> I suspect the CCP would ban US models if they didn't need to distill them to make their own.

I'm pretty sure they do, at least officially. But obviously the distillation and API proxies used by Chinese uses are unofficially tolerated and even exploited.

You're right, you can't run them in China, all models in China need to be vetted and approved by their cyberspace authority. But it's more of a "businesses cannot use them to provide services" kind of thing