Well, China would rather have AI in China than in the US. I don't think that that part is what's dumb about this.

I think that if I were the current American far-right, I'd stop dragging the pope into this stuff. Like, there is an anti-Catholic strain in the far-right that's been around for a long time, but as I've commented before, if you start getting those anti-Catholic Protestants riled up, you're also probably going to antagonize the Catholics, and a Catholic-Protestant schism in the US would be really bad for the Republican Party, since they're trying to keep social conservatives as a bloc in their coalition.

I guess it's more-understandable with Thiel than when Trump was having a spat with the pope, since Thiel isn't as directly a political operator, but still.

If the pope says something that you don't like, and you're a prominent right-wing figure in the US, even if you really have it in for Catholics, you're probably better-off biting your tongue and just addressing the thing they said, not turning it into a conflict with the person. Like, if I were Thiel, I'd have said "AI is really important to make the US competitive on the international stage" or something. Whatever, but avoid referencing the pope in particular.