Any reason to think that open models will not catch up, given enough time?

I suspect it will lead to less open sourcing but at the same time that will drive on premise deployment demand from enterprises.

If that happens, presumably the weights eventually make their way online...

Chinese model companies are already beginning to close, instead of opening. The latest big Qwen models are not open, for example. And it doesn't look like they will be, either.

The article addresses a pretty compelling reason...

Why would the makers of open models (mostly Chinese firms) continue to open them up, now that the value chain and economy shifts? Previously, it was a (Chinese) national goal to force the market to compress OpenAI/Anthropic margins (and compressing their revenue along the way), to ensure the Chinese had access to high quality models, and could afford to compete. Now there is an opportunity to usurp and be the international default, and claim the margin for themselves by closing their models.

Beyond that, there is likely an upper bound of capability-per-parameter, which means that there is an upper bound on "local" models, and once you need the cloud, why would the government not target clouds next?

By all indications, Fable is way too big to feasibly host locally. Even Opus is probably near enough to the limit.