> The better they get, the more they need a data center.

That's true.

> So, the ‘better’ Chinese AI gets , the more it will just be a service run on Chinese hardware competing with ‘our’ lower latency AIs .

This is not. Them being open models means that any hosting provider in the world can host them as well. You get to pick and choose the provider the same way you'd pick and choose where to run a Linux server.