There are plenty of non Chinese models (Meta/Mistral/Google's models for instance) but they don't keep up with the frontier models nearly as well as the Chinese open weight models.

Really where the model comes from has little to do with it. Any business is just going to use whatever is cheapest that does the job. If you buy from an AI provider, and the Anthropic/OpenAI models come with extra cost to license their use and the Chinese ones don't, then clearly the Chinese models will be cheaper, and that is what they will use.

The US providers think this is a race to the top, expecting to hit AGI which would have made them rich eliminating millions of jobs.

The Chinese see this as a race to the bottom. Computers (and the models) always get faster and more capable, so you can't expect to make money off the model itself. The compute not the model is the valuable part, and the compute will just get cheaper and cheaper.

The Chinese can use this to build up their semiconductor sector to reduce their dependence on other countries while crushing the US companies, it's a win win to them.

Meanwhile in the US they release convenient news stories about developers quitting because they are suddenly worried about AI destroying humanity. Which is clearly just a way for them to collude with each other to reduce spending without worrying their investors.

They realized their own competition with each other was costing them too much money. No return on investment in the current model before they have to spend billions to make the next one that just costs far too much for any business to run even with the current losing money prices. No real progress on AGI so slowing down is the best way to make more money.