arm the adversary.
A specific strategy is to arm absolutely everyone with very capable models, thus eliminating any advantage the U.S. could get from frontier AI.