Soft power primarily (see my original comment),and less data for western labs to train on, less money for western labs to have.

The state can use their AI as a tool to bolster their standing, which is working well. Chinese AI labs don't have to worry about making money or affording more compute. The state will (and does) give them whatever they need.

Oh no! A group of people doing useful and good things to increase their reputation! That's terrible!

But seriously, if it works so well, why don't we do it too?