both things can be true. China's gearing up, but they also try to make progress by aggressively distilling Anthropic and OpenAI models, and this is currently where most of their progress comes from.
It's also absolutely hilarious that people think only Chinese companies use distillation, as if Anthropic or OpenAI are above that or something. Not to mention that they basically ignored copyrights on all the data the siphoned and are now crying that people aren't respecting their terms of use.
Chinese labs have come up with a bunch of genuine innovations: GRPO, auxiliary loss free MoE load balancing, MLA, muon optimizer, and a bunch of other ones. The Deepseek papers are really well written, this isn’t just sneaking a peek at a peer. Anybody who thinks China is simply distilling glorious American models is not engaging with reality.